BusinessWeek’s Jon Fine takes Rupert Murdoch tell-all author Michael Wolff out for dinner. Michael then reveals the secret he didn’t put into the book: why Murdoch’s News Corp (NWS) is trying so hard to ditch MySpace:
MW: What [MySpace] understand[s] is their $25 billion to $30 billion valuation.—
JF: But that’s [expletive]. We both know that’s [expletive].
MW: It doesn’t make any difference. That’s gonna go down. What they are looking at is the distinct possibility that it can go down to nothing.
JF: How do you find that plausible? It’s not even a utility like—-the anti-Google argument is this: If someone builds a better search engine tomorrow, I have zero switching costs. If I am on MySpace, I have 500 friends. I use it to communicate with people. You can’t just move. It’s a pain in the arse. All your stuff is there.
MW: But that’s exactly what they said about AOL.
JF: You did not develop that relationship with AOL.
MW: You did. You exactly did.
MW: Your email was there, because your friends were there. I mean, AOL operated actually as the community of its day. There were all of those—
JF: But besides the email and, OK, the—
MW: There were the infinite number of chat rooms. Layer upon layer upon layer of sex chat rooms.
JF: Of course. And I give you credit for having pointed to that as the secret driver of its success. But, all you need is a different chat room. You don’t have pictures up [on AOL]. You don’t have your history up there. You don’t have—
MW: It doesn’t matter. What they saw at the time was that [users] were absolutely wedded to AOL. That was Time Warner’s bet on that.
JF: AOL was monodimensional in a way that MySpace is not. I don’t think that’s particularly debatable.
MW: I don’t think that’s true. I think it is–if you’re on MySpace now, you’re a [expletive] cretin. And you’re not only a [expletive] cretin, but you’re poor. Nobody who has beyond an 8th grade level of education is on MySpace. It is for backwards people.
JF: [unsuccessfully stifling laughter] I don’t mean to get all Murdoch’s-kids on you [an obscure reference to an earlier part of the conversation], but if you are in a band, you are on MySpace. You have to be on MySpace. That’s a powerful driver. And second of all– if I am to accept your reasoning, even though I don’t–as the success of [News Corp’s British tabloid] The Sun will tell you, there are lot of cretins out there and you can make a lot of money off cretins. By appealing to their essential–
MW: No! That is the difference. And that is one of the interesting points of Murdoch. He wants to make money off of what he rightly saw as a rising lower class. He came to this country and he sees, that’s just not really true. No one really identifies with being lower class [in the US]. As soon as it comes to you—’I am lower class’–you run, and you have to rehabilitate all of your aspirational identifiers.