Thus News Corp lost its 'social space'

BANGALORE, INDIA: Finally, News Corp put an end to the rumours and speculations, and also a six-year ordeal over a social-networking platform, with its decision to sell Myspace, reportedly for $35 million to  Specific Media. News Corp will retain about 5 per cent in the company according to sources, but there is no official confirmation about the financials from either of the parties.

The decision to say goodbye to Myspace comes at a time when may small social media companies are enjoying great market and even Google is taking another chance in the arena, with Google Plus. But, failing to fight with the likes of Facebook and other players in the social media arena, Myspace literally lost its space in the online social networking segment and it was compelled to sell it off to advertising company Specific Media for a fraction of what it paid for the once-hot social media site.

Remember, the company was bought in 2005 for $580 million. And it was expected earlier that the loss-making firm would fetch around $100 million in a bid. The selling price is just 6 per cent of what it paid!

Murdoch's tabloid sensibilities

Commenting on the decision of Rupert Murdoch-owned News Corp, Reuters Breakingviews columnist Jeffrey Goldfarb said the media giant's experience with Myspace should inspire him to focus on his space.

“Mercifully for shareholders, the octogenarian media mogul's failed six-year experiment in social networking ended on Wednesday, with his News Corp empire selling the site for about $35 million, a fraction of its original price. The deal serves as a pointed reminder of Murdoch's many poor uses of capital of late. Big TV is where the company's resources are best allocated,” he added.

According to him, “Murdoch's tabloid sensibilities mean he knows a hot story when he sees one. Investing $580 million in Myspace in 2005, when Facebook was still in its infancy, looks outrageous only in hindsight. But not long after News Corp took control, the site began its rapid descent.”

After the acquisition, Specific Media is expecting to "rebuild and reinvigorate" the platform by teaming up with actor and pop star Justin Timberlake. However, whether the plan can actually work and turn around the company remains to be seen, because in the past too Myspace had tried this strategy and miserably failed.

Incidentally, Timberlake had played the role of Facebook adviser and investor Sean Parker in the movie 'The Social Network', based on the Facebook saga and controversy. A curious turn of fate, it seems.

When News Corp bought Myspace, beating out rival Viacom Inc in a bidding war in 2005, it was viewed as a huge victory for Murdoch. Those days Myspace was the uncrowned king in the social media space. But it did not take much time for Facebook, which was far behind Myspace till a few years back, to eclipse the giant's popularity. Soon we saw an exodus and many people moved to Facebook.

News Corp's decision to buy Myspace has become a hard lesson in what can happen when a traditional media company imposes its will on a start-up, says Jennifer Saba of Reuters.

“It also shows how quickly audience — and investor — tastes can shift in the world of social networking. Indeed, Wednesday's deal contrasts sharply with the current frenzy over social media companies, including LinkedIn, Twitter and Groupon, among investors looking for the next big thing,” she said.

Interestingly, the announcement of selling of Myspace comes at a time when Zynga, an online social game company, plans to raise up to $2 billion in an initial public offering (IPO) that could be filed by Thursday, valuing the company at $20 billion.

“This is a mistake that will repeat itself,” James McQuivey, an analyst with Forrester Research, said of the Myspace saga, adding, “I'm not sure that someone being pushed on by early round investors, someone reading their own press, which is praising them, will stop and say, 'Wait, is this a one-year fad, a two-year fad? Or is this a five-year to ten-year change in the way things are done?'”

Bad news for employees

The change in management is not a good news for the employees of Myspace too, because nearly half of the 500-strong workforce are likely to get pink slip post acquisition.

Launched in 2003 by Chris De Wolfe and Tom Anderson, Myspace was a social networking platform with a 'musical bend', targeting the young generation. In 2008, three years after News Corp took over the company, Myspace had nearly 80 million users in the United States.

But the user base could not be sustained as Facebook aggressively changed its strategy. The decision to integrate the site with Zynga's FarmVille game and other third-party developers suddenly increased the popularity of the site spelling doom for Myspace. The nosediving of Myspace user base and the skyrocketing of Facebook is a clear story of change of fortunes.

Now, with Google aiming to revitalize its social networking might with the launch of Google Plus, which is expected to have a tough fight with Facebook, the scenario is likely to heat up. But, then this is the third attempt by Google in the social networking space, after Orkut and Buzz.

Who will conquer whom in the social media platform is a matter of hypothesis. But one thing is sure, any giant can fall, and Myspace is one such story.

As life and lifestyle changes, will social media interactions itself will become a thing of the past?

(With inputs from Reuters)