News Corporation sells Myspace to Specific Media and Justin Timberlake

Posted by elena On Friday, July 1st 2011 in Business

News Corporation has sold its social networking website Myspace for a disappointing $35 million. Advertising company Specific Media, together with pop singer Justin Timberlake, are the buyers. The sum they paid is extremely low compared to the price Rupert Murdoch's News Corp paid six years ago to purchase Myspace, but the website has been operating at a loss.

News Corporation paid $580 million for Myspace in 2005, when it was one of the hottest websites on the Internet. At that time, it seemed a great investment. But since then, its popularity has declined significantly, and now News Corp only managed to get a price of about 6% of what it originally paid for the website. Several buyers expressed interest in Myspace during the last four months and its sale was expected to bring some $100 million, but now it is clear that the estimates were too high.

Advertising company Specific Media said that pop star and actor Justin Timberlake would play a major part in developing the new strategy for the company. As a coincidence, or not, Timberlake played former Facebook president Sean Parker in the hit movie "The Social Network". News Corp will keep a stake of about 5% in the business, but will not have an active role in running it. More than half of the almost 500 employees at Myspace are expected to lose their jobs.

Myspace was founded in 2003 and soon became one of the most visited websites in the world, as it provided people with a way to build their own pages, connect among each other and follow their favourite musicians. The website was particularly popular among young people. But since Myspace was overtaken by Facebook as the leading social networking service in the world, its popularity has been declining at a fast rate. According to data released by comScore, Myspace had 34.9 million US visitors in May, while Facebook had 157.2 million.

At present, it looks like there will be even more competition in the social networking game. This week, Google has launched its own social networking website Google+, which the company hopes will prove a solid competitor for Facebook. In this context, it seems almost impossible for Myspace to regain its former popularity. It remains to be seen if Timberlake's film experience will be any help in posing a challenge to Facebook or, more likely, to other competitors.