Myspace.com was one of the first large social media platforms,
but a combination of self-imposed and natural problems took its
valuation from a peak of $12 billion in 2007 to just $35 million
when sold by Rupert Murdoch in 2011. Given this epic downfall,
there's a lot that large social-focused new-age technology
companies can learn from Myspace... especially Pandora Media , a
company that might be following the same path.
1. First and foremost: Competition
The majority of people would say that
killed Myspace, as its demise conveniently followed the rise of
Facebook. However, Myspace fell at a time when other large social
networking companies like
also started to explode with user growth, and attract Myspace's
core younger user demographic.
Essentially, Myspace was the first, and oldest of the social
media platforms, and lost its cool effect. With that said,
Pandora's music genome project created the first interactive
user-friendly music streaming service that worked well as
applications during a time of smartphone explosion within the
Back when Apple was still new in the iPhone era, Pandora was
one of the only applications that allowed users to access free
music streams that were based on their likes. However, today
there are a slew of such services from giants like Amazon.com and
Apple, along with increased competition from the likes of
With that said, Apple might be to Pandora what Facebook was to
Myspace. Already, in just a year following the launch of Apple's
own music streaming service, iTunes Radio, it has more than 40
million listeners. In addition, Apple recently acquired Beats,
which has a very popular streaming service of its own, proving
that Apple is in the music game to win.
Pandora is still the leader in this industry with 76.4 million
active listeners, although it's worth noting that the company had
77 million back in May. Therefore, Pandora's active listener
growth is stalling right now.
2. Failure to evolve
According to famed Napster founder and former Facebook President
Sean Parker, "They (Myspace) didn't evolve." Specifically,
Myspace was often criticized for its lack of effective filtering,
which created an upsurge in pornography -- not good for children,
of course. Also, Myspace tried to succeed with theme-paged
profiles that played music and gave users the freedom to
reposition their profile icons.
Unfortunately, this made Myspace confusing, and many thought
that it hurt the user experience. As a result, Facebook's clean
and elegant profiles and news feeds solved these common problems
that users had with Myspace. In regards to Pandora, there are,
and have been, countless opportunities for the company to evolve
and leverage its market-leading presence to stay ahead of the
For example, Pandora has generated billions of likes and
unlikes from user preferences on music, which could have been
very lucrative data to advertisers. Yet, Pandora has made no real
progress at leveraging this data. Facebook is a good example of a
company that uses likes and search preferences to help
advertisers target consumers.
Another example of failing to evolve is not using the Pandora
platform to offer more services. For one, Apple's iTunes Radio
has more than 40 NPR radio stations, and original content from
the likes of ESPN. Pandora has a platform where it could offer
such services to its customers, as well, but does not.
Finally, when a user likes and wishes to purchase a song,
Pandora routes them to iTunes. Essentially, Pandora is giving its
biggest rival more business by not having a song purchasing
platform of its own. Ironically, Myspace allows users to sign on
using Facebook, which kind of fits into the same mold as what
Pandora is doing with purchasing music.
3. A lack of stability
Perhaps the most significant similarity between Myspace and
Pandora is that both companies saw major turnover with key
visionaries who were responsible for their initial success.
's acquisition of Myspace, CEO Chris DeWolfe stepped down as
CEO and, shortly thereafter, co-founder Tom Anderson joined
DeWolfe. While the co-founders are the most noted departures,
there were countless others who were instrumental in Myspace's
With Pandora, the company has seen just as many management
shakeups as Myspace, but three in particular during the last
three years are most noteworthy. In 2012, Chief Financial Officer
Steven Cakebread left to pursue "industry changing opportunities"
-- he was instrumental in helping Pandora go public. In 2013, CEO
Joe Kennedy stepped down after nearly a decade with the company.
Then, earlier this year, perhaps the most meaningful, Chief
Technical Officer Tom Conrad, who was crucial in creating the
music genome project and the algorithm that has led to Pandora's
success, stepped down.
Like Myspace, Pandora lost three leaders who were essential in
creating the company's success, and Pandora has since failed to
innovate as new competition arose quickly. For investors, it's
hard to be bullish, as Apple's iTunes Radio grows in popularity,
and new platforms are expected to launch in the near future. In
other words, investing in Pandora may not be wise, as a path
toward experiencing the same fate as Myspace could occur.
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3 Reasons Why Pandora Could Become the Next
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