Business Model Re-Engineering: Myspace

- transmission line cast Re-engineering MySpace Date November 4, 2011 - Word Count 3742 ingress Nowadays, increasingly more than than(prenominal) industries, especi all(a) in ally the media sector, atomic material body 18 facing a invariable change. In the sideslip of media, this is mainly a result of steadily growth digital engineering science. Even though a companys crinkle lay might prepargon been favored for many years, it suddenly stomach start to become weaker.The media market is preferably disputation-driven and therefore a competition with a freshly- do bank line model might alter the fabrication approximately instantly ( handicraft model re-engineering, n. d. ). In much(prenominal)(prenominal) a militant market, the schema is ab erupt being different. (Eisenhardt & Sull, 2001, p. 116). This statement perfectly implies that companies and their products emergency to be so unique with much(prenominal) a well thought-out and innovate line of draw model that they crowd out create a competitive advantage.However, this reconcileion of the business model in an ever-changing media surround turns out to be quite a complex challenge, since now many companies face a mitigate of guests and gross. A corking spokesperson for a business model that could non be the changing media environs in impairment of online well-disposed net effecting is the genius of Myspace. Consequently, I am going to propose a re-engineering of its business model.In this paper, I pull up s back outs sicken on the problems of the current business model and cautiously analyze the context of the market in disposition to propose a refreshed model that go out do Myspace to survive and to compete more masteryfully in nowadays social ne 2rking market. Myspace postulate a business model that furnishs value to its customers, guarantees a competitive advantage, as well as collects revenue (Teece, 2010). Myspace Myspace. com, which was founded in 2003 by Chris DeWolfe and Tom Anderson (Piskorski, Chen, & Knoop, 2008), is an online social networking ervice that is now possess by Specific Media LLC and singer Justin Timberlake (Specific Media Acquires Myspace, 2011). Specific Media LLC is a media company which sells publicize online with a technology that aims at targeting specific customer segments (Specific Media LLC, 2011). Specific Media LLC, however, has non been the owner of Myspace for long. In June 2011, the company bought Myspace for about $35 million and as power of the deal pop star Justin Timberlake took an ownership s name (Specific Media Acquires Myspace, 2011).Before, from 2005 until 2011, it was have by Rupert Murdochs News corporationoration (News Corporation to Acquire merge Media, Inc, 2005). From 2005 until 2008, Myspace was the most popular social networking web commit in the world, as measured by the visitors. But the number of 75. 9 million visitors per month in 2008 dropped to 34. 8 million i n May 2011 (Gillette, 2011). Problems Is Facebook Myspaces biggest problem? Since 2008, Myspace has been continuously losing members which was at the time when it was e actuallywheretaken by Facebook (Mack, 2008).Myspace has been gradually losing its white plaguers which can be expressed by the declining members and visitors of the web land site. As from February 2010, the visitors decreased by 43. 3 per cent (Arrington, 2011) and the members shrunk by ex million within oneness month at the beginning of 2011 (Stafford, 2011). This decline brings along a dramatic loss in revenues which atomic number 18 only when generated by publicize (Enders, Hungenberg, Denker, & Mauch, 2008).Facebook has now about 25 times more users than Myspace (Stafford, 2011) and it seems that members migrated from Myspace to Facebook, but there is other reasons for the fai enticement of Myspace, mainly in terms of change. Myspace was per bodying solidly well at the time of News Corps acquisition and it barely had any competitors. However, with the rise of its first dandy competitor Facebook, the former leading social networking site had to confront one of its severest lacks innovation At the very beginning, Facebook entered a niche market, namely the one of college students.Firstly, it was available to Haravard students, and so more and more universities exigencyed to join Facebook and straight off, almost everybody is apply this social network, no matter if college student or not (Piskorski et al. , 2008). Today, some 600 million users enjoy forbearing in touch with deal all over the world via Facebook (Cauwels & Sornette, 2011). Facebook managed this great success because it was modern. New gasconades have been added all the time since it has been launched, hence tidy sum were involved and kept climax back as a result of saucily innovations much(prenominal) as the freshlys feed at that time (Stafford, 2011).While Facebook managed to be innovative all the time, M yspace failed to adapt to the market and did not add new features as Facebook did. Additionally, Myspace did not allow third party developers to create new features such as applications (e. g. Facebook FarmVille etc. ), they rather kept everything behind closed doors. Therefore, Myspace anomic the competition of controlling the market at the time between 2006 and 2008 and thence it became boring (Stafford, 2011). Even though Myspace had certain features, they did not all work very well.For example, members were able to create their own backgrounds either themselves or they could transfer an existing concept from many providers who specialized in creating Myspace profile excogitates. This feature turned into quite a mess, problems, and confusion regarding certain profiles. The whole competition resulted in a confusing mess and one could not be sure on what Myspace was stressing. Not only because of the customized user profiles but as well because of some other flaws in the si tes design, Myspace was confronted with security issues. Results were spyware (Hesseldahl, 2006), phishing, and junk e-mail (Webb, Caverlee, & Pu, 2010).Another security fear was regarding the profile subject field. Users were concerned about go for and privacy and even law enforcement officials claimed, MySpace is used by sexual predators to lure teenagers (Dwyer, Hiltz, & Passerini as cited by Schrobsdorff, 2006, p. 5). The last problem I want to focus on is the revenue model. As previously mentioned, Myspace operates on revenues from advertising. Especially under the ownership of News Corp, the main focus was on generating revenue. It seemed that Rupert Murdoch solely cerebrate on revenues and nothing else which is a great flaw for a social networking site, as it inevitably to focus on the on center of attentioners. In 2006, Google pledged to put up News Corp as many as $900 million over 3 and a half years and in return Google was allowed to provide search services and adv ertising on Myspace (Piskorski et al. , 2008). For Myspaces customer it seemed that the site was full of too much unorganized advertising, hence the website appeared unprofessionally (James, 2009). The previously listed problems of Myspace are mainly problems of the time when Myspace lost the competition against Facebook, and reasons why Myspace is not successful anymore.With regards to the Business Model Canvas by Alexander Osterwalder (2009), I exit focus on the problems based on the dramatizeing elements Value Propositions, let out Partners, Revenue Streams, and Media Channels. The element of value propositions seeks to solve customer problems and satisfy customer wishs with value propositions (Osterwalder & Pigneur, 2009, p. 16). I consume this part to be Myspaces greatest problem regarding the issues of trust, privacy, spam, spyware, and phishing.Furthermore, the lack of innovation was one of the major problems why Myspace lost that many users who constantly want to experi ence something new. With its lack of good and new features as well as its unclear point of focus, Myspace was not able to deliver value which would result in customers continue to use the social network. From my personal experience, I can say that Myspace faded into abstruseness which can be backed up by the low number of users now, compared to the time of 2006 when Myspace was at its peak (Snyder, Carpenter, & Slauson, 2006). I was a Myspace user around 2006 as well, when I was 15 years old.It seemed to be a conflux point for teenagers and for me it was not any different from the German social networking site Schuler VZ except that it is international. However, as time went by, I decreasingly used Myspace as for me it forever was too confusing and it could not compete with the German social network. Besides, I got spammed with advertising, random men (who were not at my age) thought it was a go out service, and it simply became boring. Therefore, I can state that Myspaces bigge st problem is that it is not valuable enough for the users. TheoryFirstly, I provide focus on the value propositions as all the other elements, I chose to focus on, cost up on the value propositions. When looking at value propositions, I would like to consider the tierce types of value propositions according to Anderson, Narus, and van Rossum (2006), namely all benefits, favorable points of difference, and resonating focus. In the case of Myspace, it certainly would not be enough to simply list all the benefits (Anderson et al. , 2006, p. 2) since there are too many competitors in the Internet environment that share most of the benefits and values.The favorable points of difference approach is promising in so farther that it distinguishes the valuable points that the competitors do not offer. However, I retrieve that Myspace does not present many highly valuable aspects over their competitors and indeed it would be most convenient to concentrate on the resonating focus. With t his approach, I will focus on the one or two points of difference whose improvement will deliver the greatest value to the customer for the foreseeable future (Anderson et al. , 2006, p. 4).In connection to that, I will of get over need to study the greatest competitors with regards to their value propositions in order to play up Myspaces most valuable points of difference. Furthermore, I will need to look what customers expect from online social networking, what they value about Myspace, and what they frequently find lack in the social networking environment in order to develop ideas for a possible niche market. Additionally, for this customer value question, I will need to conduct question on focus groups with regards to problems mentioned in the previous fraction ( caoutchouc and innovation).Furthermore, the design is an important aspect of the value propositions as well. As I previously stated, the old Myspace design was quite confusing which resulted in synthetic rubb er problems. Hence, a new design is needed which is unified for every user, except attractive and which does not allow bugs. Secondly, in relation to innovation, I will need to look at the Key Partners who will be part of the re-engineering of the Media Channels as well and concerning revenues. Through Media Channels, the company can fall with its customers and deliver the value propositions (Osterwalder et al. 2009). Especially in the online environment, awareness can be raised with the armed service of other secern partners. For example, you can share content from one website on another. Not so long ago, Myspace introduced connection opportunities to chirrup and Facebook (Myspace introduces mashup with Facebook, 2010) and also youtube allows sharing videos on myspace. Myspaces connections to Facebook which will also answer to generate user-specific streams according to the users Facebook profiles. However, Facebook for example, does not allow a connection to Myspace.According ly, Key Partners are needed that would servicing promoting Myspace. Moreover, the former revenue model which only consisted of advertising, has proven to be quite annoying for the users, hence Myspace needs Key Partners who will not only make the website more appealing but also help to make revenue. Hence, look has to be done on Key Partners who are willing to help financing Myspace as well as who would be interested to offer for example applications (which then help the Key Partners as well). As I tell before, Myspace faded into obscurity.For this reason, I will also need to look at other media channels such as campaigns and marketing strategies in order to bring Mypsace back to peoples minds. In that relation, research needs to be done on what marketing strategies worked for successful social networks such as Facebook and also what media channels can help to basically present a media product like Myspace. Assumptions & Best Practices Review First of all I need to mention that Myspace decided in 2010 to focus on music and entertainment (About Myspace, 2010).However, for now I will only consider online social networking sites as websites that focus on music and entertainment are not Myspaces greatest competitors. Of course, I will need to take Facebook into account as Myspaces greatest competitor and as todays most popular social network which was the most visited website in June 2011 (Smith, 2011). Facebook first started in a niche market of college students and it got awareness from the very beginning. It did not use any special advertising campaigns to become popular but the promotion was rather by word to mouth (Mitchell, 2009).The popularity has then been covered by newspaper articles and television which reported on the success (Ibid). Mark Zuckerberg launched Facebook as a unique and intimate website and constantly added new features that kept the site interesting. Facebook is far more innovative than Myspace and therefore the members victuals usi ng it and levy it by word-of-mouth advertising. Similarly to Facebook, Twitter was initially successful in a niche market. At the beginning, primarily computer- and technology specialists as well as bloggers used Twitter for example to promote their blogs (How did Twitter become popular? 2009). Twitter could convince with its simplicity and real life experience. Real life experience in so far that people twittered news from certain events such as the Mumbai attacks or late the uprisings in Tunisia as different to regular news channels (Ibid). The trump practices that made Twitter and Facebook successful and popular are therefore word-to-mouth advertising and the Internet itself. Word-to-mouth advertising only worked because of the convincing and interesting designs and usability.Both platforms are innovative, as they have been creating new features that make them enjoyable, flexible and interesting (The achiever of Twitter, 2011). Those best practices worked for Myspace as well in the beginning. However, the task now is to reconstruct Myspace aware to peoples minds and the goal is that the users actually keep using Myspace because of the new design and value propositions. I would suggest sending a in brief and catchy email to the Myspace users which shortly introduces them to the new Myspace.Users might want to get to know the new Myspace and then tell people about their good experience. Additionally, since Myspace is focusing on music, an advertising campaign might help to make new bands aware of Myspaces ability to promote their work. Facebook uses an hostile innovation approach, meaning that it comes up with new features that users initially might not like but after a while they cannot imagine Facebook without those new features anymore. Furthermore, Facebook constantly adapts the privacy settings in order to replete the customers needs with regards to safety (Blodget, 2010).Innovation keeps Facebook interesting and worthwhile to continue using it. Another sidle up it offers for their users are applications. Many software developers create applications for Facebook which make the site not only more interesting and entertaining but also help to generate revenues (Stone, 2007). With the help of key partners, Myspace can get help for its design as well as applications that help to make the site interesting. What is more, key partners help financing hence Myspace would not only be reliant on advertising revenues.As users find the amount of advertising quite annoying, Myspace can focus on less but personalized advertising. Those locomote would help to make Myspace more innovative and it can easier meet the users needs in terms of design, safety, new features that make it worth to use. Research project Method Myspace needs change More specifically, Myspace needs a re-engineered business model. The previous statistics show that the numbers of Myspace users decline gradually. If this decline continues, the once most popular soci al network (Bains, 2009) will soon be almost unknown or at least unused.However, with march on research on my previously stated ideas based on the problems of Myspace in relation to the Business Model, I will be able to help Myspace creating a new and innovative Business Model that will help to avoid further declining user numbers and to create competitive consistency in the environment of social networking. In order to study the value propositions carefully, I will conduct qualitative research. Only with qualitative research I will be able to compile in-depth understanding of the reasons why people do not use Myspace anymore.I can gather such discipline in two instructions through interviews and through an online research confederacy. With the help of a qualitative research interview I will gather the facts as well as analyze the meaning (Kvale, 1996). As a result, I will be able to understand the values customers need as well as the reasons and problems which caused the failu re of Myspace. By using an online research community, Myspace can put the customer at the heart of the marketing strategy (Simon, 2009). Such research communities allow efficient and deep qualitative research online.In such a community, members can discuss certain aspects such as new features and designs, and Myspace can adapt accordingly. Besides, a qualitative research online will probably bring more results since people rather take the time to discuss issues online. However, the qualitative Interview will also be needed because it is an additional in-depth analysis with face-to-face communication that enables immediate follow up questions and answers with high reliability. The qualitative research of both forms will be base on current or former Myspace users and also on general social network users in order to determine the general arget groups values. Questions for both kinds of researches will for example include what they shortly like about Myspace, what they do not like, why they use Myspace, or why they (stopped) using Myspace, what they generally value about Myspace, and their opinions about the competitors such as Facebook. For good measure a detailed research on the competitors and their best practices is essential. This can be done by further online research on the competitors strategies in order to find out what could work for Myspace as well. PlanThe following table provides an overview of the estimated time and cost for this project subject to modifications. For now, I will conduct the research for three weeks, meaning that for example that the online community will be run for three weeks. Part Time Costs per hour Costs per day Creating online community(5 employees) 8 hrs EUR 10 (x5) EUR 400 Leading discussion online(10 employees) 3 wks (120 hrs) EUR 8 (x10) EUR 9600 Analyzing online community (10 employees) 2 wks (80 hrs) EUR 12 (x10) EUR 9600 Developing questions for both onliny community and interview (4 employees) 8 hrs EUR 12 (x4) EUR 384I nterviews (5 hrs per day)(10 interviewer) 3 wks (75 hrs) EUR 12 (x10) EUR 9000 Evaluation Interview(10 employees) 2 wks (80 hrs) EUR 12 (x10) EUR 9600 sum Costs for staff EUR 38584 Further cost Possible travel costs (for interviewers)ca. EUR 300 Equipment (for Interviewers recorders etc. )ca. EUR 400 Technical equipment for online communityca. EUR 10000 ingrained Costsca. EUR 49284 The additional costs might not apply if the equipment already exists. All prices are including value added taxes. Reflection In this paper I laid the foundation for a re-engineering of Myspaces Business Model.Back in 2006 and 2007 I was a member of Myspace as well. However, I never like this social network much since it was confusing, annoying because of all the advertising and I did not feel safe using it. Overall, it did not really work out. Now I am a Facebook user and I all forgot about Myspace. Apparently, other social network users feel the same way which can be expressed by the declining numbe r of Myspace users. Myspace became quite unpopular, less and fewer people visit that site and Facebook out-competed Myspace fast.Therefore I analyze the problems that resulted in the failure of Myspace. The main overall problem is innovation. Myspace failed to add new features in order to make the platform interesting and worthwhile to keep using it. Myspace totally faded into obscurity wherefore it is essential to re-engineer at the media channels. Also, Myspace did not allow third party developers to help designing the knave and add for example applications which not only would make the network more entertaining but also help generating revenues other than advertising. Instead, members were able to design their own profiles.This feature, however, resulted in an overall confusing design and safety problems. recourse problem arose from the bad software as it was easier to install for example spyware. Myspace could not meet the values that the customers need. Aside from bugs such as spyware, spam and phishing, users experient a great lack of trust and privacy in that online network. To sum it up, I focused on the re-engineering of the following split of the Business Model Canvas by Osterwalder and Pigneur (2009) Value Propositions, Media Channels, Key Partners, and Revenue Streams.All parts of the business model are connected though. That is why I analyse all parts with regards to the others. My idea is that Myspace needs to be innovative. It can do so in analyzing both the values of customers and the best practices of the competitors and then adapt accordingly. With this system, Myspace can add new feature that will surely meet the customers desires. This is connected with a new design and key partners. Key partners can not only help with the design but also with innovation by adding applications that make Myspace more interesting.Furthermore, key partners would create another method of generating revenues. Then, Myspace would not only depend on adverti sing revenues and can reduce the annoying advertising to unostentatious, user-personalized advertising. After its changes, people need to be made aware of the new Myspace. This can be done with a short and catchy email to Myspace members who will then positively experience the re-engineered Myspace and spreadhead the word. Additionally, television and Internet advertising campaigns might help to bring Myspace to the peoples minds.I am convinced that those methods and the further research, suggested in form of qualitative interviews, qualitative online community research and qualitative research on the competitors, would help Myspace to survive the competition in the online environment of social networks as well as stop a further downfall. References About Myspace. (2010). Retrieved November 1, 2011 from Myspace http//www. myspace. com/pressroom/2010/11/myspace-introduces-mashup-with-facebook/ Anderson, J. C. , Narus, J. A. , van Rossum, W. (2006). Customer Value Propositions in Bus iness Markets. Harvard Business Review.Arrington, M. (2011, ring 23). Amazingly, MySpaces Decline is Accelerating. Retrieved October 29, 2011 from http//techcrunch. com/2011/03/23/amazingly-myspaces-decline-is-accelerating/ Bains, L. (2009). Facebook Overtakes MySpace as Most Popular brotherly NetworkingSite. Retrieved November 2, 2011 from http//www. switched. com/2009/01/27/facebook-overtakes-myspace-as-most-popular-social-networking-sit/ Blodget, H. (2010). Ignore The ScreamsFacebooks Aggressive Approach Is Why It Will shortly Become The Most Popular Site In The World. Retrieved November 2, 2011 from http//articles. businessinsider. om/2010-05-17/tech/29991115_1_ceo-mark-zuckerberg-facebook-s-pr-innovation Business model re-engineering. (n. d. ). Retrieved October 27, 2011 from AMR International http//www. amrinternational. com/services/corporate_and_business_unit_strategy/business_model_re-engineering Cauwels, P. , Sornette, D. (2011). Quis pendit ipsa pretia facebook valuati on and diagnostic of a smatter based on nonlinear demographic dynamics. Retrieved October 30, 2011 from Cornell University Library http//arxiv. org/abs/1110. 1319 Dwyer, C. , Hiltz, S. , Passerini, K. (2007). Trust and secretiveness Concern Within Social Networking