SFist Interview with Julia Angwin, Author of Stealing MySpace

Your book delves specifically into the personalities of MySpace's founders, Chris DeWolfe and Tom Anderson. What's the most emblematic story you can think of to describe them?

There are many stories about Chris and Tom in Stealing MySpace - stories about their past adventures in spyware, spam, pornography and other fun escapades. But I feel that the defining drama for them was the story of how MySpace was sold behind their backs. The surreptitious sale was the direct result of their low-risk, low-reward approach to business in the beginnings of MySpace.

Rather than start MySpace in the proverbial entrepeneurial garage, they founded it as a subsidiary of a larger company called eUniverse (which later changed its name to Intermix). That decision allowed them to forego a lot of the pain of the startup life; they did not have to max out their credit cards and live like starving students in the early days. But allowing themselves to be funded by eUniverse's sales of wrinkle creams also meant they gave up a lot of the upside of MySpace, because they only owned a minority stake in MySpace.

But when the inevitable day came that Intermix began negotiations to sell itself, the MySpace founders fought unsuccessfully to renegotiate the terms of their arrangement with Intermix at the last minute. Once the sale was complete, they rebelled against the strictures of their new owners. To me, that was an undersstandable emotion, but it also showed a lack of understanding of the consequences of their earlier actions.

You talk in the book about how a loophole created in switching programming languages allowed for all the glitter and animated crap that made MySpace such a hit with teenage girls. Could you explain that a little?

In its early days, MySpace made a key strategic mistake: its programmers forgot to block Web markup language such as HTML in the templates that members filled out to create their profiles. That mistake meant that savvy MySpace members could create Web codes to customize their pages with colorful backgrounds and layouts. This turned out to be extremely popular, particularly with girls who saw decorating their pages as akin to decorating their room or their locker.

MySpace smartly realized that this mistake was actually a strategic advantage - and kept the loophole intact. Flashing, blinking crazy quilt profile pages remain a hallmark of MySpace. Facebook, like its philosophical predecessor Friendster, restricts members from customizing their pages.

From a business perspective, do you foresee MySpace continuing to be successful and hold onto both its audience and its influence?

MySpace is the biggest Web site, in terms of page views, in the United States. It is also a leader in advertising: it pioneered highly targeted advertisements and struck a lucrative $900 million three-year search-advertising deal with Google. Even so, MySpace is barely profitable - in the past quarter, Fox Interactive, the division that houses MySpace, earned profits of just $7 million on sales of $226 million.

The Google deal is set to expire next year, and it's unlikely it will be renewed at such a lofty rate. So MySpace will likely have to cut costs dramatically to remain profitable, and there's a chance they could slide into the red.

At the same time, MySpace's audience growth has stagnated, and it has been surpassed by Facebook in terms of worldwide audience. MySpace is in a difficult situation - it needs to innovate to compete with Facebook, but its resources are likely to become more restrained.