Justin Timberlake is to take a "major role" in the new direction of Myspace after he emerged as one of those behind a $35m deal for the ailing social network.

The singer turned actor, who starred as Facebook investor Sean Parker in the Hollywood hit The Social Network, took a stake in Myspace along with the online advertising company, Specific Media.

The unlikely entrepreneur will "lead the business strategy" for the fallen social network, the Specific Media chief executive Tim Vangerhook, said on announcing the $35m deal on Wednesday evening.

Myspace has shed billions of dollars from its price tag since it was dethroned as the dominant social network in 2008. Rupert Murdoch's News Corporation agreed on Wednesday to sell Myspace for a fraction of the $100m it was seeking – a sign of the site's dramatic fall from greatness.

News Corp will retain a minority stake in Myspace after putting the struggling social network up for sale earlier this year, engaging investment bank Allen & Co to find a buyer.

In an interview with AdAge, Vanderhook said Timberlake, 30, had put his own money into buying Myspace, but refused to disclose how much. He confirmed that the former N Sync singer will have an office in Myspace but that he was "probably not going to be there every day".

Asked whether he thought Timberlake had been inspired by his star turn in The Social Network, Vanderhook said: "I don't think it was so much that – that was just ironic. He's really passionate about how can he create a better community."

Timberlake said in a statement: "There's a need for a place where fans can go to interact with their favorite entertainers, listen to music, watch videos, share and discover cool stuff and just connect. Myspace has the potential to be that place.

"Art is inspired by people and vice versa, so there's a natural social component to entertainment. I'm excited to help revitalise Myspace by using its social media platform to bring artists and fans together in one community."

Just this week, Parker said Myspace's fall from grace was down to it being a "junkheap of bad design", while Facebook blossomed with lots of new features.

He told TV host Jimmy Fallon at the NExTWORK conference: "They weren't successful in treating and evolving the product enough, it was basically this junkheap of bad design that persisted for many many years. There was a period of time where if they had just copied Facebook rapidly, they would have been Facebook. They were giant, the network effects, the scale effects were enormous."

Myspace is expected to shed more than half of its 500 remaining staff as part of the deal. The layoffs follow a 30% staff reduction in April last year, and a further 47% cut in January. Two years ago Myspace employed more than 1,400 people.

News Corp bought Myspace in 2005 for $580m. In 2006 Google signed a $900m deal to sell ads on Myspace; by 2007 it had 300m registered users worldwide and was being valued at $12bn. By November 2010 the user figure had fallen to 91m.

Facebook passed Myspace in terms of numbers of users two years ago and is now approaching 700m globally. As people dropped Myspace, so did advertisers. Market research firm eMarketer estimates that the site will earn about $183m in worldwide ad revenues this year, down from $605m at its peak.

Specific Media, a US digital advertising company founded by brothers Tim, Chris and Russell Vanderhook in 1999, said it planned to work with Timberlake to turn Myspace around by making it "the premiere digital destination for original shows, video content and music".

The company added it intended to use Myspace's infrastructure to "deploy socially activated advertising", enabling brands to take their campaigns viral by allowing users to share ads with friends.

News Corp's Myspace sale comes as a new generation of internet firms are attracting sky-high valuations. Zynga, the online games developer behind hits including CityVille and FarmVille, is planning an initial public offering that could value it at $20bn. LinkedIn, the business-focused social network, has already gone public and is valued at $8.6bn. Next year Facebook is expected to go public – analysts have estimated it could be worth $80bn or more.