MySpace's doom was in its DNA

June 28, 2011: 1:10 PM ET

FORTUNE -- It appears that MySpace might finally find sweet relief from its long, slow, painful demise. News reports on the company this week read like obituaries: The News Corp.-owned social network is planning massive layoffs, apparently in preparation to unload the company for a pittance.

Those developments followed a detailed post-mortem from Bloomberg BusinessWeek. Its cover story this week, "The Rise and Inglorious Fall of MySpace," recounts how "[m]ismanagement, a flawed merger, and countless strategic blunders have accelerated Myspace's fall…"

While it's surely true that MySpace's doom was hastened by News Corp.'s (NWS) bumbling management since the media giant bought the company for $580 million in 2005, it could be argued that the MySpace was doomed from the beginning.

It's difficult to remember now, but MySpace was once considered cool. When it started in 2003, it was largely devoted to indie music, with bands joining to create profiles for themselves and circulate their music. The site never really tried to capitalize on that core audience. Anything that's considered cool is almost guaranteed to fall out of fashion. Not long after News Corp.'s purchase, predictions of MySpace's fall began circulating, even as the site was still growing. And not long after that, Facebook began to rise in popularity.

Facebook, having been sort-of nerdy-cool in its early days, has since transcended the whole cool-uncool spectrum. More importantly, it was much more user-friendly and accessible to the mainstream. MySpace, meantime, insisted on sticking with a garish design and music that autostarted when a profile was opened. Nothing turns people off like a Kid Rock song blasting unbidden into their headphones.

In his BusinessWeek article, Felix Gillette argues that MySpace users' ability to tweak their profile designs was one of the site's "first breakthroughs." The developers had accidentally allowed users to insert HTML into their profiles, "allowing them to play around with the background colors and personalize their pages, leading to the site's kaleidoscopic, techno-junkyard aesthetic, which became its trademark."

For the site's users at the time, this was a feature. For users who might otherwise have signed up, it was a bug. MySpace has almost willfully discouraged older people, smarter people, and more mainstream people from joining. Facebook, meanwhile, has kept tight control over its design, which has remained free of blinking graphics and gaudy color schemes. Your elderly aunt could join it if she wanted to. And as time went on, she did.

Facebook's vanilla presentation has helped it transcend questions of "cool." For most people, it's now considered neither cool nor uncool – it's just sort of there. It's almost a utility, like an email account. Unlike with the old MySpace, joining Facebook isn't about making a statement about your social identity. Nobody thinks of themselves as a "Facebooker" the way some people once thought of themselves as "MySpacers." That's why hipsters and their moms can be Facebook friends with each other and nobody thinks it's strange. It's why you can be Facebook friends with your boss, and why you readily accept friend requests from old high school friends with whom you have little in common.

And that's why, as Facebook grows toward a billion users worldwide, MySpace is losing millions of users every month and is now reported to be planning layoffs of perhaps up to 300 of the 400 workers it has left after it let go 500 people in January. All that's left is a clunky networking infrastructure, a rapidly dwindling (and not very demographically desirable) member roster, and a source of still-considerable, if not very lucrative, Web traffic.

Of course, there are many reasons for MySpace's fall. It started as part of a company, Intermix, that had the stink of sleaze about it. But the owners at the time refused to spin MySpace off before Eliot Spitzer, then New York's attorney general, began investigating Intermix, and the site was sold to News Corp. at a discount. For a site that relies on cool, nothing could be worse than ownership by Rupert Murdoch.

Unlike Facebook, MySpace also never thought to interweave itself with the rest of the Web, allowing users to easily port outside material into their profiles, and to use their accounts to, for example, comment on outside Web pages. MySpace's corporate owners were forced to hit quarterly revenue targets, which stifled innovation, but they never thought to seek revenue through outside brands as Facebook has.

But even with all those stumbles, MySpace could possibly have endured if only it had simply made itself accessible to people from all walks of life. And now News Corp. is hurriedly trying to sell the thing off for as little as $20 million, or less than 4 percent of what it paid in 2005. And Facebook? It's valued at $70 billion - or 3,500 times what MySpace is apparently worth.

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