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MySpace Not Dead Yet, But Almost

by Team Caffeine · 0 comments

lori r taylor, revmediamarketing, social media, social media marketing, branding, product branding, networking, oneclicksocietyBelieve It Or Not
Here’s a jaw dropping fact: In 2005, NewsCorp bought MySpace, then the world’s fastest growing social media network, for more than $500 million. last week they sold it to an online advertising firm for just $35 million (or about what Donald Trump spends on Sunday breakfast.) In 2005 MySpace had about 20 unique users each month. Today it is losing more users than any other social media network.

What’s Next?
Justin Timberlake is among the group which just bought MySpace, but it is hard to image that is enough cache to turn the company around. They have carved out a small niche by catering to musicians and music-lovers, but even that may not be enough as other social media networks begin offering their own take on music. MySpace earned more than $130 million in ad revenue last year, and sees about 35 million unique users each month. But compared to Facebook which sees about 150 million unique users each month, that seems paltry at best.

The company which bought MySpace has not yet released their plan for the former social media giant. Just about everyone in the tech industry is watching closely to see if this time, maybe, they really can turn the ‘Titanic’ around….

What an amazing story, especially in light of the current fervor about social networking. Since investors love to extrapolate growth stories as far as the eye can see, if social networking firm MySpace had gone public 3-4 years ago at its peak membership, it might have fetched a $15-$25B type of valuation (many predict Facebook will come public at over $100B less than half a decade later). Instead MySpace sold out to News Corp (NASDAQ:NWS) for what appeared to be a paltry $580M. News Corp sold the firm for $35M yesterday – astonishing numbers when web 2.0 companies with even a hint of social networking are going IPO at multi billion valuations.

At $605M, with many investors giving these companies 15-20x sales valuations, you are talking $9-$12B valuation minimum …. and that’s before the first day IPO spike to catch the ‘next great unbeatable story’. It’s really all about timing, sometimes for better (as Marc Cuban could attest to)… sometimes for the worse (Lycos anyone?).

* MySpace, the long-suffering Web site that the News Corporation (NASDAQ:NWSA) bought six years ago for $580 million, was sold Wednesday to the advertising network Specific Media for roughly $35 million. The News Corporation, which is controlled by Rupert Murdoch, had been trying since last winter to rid itself of the unprofitable unit, which was a casualty of changing tastes and may be a cautionary tale for social companies like Zynga and LinkedIn (NYSE:LNKD) that are currently enjoying sky-high valuations.
* The sale closes a complex chapter in the history of the Internet and of the News Corporation (NASDAQ:NWSA), 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.

Click here to read the entire article.

Team Caffeine

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