A day after Google launched its answer to Facebook, News Corp sold MySpace, the social networking site displaced by Facebook, for $35 million – $545 million less than it purchased it for in 2005, the New York Times reported.
“The sale closes a complex chapter in the history of the Internet and of News Corp., which was widely envied by other media companies when it bagged 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 that soon soared to 70 million, but the network could not keep pace with Facebook, which overtook MySpace two years ago,” the New York Times noted.
When the sale first went through there was debate on whether the price was too high, but just one year later when its traffic doubled the question was changed to was it acquired too cheaply. Shareholders in Intermix, the company that owned the social platform even filed complaints for breach of fuduciary duty. Meanwhile, its valuation tripled and was being seen as one of the best acquistions of an online property. Unfortunately the increase in popularity of Facebook and its opening to the general public and not just college students soon saw it soar pass MySpace which at the time was the sixth most visited site on the web.
“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 revenues 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,” according to the New York Times.
What will be done with MySpace by its new owner Specific Media – a global interactive media company geared to selling advertising across various platforms – has yet to be determined. But MySpace let most of its 400 employees know they were being let go today and their CEO Mike Jones will be leaving.
News Corp recouped its purchase costs from Google through an advertising agreement and still gets about 35 million visitors a month. No doubt if Specific Media has an alternative to Google advertising, the sale will also impact Google’s numbers including their search market share and ad revenue.
“Myspace is a recognized leader that has pioneered the social media space. The company has transformed the ways in which audiences discover, consume and engage with content online,” said Tim Vanderhook, Specific Media CEO. “There are many synergies between our companies as we are both focused on enhancing digital media experiences by fueling connections with relevance and interest. We look forward to combining our platforms to drive the next generation of digital innovation.