Another black dayfor myspace

The social networking site has seen users plunge again as its owner News Corp seeks a buyer

Could MySpace, once the rock star of social networking on the internet, be reduced to a digital arm of the world's most powerful record labels? The idea that Rupert Murdoch's website could be rolled into Vevo, a joint venture of Sony and Universal Music, is one of the plans on the table as the mogul's bankers desperately try to engineer a new strategy for MySpace and salvage some value from the site that Mr Murdoch has owned for six years without turning a profit.

But negotiations are being complicated by an accelerating plunge in the number of users that MySpace has and stories that advertisers are deserting the site.

As Mr Murdoch's June deadline for selling all or part of MySpace looms, advisers are racing to solicit some firm bids in the next few weeks. Investors say a deal cannot come a moment too soon, since the website looks set to be a substantial drain on profits at its parent company, News Corp, even after it laid off half its staff earlier this year.

"MySpace has become an unmitigated disaster for News Corp," Richard Greenfield, an analyst with BTIG equity research, said in a research note earlier this month. "Selling it for next to nothing or even giving it away is increasingly likely, so that its sizable losses disappear."

The spin yesterday was that the joint venture under discussion with Vevo is only one of more than a dozen options being pursued, and actually Vevo is not all that keen. Allen & Co, the New York investment bank hired by News Corp to sell MySpace, first approached the music company a few weeks ago suggesting it buy MySpace outright, but that was turned down. Under the revised plan, News Corp will put MySpace into a new joint venture and keep a non-controlling stake.

Vevo is the fifth most-visited website on the internet, playing pop videos and making money from the ads sold on the site or embedded before the video starts to play. It was set up in December 2009 by Vivendi-owned Universal Music, Sony Music Entertainment and Abu Dhabi Media of the United Arab Emirates.

MySpace, meanwhile, still remains a destination for many music fans, because artists stream some of their songs on their fan pages on the site. But it is all a far cry from the heady days of 2005, when the UK act Arctic Monkeys became one of the biggest bands in the world without having a record contract, merely from stoking buzz about their music on MySpace.

Chase Carey, News Corp's chief operating officer and Mr Murdoch's right-hand man, said in February that the website had attracted interest from about 20 potential buyers or partners, both from the media industry and from financial buyers. Some of the other options being explored include a management buyout, with funding from private equity, or a merger with another social networking site or an online gaming company. MySpace would not comment yesterday, nor would Vevo.

Losses at the News Corp division that includes MySpace widened to $312m in the first six months of its fiscal year, which ended in December. Mr Carey had set a deadline of June for MySpace to become profitable, but he admitted that its results in the current six months were "not going to be wildly better" than the last six.

The reason is easy to gauge from the figures coming out of ComScore, which monitors user activity on the web. Last month, MySpace clocked 63 million visitors globally, down 29 per cent just since last October, when the site was redesigned. In the US, the market with the most potential for advertising and other revenue, user figures have plunged 44 per cent in the past year. Worse, the amount of time the remaining users are spending on the site is down 59 per cent.

Inevitably, the slump has had a knock-on effect with advertisers, who are ploughing more money than ever into online marketing but increasingly bypassing MySpace in favour of other opportunities – notably Facebook.

"MySpace was always a great place for underground creative activity," says Paul Verna at the research firm eMarketer. "But News Corp's strategy has been to try to elevate it to the premium content level and attract the advertising that goes with that. It has been hampered because the interface has always been sloppy and it has always been – and still is – very hard to find content on MySpace."

It looks like a messy endgame for Rupert Murdoch's ownership of MySpace, as years of strategic errors catch up with it. No one expects News Corp to get anything like the price it paid to buy the site from Intermix in 2005. In a worst case scenario, this could be a repeat of AOL's sale last year of Bebo. AOL bought that social network in 2008 for $850m, but offloaded it for less than $10m after users numbers dived.

Mr Verna of eMarketer sounded a gloomy note for MySpace's prospects. "Frankly, perception plays a large part," he said. "Once people start to believe you are not cool anymore, it is hard to swim against that tide."

The MySpace age

August 2003

Employees at eUniverse, the Los Angeles tech firm later renamed Intermix, decide to create a rival to the then-leading social network, Friendster. Chris DeWolfe is MySpace's first chief executive.



January 2004

Site launches to the public, and Tom Anderson, the company president, who automatically becomes every new member's friend, is suddenly the most popular person on the planet.



March 2005

Special "webisodes" of the US version of The Office are made available on MySpace, foreshadowing the explosion of television on the internet.



July 2005

Rupert Murdoch wins control of MySpace – and its 20 million members – with a $580m takeover offer.



January 2006

Whatever People Say I Am, That's What I'm Not by Arctic Monkeys becomes the fastest-selling debut album in the UK, thanks to a fan base built up on MySpace.

June 2006

Launch of MySpace.co.uk.



August 2006

Google agrees to pay $900m over three years to run search results and place adverts on MySpace, a deal that is fêted for guaranteeing Mr Murdoch an instant profit on his 2005 acquisition. Except that MySpace fails to meet the performance targets that were its side of the bargain, and never receives that sum.



November 2007

Mr Murdoch derides Facebook as a "utility... like the phone book" and predicts MySpace will be much more valuable.

April 2008

Launch of MySpace Music, a joint venture with the world's biggest music labels, offering free streaming for fans – and a share of revenues from adverts, merchandise sales and concert tickets for the companies.



April 2009

News Corp parachutes in Owen Van Natta, formerly of Facebook, as MySpace chief executive, with a brief to slash costs.



February 2010

Amid management infighting and Mr Murdoch's rising frustration at poor results, Mr Van Natta is ousted.



October 2010

MySpace rebrands as My______, de-emphasising its roots as a social network, and pushes itself as a hub for online entertainment.



November 2010

Users are given the ability to share their MySpace content on Facebook.



January 2011

MySpace says it will axe half its staff.



February 2011

News Corp says MySpace is up for sale.

Suggested Topics
PROMOTED VIDEO
Life and Style
fashionHealth concerns and 'pornified' perceptions have made women more conscious at the beach
Arts and Entertainment
tv
Sport
Ojo Onaolapo celebrates winning the bronze medal
commonwealth games
Arts and Entertainment
Rock band Led Zeppelin in the early 1970s
musicLed Zeppelin to release alternative Stairway To Heaven after 43 years
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmHe was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
Sport
Van Gaal said that his challenge in taking over Bobby Robson's Barcelona team in 1993 has been easier than the task of resurrecting the current United side
footballA colourful discussion on tactics, the merits of the English footballer and rebuilding Manchester United
Life and Style
Sainsbury's could roll the lorries out across its whole fleet if they are successful
tech
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Travel
The shipping news: a typical Snoozebox construction
travelSpending the night in a shipping container doesn't sound appealing, but mobile crash pads are popping up at the summer's biggest events
Arts and Entertainment
'Old Fashioned' will be a different kind of love story to '50 Shades'
film
Arts and Entertainment
Tracey Emin's 'My Bed' is returning to the Tate more than 15 years after it first caused shockwaves at the gallery
artTracey Emin's bed returns to the Tate after record sale
Arts and Entertainment
Smart mover: Peter Bazalgette
filmHow live cinema screenings can boost arts audiences
Environment
Neil Young performing at Hyde Park, London, earlier this month
environment
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Project Manager (HR)- Bristol - Upto £400 p/day

£350 - £400 per annum + competitive: Orgtel: Project Manager (specializing in ...

Graduate / Trainee Recruitment Consultant - IT

£25000 per annum + OTE £40,000: SThree: Orgtel are seeking Graduate Trainee Re...

HR Business Partner - Banking Finance - Brentwood - £45K

£45000 per annum + Benefits: Ashdown Group: ** HR Business Partner - Senior H...

PA / Team Secretary - Wimbledon

£28000 - £32000 per annum + Benefits: Ashdown Group: PA / Team Secretary - Mat...

Day In a Page

Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?
Boris Johnson's war on diesel

Boris Johnson's war on diesel

11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
5 best waterproof cameras

Splash and flash: 5 best waterproof cameras

Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

Louis van Gaal interview

Manchester United manager discusses tactics and rebuilding after the David Moyes era
Will Gore: The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series

Will Gore: Outside Edge

The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz