Myspace social network was sold by Rupert Murdoch’s News Corporation to Specific Media. Justin Timberlake teamed up with this advertising company and they bought MySpace for $35 million. In 2005, MySpace was worth 17 times more.
Rupert Murdoch probably made his worst deal when he decided to acquire Myspace in 2005, paying an astonishing $580 million. The amazing growth of main competitor Facebook combined with a bad strategy it’s what led News Corp to selling the social network for only 6% what they paid for it.
The price is way below Murdoch’s expectations, The Telegraph reported he was hoping to obtain $100 million from the deal.
This transaction marks the slump that MySpace, founded in 2003, suffered in the last 3 years.
MySpace was launched as a small project by a few employees. They only needed 10 days to build the site. After the launch, it experienced enormous success and started gaining momentum. Those were the golden days, from July 2004 to July 2005, Myspace managed to grow with 1,400% to 17.2 million unique visitors/month according to comScore. Then, it was sold to News Corp in a $580 million deal. The inspiration and intuition of ‘Tom’ was incredible.
However, the social network began losing it 3 years later. They lost ground to Facebook which took the #1 spot on the market in December 2008 with 59.7 million users, while MySpace had 59.5. From that point, MySpace is history. While the network was experiencing a steady decline, Facebook has grown to unprecedented heights.
But why? What did Facebook to eat all the market pie?
The keyword is simplicity. MySpace started as a venue to share music, but now no one can really define its main purpose. Facebook came with a much improved interface, less ads, faster loading times (it is still taking ages to load a MySpace profile). It also introduced more transparency by displaying the real names of the users.
“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,” Timberlake declared. “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.”
Specific Media revealed that it plans to “evolve MySpace into the premiere digital destination for original shows, video content, and music,”.
Mike Jones, MySpace’s CEO, will leave the company along with many employees.
This is the email he sent to people still working for the company:
From: Mike Jones
Sent: Wednesday, June 29, 2011 11:26 AM
To: Myspace All
Subject: IMPORTANT COMPANY NEWS
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.
I wanted to take a minute to thank you all for the incredible experience it has been to lead this company and to work closely with all of you over the past several years. While I regret we won’t be working together at Myspace any longer, I am very proud of the work we have done here and believe we have performed with excellence – even under extremely difficult circumstances.
My time here at Myspace represents the most engaging and challenging time of my professional career. I have found our team to be comprised of the best people I have come across in our industry.
You can read the press release below. Once again, thank you for all of your hard work and dedication.