Oh, How the Might Have Fallen! Myspace which ruled the social media in the early phase of the 20th century now finds itself in the doldrums. Purchased by NewsCorp in 2005 for an astronomical $ 580 million, Myspace has been shelved off at a drastically reduced price of $ 35 million, made up of a mix of cash and stock, to advertising company Specific Media on Wednesday. News Corp will continue to hold about 5 percent in the company.
The deal comes after a four-month bidding process in which a number of different possible buyers surfaced, including other social networking sites and private equity firms. The auction had been expected to fetch in the neighborhood of $100 million.
CEO Mike Jones will be leaving the company, and it seems so will a good portion of the staff.
Says Jones in an email: “In conjunction with the deal, we are conducting a series of restructuring initiatives, including a significant reduction in our workforce. I will assist Specific with the transition over the next two months before departing my role as MySpace CEO.”
The challenge to revive Myspace now lies with a Specific Media, which specialises in digital advertising, and Emmy and Grammy winning artist Justin Timberlake, who will take an ownerhsip stake. It is expected that Timberlake alongwith Specific Media will develop a creative direction and strategy for the company, though their vision for the site will only be unveiled in an exclusive press conference scheduled later this summer.
Founded in August 2003 by Chris De Wolfe and Tom Anderson, Myspace was conceived as a way for friends and fans to connect with one another as well as with their favorite bands and artists.
Myspace, a kind of musical version of pioneer social network site Friendster, fast became wildly popular with teenagers and young adults, who spent hours designing their own pages with their favorite digital wallpaper, posting photos and adding friends.
Myspace became the most popular social networking site in the United States in June 2006, and it continued to hold on to the position throughout 2007 until 2008. However by April 2008, according to comScore, Myspace was overtaken internationally by its main competitor, Facebook, based on monthly unique visitors. Since then MySpace has declined steadily and parent News Corp finally decided to sell it.
Quantcast estimates MySpace’s monthly U.S. unique visitors at 19.7 million as of May 2011. The site ranking of Myspace as of June 2011 was 80,as opposed to the number 2 position held by Facebook.
Commenting on the downfall of Myspace, Yahoo News said, “ It shows how quickly audience and investor tastes can shift in the world of social networking. Indeed, Wednesday’s deal contrasts sharply with the current frenzy over social media companies, including LinkedIn, Twitter and Groupon, among investors looking for the next big thing.”
Another of the hot start-ups, Zynga, an online social game company, plans to raise up to $2 billion in an initial public offering that could be filed by Thursday, valuing the company at $20 billion
For the quarter ended March 2011, News Corp reported a segment operating loss of $165 million, mainly due to declines at Myspace. It remains to be seen how successful Specific Media and Timberlake will be at their attempts to give a fresh lease of life to Myspace.