Could What Happened to MySpace Happen to Facebook?

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Ben Bajarin is the Director of Consumer Technology Analysis and Research at Creative Strategies, Inc, a technology industry analysis and market intelligence firm located in Silicon Valley.

Social networks have been in the news lately. Last month MySpace was sold and we learned that Justin Timberlake and his partners have decided to try and help it be successful again.

(MORE: Myspace Sold for $35 Million with ‘Significant Reduction’ of Staff Imminent)

Google has just launched a new service called Google+ that has the blogosphere asking if it is a Facebook killer. So the question I want to explore is whether or not what happened to MySpace could happen to Facebook?

Facebook Learned from MySpace’s Errors

MySpace fell from grace for several reasons. First, they sacrificed the service’s integrity in pursuit of monetization. For those who remember, the user experience declined drastically once the service hit a critical mass.

We were bombarded by ads—highly irrelevant ones and many of a sexual nature (at least mine were). There came a point in time where I literally said to myself that the service had become unusable. I heard the same from a plethora as others as well. The turning point was when they lost control to the advertisers. Their monetization strategy was poor and because of that the site went downhill.

The second reason was because they failed to innovate in order to meet the needs of their users. In short, MySpace ran out of ideas. The site started with the humble idea of giving people their own spaces on the web but never evolved it into much more.

Facebook, on the other hand, has taken a different approach. They have not only been innovating and evolving the service to meet the needs of their users, but they have also been employing a business model that actually works for the service and is valuable to people. This model includes the subtle yet relevant placing of ads.

Facebook has innovated and monetized without sacrificing their network’s integrity for the almighty dollar. Facebook also has another market force in their favor, and that is the philosophy of “sunk costs.”

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