What do you have to say about Tumblr's success? Not only do they allow you to do custom HTML, but they encourage it and show you how
Creating a custom HTML theme | Tumblr
I'm not saying that layout isn't important, but the whole basis of your argument ignores the fact that people still love freedom and creativity. The competitive market turned Myspace into more of a niche product, but instead of innovating and building off its opportunity to capitalize off being what Facebook isn't, it tried to become more like Facebook. They had the chance to gather the following that Tumblr has, but they blew it and now have to occupy a smaller niche as a music website which still has to compete with Tumblr, Facebook, and now Soundcloud.
I don't know anything about Tumblr, so I can't comment on it.
It's my experience, that when you give consumers too many options, and too much free reign, that's when things go south, because they inevitably find a way to fcuk it up.
Myspace allowed the competitive market to even compete, by not innovating. Facebook was once a niche product, strictly for college kids. If you didn't have a .edu address, you couldn't even sign up.
Myspace had no clear cut direction, no real concept of WHAT it wanted to be for it's customers. They tried to be everything to everybody, and ultimately they failed. Myspace got to be very annoying, with all of the crazy code, custom layouts and just craziness on everybody's page. It became very hard to navigate and I think that's what ultimately drove people away.
Plus the fact that they had no good way of implementing micro level security features. That was a biggie too.
Facebook kept it simple. Facebook from it's inception has always had a clearly defined concept of what it wanted to be to it's users, and what purpose it wanted to serve, and it's never really tried to stray from that.
Facebook really doesn't give the users many options as far as presentation of their profile/space. You get what Facebook gives you. Yeah when they make an update, you're gonna b*tch about it for a little bit, but then you're gonna get used to it.
I think Myspace's real opportunity for a resurgence was in the music space. I thought that was a great idea, that was never implemented properly. It tried to almost become iTunes, instead of catering solely to the independent market, which was dominating myspace anyway.
That's where they failed.