Specific Media acquires Myspace in $35M deal

SAN FRANCISCO  Myspace on Wednesday was sold to ad-targeting firm Specific Media for $35 million, a fraction of the $580 million that News Corp. paid for the once-highflying social network during its heyday in 2005.

As part of the long-rumored deal, Myspace CEO Mike Jones will depart. But there were no details on the rumored layoffs of half of Myspace's 500 remaining workers, also believed to be part of the sale's framework.

"There are many synergies between our companies as we are both focused on enhancing digital media experiences by fueling connections with relevance and interest," Specific Media CEO Tim Vanderhook said in a statement. Justin Timberlake is among the new investors.

Synergy has been lacking for some time with Myspace, analysts say. Despite several redesigns and changes in strategy, it continued to hemorrhage users. By May, Myspace had 34.9 million unique monthly visitors in the U.S., compared with 67.2 million in May 2010, according to market researcher ComScore. In that same time, Facebook vaulted to 157.2 million from 130.3 million.

"Myspace was like a ghost town in the Wild West," says Jennifer Jacobson, a social-media expert and author on the topic. "It proves that if you lose sight of what customers want, you risk losing relevance very fast. You have to keep the customer experience meaningful."

The fire sale underscores a dramatic fall from grace for Myspace, which once boasted more than 100 million members and was a haven for entertainers. Myspace lost its mojo several years ago when Facebook became available to everyone. And it continued to suffer at the hands of Facebook, Twitter and other social-media services. This week, Google began to roll out its social-networking service, called GooglePlus.

The discrepancy is stark when comparing ad revenue worldwide. In 2009, Facebook passed Myspace for the first time, $738 million to $470 million. This year, eMarketer says, Facebook will haul in $4.1 billion to Myspace's $184 million.

Facebook is gearing up for an initial public offering in 2012 that could push its value to $100 billion — roughly 3,000 times the sale price for Myspace.