The Rise And Fall Of An Internet Giant : Planet Money There was a brief moment — post-Friendster, pre-Facebook — when MySpace was a big deal. How did that happen? And why was the moment so brief? The answer involves porn, spyware, and total ignorance.
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The Rise And Fall Of An Internet Giant

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The Rise And Fall Of An Internet Giant

The Rise And Fall Of An Internet Giant

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BARACK OBAMA: Today, we are reminded that as a nation, there is nothing we can't do when we put our shoulders to the wheel, when we work together, when we remember the sense of unity that defines us as Americans.


SCAPEGOAT WAX: (Singing) Sleeping on the steps, waiting for the day to begin.


Hello, and welcome to PLANET MONEY. I'm David Kestenbaum.


And I'm Jacob Goldstein. Today is Tuesday, May 3.

KESTENBAUM: Today on the podcast, we are replaying one of our favorites about how two experts in spyware and porn launched what became, for a while at least, the most popular social networking site in America.

GOLDSTEIN: But first - the PLANET MONEY Indicator, David, from me. Today's PLANET MONEY Indicator is 3.25 percent. I'm sorry to give you what on its face is a boring PLANET MONEY Indicator after that drum roll. But it is kind of boring on its face. It's the interest rate - the yield on 10-year treasury bonds. It's pretty low by historic standards. But this is right in the range where the 10-year Treasury yield has been for a long time now. But this number - it's really interesting to me right now, this week, in light of how much we've been hearing about the debt ceiling.

KESTENBAUM: Because it seems to contradict the story coming out of Washington - the story in the newspapers about the debt ceiling, which is that, oh, my God, the clock is running. If Congress doesn't raise the debt ceiling in time, maybe the United States will not be able to pay its debts. Or maybe bond investors will freak out and demand higher interest rates if they want to lend money to the United States - demand higher interest rates when they buy U.S. bonds.

GOLDSTEIN: This is exactly the narrative explicitly, sometimes implicitly. But when you step back and take a look at what bond investors are actually doing - when you take a look, say, at the 10-year bond yield - the key, you know, benchmark for U.S. debt, you do not see any freak out at all. You basically see investors all around the world saying, you know what? This is, like, a bunch of political noise coming out of Washington. We're really not worried about it. We're basically going to ignore it. Bond yields are going to be boring as always.

KESTENBAUM: Thank you very much.

GOLDSTEIN: Thank you.

KESTENBAUM: OK, on to the show. So we had a podcast recently about Groupon. There have been news reports that Google was offering to buy this coupon company for billions of dollars. And I kept having this thought - are my future kids going to be using Groupon, or will they be like, Daddy, what was Groupon? And I'll say, oh, it's this weird coupon thing back in 2011. It was really popular.

GOLDSTEIN: And today, we have one of those from the history books. Our youngest listeners may not remember MySpace. But a few years ago, it was actually a big deal.

KESTENBAUM: Yeah. In 2006, 2007, 2008, according to the Internet, MySpace was the most popular social networking site in America. And then, also according to the Internet, it got overtaken by Facebook and had to cut its staff by something like a third.

GOLDSTEIN: Our colleague Adam Davidson spoke with Julia Angwin back in 2009 about MySpace's boom and bust. She's the author of a book called "Stealing MySpace: The Battle To Control The Most Popular Website In America."

KESTENBAUM: Julia told Adam that the founders of MySpace, Chris DeWolfe and Tom Anderson, they came to the project not as rocket scientists from Silicon Valley but as experts in things that we all hate about the Internet - pop-up ads and scams.

GOLDSTEIN: Basically, they would look at the Internet, see how other people were making money and copy that.

ADAM DAVIDSON, BYLINE: They did porn sites and spyware. In fact, she says they had perfected these things to the level of evil genius.


JULIA ANGWIN: Right after 9/11 when everyone was in this patriotic fervor, they came out with a little cursor that would make your - where your mouse shows up on your screen look like an American flag. And so all these people downloaded the thing - like, oh, I'm showing my, you know, patriotism. And actually it was spyware that was tracking your every move on the Internet. And...

DAVIDSON: So by downloading the cursor software, you're actually installing a software program that is tracking you.

ANGWIN: Yeah. And not only that, it's serving ads to you. So when you try to go to Google and search for, you know, cars, it serves up a pop-up ad on top of what you're trying to find - a car ad.

DAVIDSON: Right. And this company - what was it called? It was...

ANGWIN: eUniverse.

DAVIDSON: eUniverse. It's one of these classic stories where they just were - they got a lot of investor money - and sort of you look and think, why would anyone give them any money? And, you know, it sounds like they had presentations that were - you know, sounded like gobbledygook about how, oh, we're on top of the future - synergy. They were basically selling remote control cars and face cream.

ANGWIN: Oh, yeah. There was - actually, a lot of their money came from wrinkle cream. So they had these ads called Better than Botox, which you probably actually distantly recall seeing somewhere on the Internet because they were plastered everywhere. And they were supposedly like a free trial of some wrinkle cream that was going to remove wrinkles from your face. But once you sent in your credit card for - supposedly for authorization purposes, this wrinkle cream kept coming, and it was every month. And you couldn't get it to stop. And there were just, like, thousands of complaints with the Better Business Bureau. But they were minting money off of this wrinkle cream.

DAVIDSON: So in their hunt for the next porn, spyware opportunity, they noticed that everybody is trying to create the next social media platform.

ANGWIN: Right.

DAVIDSON: And there's all these people in Silicon Valley who have all sorts of theories about how human society is structured and technical ways to amplify the natural connections. And, you know, anthropologists are writing dissertations on this topic. These guys are just - what are they thinking?

ANGWIN: Copying. So they're not thinking at all. They're just - they are - Tom, actually, who had run a porn site on the side, was really famous for trolling around the Internet and particularly for looking for cute girls. So Friendster was a hot Silicon Valley property where there were a lot of cute girls, including one named Tila Tequila, who's managed to crawl her way up from - I think she's probably still a D-list celebrity, but maybe C (laughter) - by virtue of MySpace. So he saw that there were people like her on Friendster. And he made it his mission to recruit them to a copycat site, MySpace, which was basically the same as Friendster in all respects except that it was more permissive. So if Tila Tequila wants to pose sort of wearing barely any clothing - she kept getting kicked off Friendster. So MySpace was like, sure (laughter).

DAVIDSON: Do whatever you want.

ANGWIN: Yeah. Bring it on.

DAVIDSON: I mean, one of the things that's the most fascinating is how they just happened to be at a moment where their complete technical incompetence was the best possible thing.

ANGWIN: It was, actually. It's a great story about how it's both their biggest advantage and their worst enemy, which is often the case, right? My best traits are also my worst. So, you know, they were totally ignorant of sort of the technical challenge of what they were doing. So they dove right in - sort of ignorance is bliss. And they were quick to make changes. So when the users said they wanted a certain feature, they threw it out there. Even though it totally sucked, and it didn't - it was really buggy....

DAVIDSON: And they were constantly crashing the whole system.

ANGWIN: And they were constantly crashing the whole system. But they didn't care. And so they were able to just move quickly and create - and they didn't waste time perfecting features that weren't going to be popular. So they basically threw everything out there. And the ones that turned out to have some traction, then they would spend time working to perfect those. So it was actually kind of a good strategy. In the end, when they became a big site, it turned against them because they couldn't keep it up, and they couldn't keep up with Facebook on a technical level.

DAVIDSON: Certainly for me - I remember I was in Iraq when MySpace hit big. And all these soldiers were on MySpace. They loved MySpace. And so I remember just going - you know, I had pretty good Internet connection. You go to any Army base in Baghdad or in Iraq, and there's - you know, certainly by the - after the Americans had been there, like, eight months or so, almost every Army base had a little Internet cafe, usually actually staffed by Iraqis. It was sort of awesome. And they were all there on their MySpace pages.

ANGWIN: Right.

DAVIDSON: And so I checked it out, and I - it's just too chaotic. It's just - I didn't know where my eyes should look. It's ugly. It's difficult. And when I saw Facebook, it made more sense to me. It's more - it's more calming. I'm not a huge Facebook user, but at least I know what's going on. I'm able to interact. But my understanding is that there is a bit of a age and class issue with the division.

ANGWIN: Yeah. I mean, look; MySpace was designed - I mean, I call it the nightclub strategy versus the Ivy League strategy. So MySpace was trying to create that feeling of disorientation that you have when you go into a nightclub. And they wanted to stock it with models and musicians, which is also what you're looking for in a nightclub. And so it has all that aspects of a nightclub - the flashing lights and the disorientation and the kind of crazy, where should I look and lots of, like, people wearing strange clothing. So that's their vibe. That's their market.

DAVIDSON: And kind of anything goes.

ANGWIN: And anything goes, right. And, you know, I think that the strategy is really deliberate, and it does appeal to a different segment.

DAVIDSON: So I felt like - as someone who tries to do narrative journalism - your biggest challenge is everyone's a jerk. I mean, the most shocking thing that you accomplished is there's a good chunk of the book where the guy you're rooting for - the guy you like the most - is Rupert Murdoch.

ANGWIN: (Laughter) I know. That is really - nobody's put it that way, but you're right. It's pretty funny.

DAVIDSON: Because you have these two guys, Tom and Chris, who found it. And you sort of think they hit the lottery. I mean, they...

ANGWIN: Totally.

DAVIDSON: ...Happened to copy the right thing at the right moment, and they all became insanely rich, but they're all battling each other in these ugly battles to make sure that each one was more rich than the other guys.

ANGWIN: Yes, totally.

DAVIDSON: And then - and we don't - there's a lot of fascinating nuance about Rupert Murdoch buying MySpace and how - just all the personal politics behind the scenes, but basically there isn't a hero here.

ANGWIN: Yes, it's a challenge. And my editor at Random House was concerned about that. And I agreed with him that it was a hard book to write because there were no heroes, but I also felt like every character - you just couldn't make these people up. They were so great. I mean, you just - as a journalist, when you stumble on this kind of cast of characters, and each one of them with their strange - you know, Tom with his Asian porn fetish, and - you know, you just - you can't help - you have to write it and just hope that the reader will come along for the ride because they're just equally fascinated. It's very voyeuristic, actually, the way that MySpace is.

DAVIDSON: Right, and I got to say, it total - it does work. It, ultimately, for me, made me feel good about myself because these guys are much richer than I am - insanely rich - but they're such jerks. And they all get screwed in different ways. And it's very satisfying.

ANGWIN: (Laughter).

DAVIDSON: And I would not have cared when I learned that Christa Wolf was recently fired by Rupert Murdoch - if I hadn't read your book, I wouldn't have even noticed I did - wouldn't note - but I was really happy to hear that. He still has hundreds of millions of dollars and I'm sure he's doing fine, but I don't think he had a good month. And that - I hate to say it, it makes me a petty person, but I'm a pleasurably petty person.

ANGWIN: (Laughter).

DAVIDSON: So I was struggling with what the lesson here is. You know, MySpace was doing really really well, and then, it has stopped doing as well, but it still is a very successful site, is that right?

ANGWIN: Yeah. I mean, it's on a very steep decline right now. They're losing, you know, millions of members a month, which is a bad sign. However, they're trying to double down on music, which is their core. Musicians still like the idea of having their page on MySpace and their friends. So if they can hold on to that niche, I think they could remain relevant, but, honestly, it's a challenge. They're in a very bad place right now.

DAVIDSON: So I guess the lesson is - I mean, is - or let me ask you if the lesson is - if you really want a longtime success, do the Silicon Valley thing. Be smart, be careful, be excellent. If you want to get really rich really quickly, do the Hollywood thing and just copy everyone else's ideas...

ANGWIN: You know...

DAVIDSON: ...And do it sloppily.

ANGWIN: Actually, I came to a different conclusion. So I think you're sort of right there, but I also think that - one thing I realized was that the Silicon Valley thing was a bit of a myth. So I - as I thought about it more, I realized you know what? Like, Steve Jobs, he's not, like, such a great programmer. He's actually a great marketer, right? And Bill Gates, he wasn't the greatest programmer. He was also a great - I would say, he was a great marketing strategist.

DAVIDSON: And Microsoft is certainly famously a copier of other people's ideas.

ANGWIN: Exactly. So in a way, what I realized was that I had a false idea about what Silicon Valley was. The myth of Silicon Valley is about technical competence, but the reality is that marketing still makes a huge difference. And so I kind of came to the conclusion that all these guys are hucksters who really crossed the line to brilliance.


SCAPEGOAT WAX: (Singing) And making all the sense is everything I don't believe. I can't...

KESTENBAUM: So Jacob, since that interview in 2009, MySpace is not doing any better, in fact, it's doing worse. News Corp, which owns MySpace, is trying to sell it for a $100 million. They bought it for a lot more in a deal valued at $750 million.

GOLDSTEIN: As always, let us know what you think of the podcast. Check out our Friendster page or visit us...

KESTENBAUM: We don't have a Friendster page.

GOLDSTEIN: We have a blog at We do have a Facebook page - sorry, MySpace. And you can email us at

KESTENBAUM: I'm David Kestenbaum.

GOLDSTEIN: And Jacob Goldstein. Thanks for listening.


SCAPEGOAT WAX: (Singing) Move along is all you heard. I'm sure you're fine right there, but if you're bad with words, we have a space to share, a space to share.

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