Sean Parker knows a thing or two about the internet. The founder of Napster and former President of Facebook has been a pivotal figure in two of the biggest trends to hit the web: file sharing and social networking. He seemed to be just the right person to ask about the slow, painful death of Myspace and the mercurial rise of Facebook. Jimmy Fallon did just that at the NexTWORK conference in New York this month by asking, “Where did Myspace go wrong?”
Parker has a lot to say about this: “The failure to execute product development. … 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.”
The Myspace that Parker was describing was the one that drew Rupert Murdoch’s attention back in July 2005. When he bought the site’s parent company, Intermix, for $580 million, Myspace’s value in the deal was estimated to be $327 million, or roughly two-thirds of Intermix’s valuation. At the time, it was considered a stroke of genius, with Myspace’s valuation increasing rapidly. At one point it was estimated to be worth as much as $1.5 billion.
Then came Facebook, which surpassed Myspace in the number of users by 2008. As Facebook ballooned, Myspace shrank. The culmination came on Wednesday.
In an email to employees, Myspace CEO Mike Jones confirmed the rumors that had been swirling around for weeks. News Corps had finally found a buyer for the moribund website. Specific Media, an internet advertising company, picked up the site for $35 million, considerably less than the $100 million that Murdoch supposedly hoped to get. According to the Wall Street Journal, Specific Media is one of the largest ad targeting companies in the world, “reaching 170.9 million unique U.S. visitors in May, or about 79% of the U.S. Internet users, according to comScore Inc.” In other word, their traffic dwarfs Myspace’s traffic. News Corps was anxious to get the deal done before the end of its fiscal year.
In his email, Jones announced that the acquisition by Specific Media would be accompanied by, “a series of restructuring initiatives, including a significant reduction in our workforce.” Some 400 people are left working at Myspace, and over half would be losing their jobs, including Jones himself.
There will be some new hires too, however, including Sean Parker’s doppelganger, Justin Timberlake, who portrayed him in the film The Social Network.” Timberlake has invested an undisclosed amount in Specific Media and will be brought on board Myspace as Head of Creative Strategy. A press release quoted him as saying, “I’m excited to help revitalize Myspace by using its social media platform to bring artists and fans together in one community.” He continued that he hoped to transform Myspace into the premiere web location for original entertainment content.
Specific Media CEO Tim Vanderhook says that Timberlake will have his own office and six staff members to pursue this goal. He has a lot of work ahead of him. Myspace, now valued at $35 million, will be competing against Facebook, with an estimated value of $70 billion, or 2,000 times bigger. That should keep him very busy.