MySpace forges ahead despite really tough times

BEVERLY HILLS -- Forgive Chris DeWolfe if he isn't wildly celebrating MySpace's five-year anniversary. As he prepares MySpace for the next half decade, the CEO of the social-networking behemoth is acutely aware that it will be harder to navigate an economy shaken by recession while slugging it out with Facebook.

"We have not seen an economic climate like this," says DeWolfe. "We're cautiously optimistic. … We're focused on building a sustainable global business which we measure by profits and revenue, not just eyeballs."

He is seemingly everywhere to make his case. At the Sundance Film Festival in Utah. At the Producers Guild Awards in Los Angeles to pick up a technology award previously won by Steve Jobs and George Lucas. At the World Economic Forum in Switzerland.

The past several months have been a swirl of activity, and the next few should be crazier. MySpace NWS continues an ambitious redesign, with a splashy new look for searches and site navigation. It also revamped the way its members can lay out and manage their profiles as well as categorize friends (by college, work, interests, etc.). The changes, among the most significant in MySpace's history, make available for the first time functions previously used only by people with strong programming skills.

It does so in an economy that has claimed thousands of tech jobs and put a damper on online ad spending. DeWolfe and company are betting the ongoing changes expand MySpace's appeal to an older crowd and, by extension, more advertisers in the fiercely competitive multibillion-dollar online ad market.

While its tech brethren slash jobs, MySpace intends to expand its 1,600-person workforce this year, DeWolfe says.

"In the end, we think all these changes will widen the demographics, to 40-, 50- and 60-year-olds," DeWolfe says. "We expect more users and a gradual increase in time spent by existing users." Nearly half of the site's about 130 million members worldwide are 35 and older, says DeWolfe.

Facebook has more members worldwide, with 150 million, but MySpace has an edge in unique monthly U.S. users, 76 million to 55 million, says market researcher ComScore. The bulk of the world's online ad revenue comes from the U.S.

MySpace 2.0 sounds like market-speak. Yet it positions MySpace to expand its revenue, which was an estimated $750 million last year. Facebook rang up about a third of that in 2008, according to financial analysts. This year, MySpace plans to launch multiple advertising programs, one of which lets marketers promote their products on users' pages.

Last year, MySpace began a music venture with all four major record labels — EMI Music Publishing, Sony BMG Music Entertainment, Universal Music Group and Warner Music Group — that lets consumers listen to free streaming audio, purchase song downloads and make playlists. "He's one of these guys who can see the future and get in front of things," says Doug Morris, CEO of Universal Music Group. "There is a lot of conflict between technology and content, and Chris has successfully brought both together."

MyAds, launched in August, allows small businesses to target consumers for as little as $25.

More changes are in store in a couple of months. This year, expect a major promotional push through the various media holdings of News Corp., which owns MySpace. DeWolfe envisions the new MySpace promoted on American Idol and The Simpsons as well as during movies, NFL broadcasts and other popular Fox properties.

(Facebook, also turning 5 this month, revamped its design last year. It had no comment for this story.)

MySpace's broad swath of consumers — DeWolfe characterizes it as "deep and diverse" — makes it increasingly attractive to ad agencies and brands, he says. "We really think of MySpace as a social portal," he says, emphasizing its status as a vehicle to promote movies such as The Dark Knight, music and TV shows.

A maturing market

The economy and Facebook are a potent one-two punch, to be sure. Add to that the nagging stigma that MySpace is some teenage refuge where provocative photos are shared. Indeed, MySpace on Tuesday said about 90,000 sex offenders have been identified and removed from the site since 2006.

"MySpace is different. Many people still believe MySpace is all about teenagers, but that's not true," says Tom Anderson, co-founder and president. "Once the changes are in place (this) year, it will be even more suitable for family members, at work, everywhere."

The face-lift, which gives a more polished look to its member profiles, should appeal to a larger demographic, says David Card, an analyst at JupiterResearch.

The personable, laid-back DeWolfe is in a unique position to help MySpace prosper during such dicey times because he successfully straddles the line between the business and celebrity worlds, say his friends and business associates. "One of his great qualities is he is incredibly approachable," says actor/producer Ashton Kutcher, whose website, Blahgirls.com, is prominently featured on MySpace.com.

Political blogger Arianna Huffington, who met DeWolfe at a tech salon at the home of actress Meg Ryan a few years ago, says she was instantly impressed with his "capacity for intimacy" and his ability to inspire people. Both qualities, she says, are essential as MySpace competes. "Tough economic times might bring people together online," she says. "There is a sense of isolation in bad economic times, and there is a sense of intimacy among social-networking friends."

MySpace COO Amit Kapur, who has worked with DeWolfe for 3½ years, says DeWolfe's personal touch extends to his management style. "He surrounds himself with people he trusts and lets them do their jobs. There is no micromanaging."

"It's not easy building entirely new markets, and Chris clearly has a knack for doing just that," says Peter Chernin, COO of News Corp., which acquired MySpace for $580 million in 2005.

DeWolfe, like other tech executives, needs all the help he can get in a deepening recession. At last month's World Economic Forum, the "mood was pretty negative and somber," he says. Nearly every session, he says, was about the global economic crisis.

And yet, the next few years hold rich promise, says DeWolfe. He foresees MySpace available on every portable device and wireless carrier in the world. He anticipates the site gaining more traffic overseas. And he says MySpace will develop a social e-commerce service.

"I can't predict the future," he says, "but I know MySpace will be well positioned for it."