News Corp.'s Miller: MySpace Fell Behind

Written by Ryan Lawler

Monday, September 21. 2009 at 12:50 PM EDT Post a comment

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NEW YORK -- MySpace fell behind other social networks on innovation, says the new CEO of the digital media group at parent company News Corp. (NYSE: NWS) But the company is working to regain its mojo by putting a new team in place.

At a keynote discussion this morning at OMMA Global, Jon Miller, who took over News Corp.'s digital operations back in April, said he is working to remake the company as an innovator on the technology and product fronts.

"There's no question that [MySpace] fell behind on the technology front and on the product front," Miller said. "This business is one of continual innovation, and we're very focused on building a product and technology organization that innovates."

While MySpace lagged on the innovation front, rival social network Facebook has posted impressive user and revenue growth, now touting more than 300 million users and profitability. In July, comScore reported that Facebook generated 87.7 million unique visitors, while MySpace saw its unique visitor count fall 68.4 million.

While companies like MySpace need to innovate, Miller says the trick is to marry technology innovation with media. "I don't think it's an either/or discussion," Miller said.

Miller singled out Hulu LLC as an example of a great Web application married with great media content. The online video portal -- which is a joint venture from News Corp., NBC Universal, and now Walt Disney Corp. -- has been one of the fastest growing video sites on the Web, based mostly on its library of full-length film and TV programming.

Miller may have some work ahead of him at MySpace and News Corp., but he sees positive signs for digital media as a whole.

"There are two great things going on. First, people are back in the equation," Miller said. "In the earlier part of the decade, it was all about the algorithm and what the algorithm could do."

Miller said the second major trend is the rise of traditional media companies moving online. "The so-called traditional media is trying to embrace this, but they're trying to figure out how," he said. "They might be slow to the party, but it's a big deal that they're here."

Just as importantly, there's room for growth in the online ad market. Miller said there was still about a three-to-one gap between the amount of time that users spent online versus the amount of money spent by online advertisers.

There's also a growing interest in producing paid content online. Explaining why more users may be willing to pay for online and mobile content, Miller said that an increase in quality could lead to more user adoption of premium content.

"Before you could get to paid content, you need to get to premium content," he said.

At the same time, he said that content owners shouldn't expect to be able to start charging for premium content that users previously got for free.

"You have to provide additional value in the process. You can't say, 'hey you got this for free, but now we're going to charge you for it.' If you do that, you're taking things away from the consumer," Miller said.