Timberlake part of group buying MySpace

2011-06-30 10:29
Los Angeles - Justin Timberlake apparently wasn't satisfied with just playing a social media impresario in the movies, so now he's becoming one in real life.

The pop star, who played Napster co-founder Sean Parker in The Social Network, a movie about Facebook, has joined Specific Media in buying its downtrodden rival, MySpace, from News Corp in a deal that closed on Wednesday.

Timberlake will have an office at MySpace's Beverly Hills headquarters and a staff of about a half dozen people working for him "around the clock" developing his ideas for the site, said Specific Media CEO Tim Vanderhook.

The partners are set to unveil their plans for reviving the flagging site in a couple of months.

"When we met with Justin and we discussed what our strategy was, we hit a chord with him," Vanderhook told The Associated Press.

"One of his passions is he really enjoys helping other artists and creating a community for people to really express themselves. I think we were blown away that we were able to get someone like Justin to be so excited about what we were doing."

Revitalising MySpace

The deal is for $35m, mostly in Specific Media stock, according to a person familiar with the matter. That's a small fraction of the $580m that News Corp paid for the site six years ago. The sale resulted in the layoff of about half of the site's remaining 500 workers, said the person, who was not authorised to speak publicly and spoke on condition of anonymity.

As part of the exchange, News Corp received a private equity stake in Specific Media and less than a five percent stake in MySpace.

With Timberlake's help, the buyers hope to revitalise MySpace and transform it into a destination for original shows, as well as bolster its already available video content and music. Vanderhook said the revamp will include additional investment in technology and maintain the right to stream music through the joint venture it has with major recording companies, MySpace Music.

"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," Timberlake, an Emmy and Grammy winning artist, said in a statement. "MySpace has the potential to be that place."

The sale closed a day before the end of News Corp.'s fiscal year, meaning it was able rid itself of about $250m in losses, estimated Barclays Capital analyst Anthony DiClemente.

Disastrous performance

Over the last 11 quarters, News Corp had cumulatively lost about $1.4bn on the business segment that houses MySpace. It was a disastrous performance by a company that CEO Rupert Murdoch had predicted would reach $1bn in annual revenue. It never reached that goal.

Walking away from the site was "the right decision", said Standard & Poor's equity analyst Tuna Amobi. "It's something that they should put behind them and kind of move on."

MySpace CEO Mike Jones, the last member of a three-member executive team appointed to fix the site in April 2009, said in a memo to staff Wednesday that he would help with the transition for two months before departing.

MySpace launched in 2003, founded by entrepreneurs Chris DeWolfe and Tom Anderson, who is every MySpace user's first friend. It became a popular internet destination and a key way for little-known musicians to market themselves and interact with their fans.

MySpace left in the dust

But MySpace lost its footing over the years as the fun of customizing one's profile began to bore its users and heavy use of banner advertisements slowed the speed at which pages load. Meanwhile, Facebook, founded in 2004, limited what users and advertisers could do, but kept pages clean, and freshened them with its "news feed" of updates, a feature that MySpace later copied.

MySpace peaked with 76 million monthly US visitors in October 2008. Advertisers and musicians who once relied on it for promotion fled the site for other hotter social networks like Facebook and, more recently, Twitter.

When Facebook a few years ago began allowing apps, including music functions and addictive games like FarmVille, MySpace was left in the dust.

Less than half of MySpace's monthly visitors are now in the United States, where its visitor count dropped by half in May to 35 million, according to tracking firm comScore Inc. Facebook now has more than 700 million monthly visitors worldwide, it said.

"Apps were the breaking point and MySpace could never recover from that," said Charlene Li, a social media analyst and founder of Altimeter Group.

Rohit Kulkarni, an 18-year-old member of the San Jose, California pop punk band Four O'Clock Heroes, said his group once exclusively used MySpace to reach fans with their music, but they haven't checked the site in months. They opened their Facebook band page last year.

Musical roots

"Most of our following was already on Facebook anyways," Kulkarni said. "Nowadays, people use Facebook over MySpace because it's integrated into almost everything, like all your mobile phones. I'm guessing that's why it became more popular."

Even FarmVille game-maker Zynga has taken a role promoting music, as shown recently when Lady Gaga unveiled her new album there.

Timberlake's involvement is a clear sign that MySpace will try to reconnect with its musical roots. Tim Vanderhook said that the acquisition is about returning MySpace "to what it was supposed to be".

Specific Media, based in Irvine, California, brokers the sale of ads to websites and has dabbled in creating original programming and matching it with sponsors. The company was founded in 1999 by brothers Tim, Chris and Russell Vanderhook.

At $35m, Specific Media gets an Internet property for a price that Altimeter's Li called "ridiculously low" and values each monthly US visitor at about $1 each. Its new owners should be able to recoup their investment if the company gets each user to click on about 20 ads over their lifetime, she said.
- AP
Read more on:    myspace  |  zynga  |  facebook  |  justin timberlake  |  social networks
NEXT ON NEWS24X
SHARE:

Read News24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining
 

Inside News24

 
/News
 

Joburg hot spots for cocktails, craft beer, tapas and wine!

It’s the season to be jolly – so we’ve rounded up some new Joburg hot spots!

 
 

I love summer.24

Summer Survey!
Great ideas for the best summer sandwiches!
Christmas lingerie to make this festive season the best one ever!
13 things you might not know about Disneyland

Jobs in Cape Town [change area]

Property [change area]

Travel - Look, Book, Go!

Kalahari.com - shop online today

2DAYS ONLY – 30% off Appliances

Coffee makers, blenders, fans, juicers and more. T&Cs apply. Shop now!

2 DAYS ONLY – 40% off books

Get 40% off when you buy 2 books. For two days only! T&Cs apply. Buy now!

Up to 50% off on outdoor gear

Save on chairs, blankets, cooler bags, umbrellas and more. Shop now!

Save on Samsung

Cameras, mobile phones, TVs, Tablets and more. While stocks last. Shop now!

Grand Theft Auto 5

Now available on PS4, Xbox One and PC from R649. Buy now!

OLX Free Classifieds [change area]

Samsung Galaxy s4

Mobile, Cell Phones in South Africa, Western Cape, Cape Town. Date October 24

Best bargain in big bay

Real Estate, Houses - Apartments for Sale in South Africa, Western Cape, Cape Town. Date October 25

VW Golf 6, 1.6 Trendline (Excellent condition)

Vehicles, Cars in South Africa, Western Cape, Cape Town. Date October 25

Horoscopes
Aquarius
Aquarius

The energy today is serious, materialistic and hardworking. You may find you get a new outlook on things and you may want to spend...read more

There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.








Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.