The web has been full of rumors about the selling of MySpace for a long time. And it finally happened: MySpace has been sold, to an advertising network called Specific Media for a mere $35 million. CEO of MySpace Mike Jones will leave the company, and it seems that a good portion of the staff will do the same.
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.”
Specific Media LLC will pay $35 million in cash and stock for the site, according to people familiar with the matter. This is a major comedown for a property that was acquired for $580 million just six years ago.
Specific Media, which sells ads on other websites, said it united up with actor and pop star Justin Timberlake to “rebuild and reinvigorate” Myspace by making it a place to consume media and connect with entertainers, a strategy several rounds of Myspace managers have pursued unsuccessfully for years. It is known that Mr. Timberlake invested an undisclosed amount in the company.
According to MySpace, we will know more about Specific Media’s and Timberlake’s vision for the company later this summer. Timberlake said in his statement: “There’s a need for a place where fans can go to interact with their favorite entertainers, listen to music, watch videos, share and discover cool stuff and just connect.”
“MySpace has the potential to be that place. Art is inspired by people and vice versa, so there’s a natural social component to entertainment,” he added.
Timberlake and Specific Media plan to focus the site on entertainment, they aim to make it the place to go for original shows, videos and music. They also plan to launch “socially-activated advertising campaigns,” according to the statement, which would allow users share their favorite ads with friends.
Specific Media CEO Tim Vanderhook said in an interview that the company aims to build a “digital media company on par with Yahoo, AOL, Facebook and all the other big names out there.” Myspace gives Specific Media its own real estate for selling ads and a trove of data to use to target those ads.
News Corp. started dropping hints it wanted to ditch Myspace last year. In November, Mr. Carey, News Corp.’s COO, called losses unsustainable. In February, Mr. Carey said “the plan to allow Myspace to reach its full potential may be best achieved under a new owner.”
By May, Myspace had 34.9 million unique monthly visitors in the U.S., compared with 67.2 million in May 2010, according to market researcher ComScore. In that same time, Facebook vaulted to 157.2 million from 130.3 million.
“Myspace was like a ghost town in the Wild West,” says Jennifer Jacobson, a social-media expert and author on the topic. “It proves that if you lose sight of what customers want, you risk losing relevance very fast. You have to keep the customer experience meaningful.”
The discrepancy is stark when comparing ad revenue worldwide. In 2009, Facebook passed Myspace for the first time, $738 million to $470 million. This year, eMarketer says, Facebook will haul in $4.1 billion to Myspace’s $184 million.
Facebook is gearing up for an initial public offering in 2012 that could push its value to $100 billion — roughly 30 times the sale price for Myspace. [via Mashable, The Wall Street Journal and USA Today]