Twitter jumped the shark, now it looks like MySpace

Elon Musk has good reason to laugh at those naysayers who predicted Twitter would crash as soon as he laid off half of his workforce. Without engineers to make it work, critics reasoned, the platform would crumble. Two months later, the social media site is still alive and maybe even grown.
Its disappearance is however always possible. Not because there is a lack of talent for detecting software bugs or running servers, but because his time may have come. Recent gimmicks include reinstating banned accounts, introducing blue ticks for all, and pseudo-democratic political decisions. At first glance, none of this alone portends impending doom, merely the whims of a billionaire showing off his new toy.

But history can show it the moment Musk jumped on the shark. This term comes from the 1970s American sitcom Happy Days, which starred Henry Winkler as the leather-jacketed Fonzie and Ron Howard as the freckled Richie Cunningham. At the time, the series was one of the highest rated shows on American television. By season five, however, its writers were desperate for new ideas, so they asked The Fonz to do a waterski jump over a shark. This episode, while a ratings hit, showed just how wacky the producers had become in chasing attention.

The show ran for six more seasons, but audiences began to lose interest and its ratings dropped dramatically. Jumping the Shark didn’t kill Happy Days, but it did signal a spike in relevance and popularity.

Thirty years later, a similar desperation could be seen on the faces and checkbooks of News Corp executives. Eager to enter the new trendy arena of social media on the Internet, the multinational conglomerate of Rupert Murdoch spent in July 2005 580 million dollars to take over MySpace.

At the time, MySpace had 16 million users, making it the fifth most visited website in the United States and the number one social networking platform in the world. Murdoch saw it as a chance to drive users to his other properties, including Fox-branded news, sports and movie websites. (Disclosure: Two years later, News Corp. bought Dow Jones and The Wall Street Journal, which compete with Bloomberg in the financial news and information market.)

Beyond millions of users, the purchase gave Murdoch’s team what they desperately needed: chic. Instead of buying physical newspapers or watching cable news shows, young people of this era spent more time in front of a computer writing their own content and sharing updates with friends. His humble roots in Adelaide, Australia, coupled with decades in London’s cutthroat newspaper market, had made Murdoch rich and powerful, but that didn’t make him cool. For that, he turned to Los Angeles-based web wizards.

Although MySpace continued to grow, reaching 100 million global users a year later, it was losing its novelty value to a new hip startup in a Harvard University dorm. In 2008 Facebook overtook MySpace in web traffic.

Musk could learn a lot from Murdoch’s mistakes, but he probably won’t.

Eager to monetize MySpace and reach a stated goal of $1 billion in ad revenue by 2008, News Corp. started forcibly injecting advertisements to site users. Tensions have escalated between the website’s founders and the team Murdoch has brought in to run it. Innovations to make it more usable, such as reducing the number of pages to load, were negated by the new owner’s desire to get the most out of the deal. Before long, it was apparent that those who knew MySpace inside out were being usurped by outsiders buying it and wanting to assert their right to exploit it as they saw fit.

Users spend less and less time on MySpace and more and more on Facebook. Years later, Murdoch himself would recognize this as the beginning of the end.

Musk’s predicament is no different.

After shelling out $47 billion, not all of his own money, the Tesla Inc. and SpaceX chief executive funded the deal with $13 billion in debt that requires about $1.5 billion in interest payments annual. By comparison, Twitter posted $5 billion in revenue in 2021, with a net loss of $221 million and negative free cash flow of $379 million. The second richest man in the world has no choice but to hastily monetize his new asset, unless he pays this debt out of his own pocket.

Yet Twitter’s challenges and demise may have begun even before Musk made his half-hearted offer in April. The site lags a long way behind rivals Facebook, Instagram, YouTube, WhatsApp and TikTok, with just 3.5% of global users naming it as their favorite social media platform, according to market researcher GWI.

Additionally, over 75% of Twitter’s audience are regulars on major rivals’ platforms, but the same can’t be said upside down: only 54% of Instagram users and 56% of TikTok are also active on Twitter. If needed, those in the Blue-bird app have plenty of other places to land. What’s more, it trails in time spent at an average of just 5.5 hours per month globally, behind YouTube at 23.4 hours and TikTok’s 22.9 hours, according to data compiled by HootSuite and We Are Social. .

But perhaps the biggest concern is one that Murdoch himself pointed out.

While Musk’s eye-catching takeover has undoubtedly garnered new fans and more engagement, that can only be fleeting. In fact, the average time spent on Twitter fell 15% in the third quarter of 2021 and 6% in the last three months of that year, shortly before its takeover became increasingly popular. crowds, according to data compiled by Bloomberg Intelligence.

If this downward trend returns, as marketers and researchers predict, then Twitter has already peaked. Sometimes stunts and one-time events attract people. But it’s only so often that a teenage activist can educate a bald musclehead, or the site owner can conduct a fanciful opinion poll.

The rest of the time, Twitter has a good chance of slowly slipping into insignificance — like a dude in a leather jacket jumping a shark.

© 2023 Bloomberg LP

---