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News Corp Sells Ailing MySpace To Justin Timberlake

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News Corp has confirmed the sale of struggling social network MySpace to Specific Media and Justin Timberlake

Media conglomerate News Corporation has today confirmed its sale of social network MySpace to digital media company Specific Media, and singer/actor Justin Timberlake. As part of the agreement, News Corp will take a minority equity stake in Specific Media. Additional terms of the deal remain undisclosed.

“Myspace is a recognised 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,” said Vanderhook, adding the usual guff about “driving the next generation of digital innovation”.

News Corp cuts its losses

News Corp, which bought MySpace for $580 million in 2005, announced in February that it intended to sell the company by the end of its fiscal year (30 June). The media conglomerate had hoped to rake back around $100 million (£62m) from the sale, but rumours suggest that MySpace is has only fetched around $35 million (£22m).

Specific Media, which helps marketers buy digital ads across web, mobile and TV platforms, was yesterday reported to be one of two final contenders for the site, along with private-equity firm Golden Gate Capital. The buyout gives Specific Media access to MySpace’s 34.9 million monthly global visitors for ad targeting, and will enable the company to sell its own ad space.

As part of the deal, pop singer Justin Timberlake, who played Napster co-founder Sean Parker in The Social Network, a movie about Facebook, will take an “ownership stake” in MySpace and work with Specific Media.

The company said that Timberlake will play a major role in developing the creative direction and strategy for the company moving forward, supported – according to Vanderhook – by a staff of six in the MySpace offices.

“There’s a need for a place where fans can go to interact with their favourite entertainers, listen to music, watch videos, share and discover cool stuff and just connect. MySpace has the potential to be that place,” said Timberlake. “Art is inspired by people and vice versa, so there’s a natural social component to entertainment. I’m excited to help revitalise MySpace by using its social media platform to bring artists and fans together in one community.”

Facebook stole the thunder

MySpace first appeared in 2003 and, by the time Facebook (then known as thefacebook.com) launched the following year, it already had a million members. By the end of 2004, Facebook had reached the million mark but MySpace had rocketed to five million members. Facebook continued to trail behind MySpace until April 2008, by which point MySpace subscriptions had begun to flatten out.

This prompted a major development programme by News Corp, which started to pile in new features to make music more accessible and to allow customisation of its pages. However, rather than popularise the social network, the extra features started to slow down page access speeds and, gradually, people began to leave MySpace and switch to Facebook.

Since 2008, Facebook has surpassed 500 million members, but MySpace has remained stuck around the 125 million mark (see graph below). According to comScore, this number is eroding fast and the unique visitor rate has decreased in the past year to around 60,000 last February.

MySpace will be shedding around half of its 500 members of staff as part of the deal, following a 30 percent staff reduction in April 2010, and a further cut of 47 percent in January 2011.