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TECH TALK: The MySpace Story: The Acquisition

March 30th, 2006 · No Comments

The Acquisition

In July 2005, News Corp bought MySpace for $580 million. BBC News wrote then:

The central message was that the days of newspapers editing content into a one-size-fits-all package to be consumed without question by the reader were numbered.

Young people “don’t want to rely on a God-like figure from above to tell them what’s important,” Mr Murdoch said.

“And to carry the religion analogy a bit further, they certainly don’t want news presented as gospel.

“Instead, they want their news on demand, when it works for them. They want control over their media, instead of being controlled by it. They want to question, to probe, to offer a different angle.”

Myspace fits neatly into that definition. It is a network of pages – most set up by individuals, some by musicians and other creative types – each mixing self-generated text and pictures, links to other content elsewhere, and streamed music and video to create networks of friends and contacts.

The result is a densely interwoven community, which its adherents say is highly addictive.

Robert Young analysed the purchase of MySpace by News Corp:

Although ad inventory was surely part of the equation, I believe there is larger strategic reason that motivated Murdoch to make such a bold move: He is planning to create a competitor to MTV.

Much like Viacoms CBS decided to use the broadband web to bypass cable and compete against the 24-hour news networks like CNN and FoxNews (see PaidContents coverage here), the acquisition of MySpace positions Murdoch to challenge the dominance of MTV in their category. Im willing to bet that he will go even further by eventually extending the MySpace brand to include a dedicated cable & satellite network/channel. He is after all an old media guy. In fact, just a couple of weeks before News Corp. announced the deal, we all witnessed the webs potential in this context when AOLs webcasting audience for Live 8 outreached MTV and ABCs ratings of the same event (details here.) Such a data point can go a long way towards justifying a $580 million price tag.

In addition to live concerts, MySpace is an ideal platform to release music videos (which the major record labels are desperately trying to monetize), as well as other short-form reality programming (think Foxs American Idol) thats likely to attract the 22 million youngsters in the MySpace community an audience that happens to also watch MTV.

MySpace has helped catapult News Corp and Murdoch in the forefront of the Internet revolution. Going ahead, the challenge for them is to keep the spirit and community features that helped MySpace succeed even as they monetise the brand and the user base.

Tomorrow: The Future

Tags: Tech Talk

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