Once the most promising property in the emerging social media scene, MySpace – which News Corp bought in 2005 for US$580m – has been sold to online ads giant Specific Media for just US$35m.
It is understood that Rupert Murdoch’s News Corp had been hoping to attract a price tag of US$100m but it was not to be.
News Corp will retain a 5pc stake in the social networking site that lost its way.
It will serve as a harsh reminder to today’s hot social media properties like Facebook and Twitter that success can be fleeting if the wrong decisions are made.
A number of consortia had bid for MySpace, including founders Chris de Wolfe and Tom Anderson, as well as Activision CEO Bobby Kotick.
Specific Media specialises in brokering online advertising space and is one of the largest online advertising firms in the US with 79pc of unique US users, or 170.9m unique visitors.
MySpace CEO Mike Jones in an email wrote to his staff: “Today, we are announcing that MySpace will be acquired by Specific Media, one of the world’s leading online media and advertising platforms. Over the next few days, you will be hearing from the team at Specific, including their CEO, Tim Vanderhook, regarding their exciting plans for MySpace and how it fits in with the overall vision of their company.
“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,” Jones said.
At its peak, MySpace was the site of choice for music-oriented Generation Y early adopters, but failed to respond to the rise and rise of Facebook and its social graph strategy.
However, numbers of users began to slide, efforts to redesign and reinvigorate MySpace failed and in February, News Corp began the selling-off process.
The lesson is instructive and for players like Facebook, which has 750m users, responding to new platforms is the key to survival. It will be interesting to see Facebook’s response to Google’s arrival in the social space with its Google+ project, which appears to empower users with the ability to create multiple social graphs of their own designs.
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