MySpace Sells for $35 Million

by Jordan Richardson on July 1, 2011

When Rupert Murdoch spent $580 million on purchasing the social networking site MySpace in 2005, his News Corporation was delving in to the Internet era. A year later, Google spent $900 million in a bid to sell advertising on the site. And in 2007, MySpace had 300 million registered users and a valuation of $12 billion.

Enter Facebook. We all know what happened next, as Mark Zuckerberg’s social networking colossus took over and MySpace was left in the dust.

Murdoch, with more than a little egg on his face, put MySpace up for sale earlier this year. The asking price was $100 million, a significant drop from the inflated valuation of $12 billion and a plunge from what News Corporation originally spent on the site. Murdoch sent Allen and Co., an investment bank, out into the world to find a buyer.

On Wednesday, the “deal” came in. Advertising targeting firm Specific Media bought MySpace for $35 million, lower than the asking price. The deal is expected to be mostly in stock and News Corporation will retain a small holding.

As part of the deal, MySpace will have to lay off more than half of its 450 or so remaining staff members. This follows a 30 percent staff reduction from April and another cut of 47 percent from January. It’s hard to believe, by MySpace employed more than 1,400 people a mere two years ago.

The MySpace story is an example of how fast things can change in the world of social networking trends and technology. One company’s prime investment a year ago can be a bad idea a year later. Murdoch and New Corporation certainly must’ve seen something in the company. They certainly didn’t anticipate Facebook and Twitter taking off as they did.

MySpace largely suffered from a complicated product model in a world of other models with simplicity as a virtue. While Facebook and Twitter took to social networking with modest designs and easy instructions, MySpace lingered with a product that few took to after the initial salvo. And now the site forces a redesign or reinvention if it hopes to stay in some sort of business.

With Facebook expected to go public in the next while, MySpace’s next moves are vital.

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Written by: Jordan Richardson. Follow by: RSS, Twitter, Facebook, or YouTube.

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