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What Killed Myspace

The cover story for the latest issue of Businessweek is The Rise and Inglorious Fall of Myspace.

There are a lot of reasons, obviously, for the massive decline of Myspace. But here’s something that especially stood out:

“There was lot of pressure to drive revenue. There were things that we knew would be more efficient for the user that we didn’t act on immediately because it would reduce page views, which woul dhave hurt the bottom line.” — Shawn Gold, Myspace’s former senior vice president for marketing and content

In other words, the pursuit of profit was placed ahead of the user.

Deadly. Just deadly.

There’s a lesson here, which I’ve blogged about often: You have to put your user/customer/constituents before revenue.

If your organization places higher priority on money than the people it serves, you are already on your way down.

Sometimes people say “but if we don’t put revenue first, we won’t make enough money to survive.” But this has it backwards. If you do put revenue first, you will likely undercut the very things that actually produce revenue — things like goodwill, generosity, genuine service, and remarkability. The way to ensure that you have enough revenue to survive and thrive is to not put revenue first.

Profit matters, obviously. But the best companies put something other than profit first — and, paradoxically, become more profitable as a result.

  • Richard

    This post is a great book review for “Obliquity – Why our goals are best achieved indirectly”. I agree with all you said.

  • David Reimer

    That last link, with the anchor text “more profitable as a result”, has gone wrong. I’m interested to see what you had in mind there! Could a fix be arranged? Many thanks.

  • Matt

    Sorry about that! It’s fixed now.

  • staffaction

    Matt, how do you think this translates to the np world? How can a nonprofit put “profit” before users/customers?

  • staffaction,
    I would say that it’s not necessarily a profit vs. customer situation, at its core it’s really about short term objectives vs. long term objectives. For-profit and non-profits both need to properly evaluate what their true long term objectives and metrics are, and then they need to have the courage to pursue those despite the short term ups and downs.

  • Matt

    Ben: In the NP world, I think a lot of organizations end up doing this by pursuing funding ahead of their mission. In other words, instead of saying, first, “what will best further our mission and help the people we serve,” they ask “what is most likely to keep us financially secure,” and then they adapt what they do around that.

    For example, when we had our radio program at Desiring God (radio was pretty expensive–you had to pay to air the programs), a lot of consultants would say “no money, no mission.” And a lot of ministries would thus end up having some pretty hokey appeals for money in their programs. We said that it’s the reverse: no mission, no money, and that if we just kept pursuing our mission and being who we are, the money would follow (not just for radio, but for the ministry as a whole). So we didn’t resort to hokey ways of asking for money, because that’s not us.

    Obviously financial security is a good thing. But when non-profits put that first, as the primary grid through which they make their decisions, they are going off track. The first thing they need to do is be true to who they are and their mission. Then, from that, the funding will follow.

    Matt

  • staffaction

    good points, Loren and Matt. Thanks!

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