Thursday, June 30, 2011
More Details on MySpace Sale
While complete terms of the deal were not disclosed (and News Corp will continue to own a small stake in the company), Specific Media has brought in JT (Justin Timberlake) as part owner and active player in MySpace's future according to this New York Times story:
The sale closes a complex chapter in the history of the Internet and of the News Corporation, which was widely envied by other media companies when it acquired MySpace in 2005. At that time, MySpace was the world’s fastest-growing social network, with 20 million unique visitors each month in the United States. That figure soon soared to 70 million, but the network could not keep pace with Facebook, which overtook MySpace two years ago.
As users fled MySpace, so, too, did advertisers. The market research firm eMarketer estimates that the site will earn about $183 million in worldwide ad revenue this year, down from $605 million at its peak, when the site introduced many Web users and many advertisers to the concept of social networking.
“It’s a shame that MySpace’s value has diminished so severely since the acquisition; MySpace’s pioneering of social networking (now referred to as social media) will always be revered as igniting a new medium,” Richard Rosenblatt, the chairman of MySpace at the time of the sale to the News Corporation, said in an e-mail.
Instead of envy, the News Corporation’s bet on MySpace now provokes punch lines. Tom Freston, who was fired as the chief executive of Viacom in part for failing to buy MySpace, joked in an interview with CNBC earlier this year that “I’m still waiting for a thank-you note” from the Viacom chairman, Sumner M. Redstone.
Mr. Freston, who was in Iceland on Wednesday and said he was smiling at the news of an impending MySpace sale, declined to comment.
News Corporation executives declined interview requests on Wednesday.
It is not clear whether MySpace itself was profitable for the company. The division that houses MySpace and other digital properties has turned a profit only once in the last six years. An advertising deal with Google helped the company to recoup what it spent on MySpace in the first place, but the site became a burden on the company’s earnings; by last year executives were calling the losses unacceptable. Mr. Nathanson called the site a “headache.”
What doomed the site? Lee Brenner, the former director of MySpace’s Impact section who is now the publisher of HyperVocal, wrote in a blog post Tuesday, “I’m sure most employees (former or current) will argue that it was poor management, or a need to hit revenue targets once News Corp. took over, or a bottleneck in the technology department, or lack of resources given to their division, or a poor public relations effort, etc., that set the course of MySpace’s downfall.
“Any number of these could be true,” he continued. “I suppose we’ll never know for sure. It is most likely a combination of these factors, along with a ‘low attention span’ public. It probably didn’t help to be doing business, and trying to grow, along with all of these issues, in the midst of a global economic crisis.”
MySpace has tried to reboot itself several times, most recently as a social destination for music, movies and other media. It has not been abandoned altogether: it still has 35 million visitors a month in the United States, according to the measurement company comScore. Facebook has 157 million visitors a month in the United States.