Is MySpace's 15 Minutes Over?

News Corp.'s (NYSE: NWS  ) MySpace is without a doubt one of the most popular websites on the Internet. With giants like Google (Nasdaq: GOOG  ) lining up to pay hundreds of millions to be the search engine of choice for the site, it is clear that Mr. Murdoch and Co. got quite the deal when they acquired the site (or did he steal it?) for $580 million last July. Not surprisingly, Mr. Murdoch mentioned at an investor meeting last week that the site now could be sold for $6 billion, and he expects 200 million users by mid-2007.

Murdoch's price-dropping of a potential valuation for MySpace is intriguing, because it implies that News Corp. might be willing to unload the site if the price is right. Given the headaches involved with, say, trying to sell copyrighted music and crack down on its user base, who quite often use illegal means to obtain songs to play on their MySpace pages, it might be a smart move. Heck, the site even gave away a band's MySpace page to a Fox TV show, before an outcry made the company give it back to the band. After all, the younger user base is largely fickle, with sites like and left in its wake.

Advertisers can be fickle as well, and with looking for a billion-dollar-plus valuation, an acquirer needs to have a compelling value proposition for advertisers to justify those types of numbers. Facebook and MySpace, for all their gaudy traffic numbers, are having a difficult time developing a strong advertising base, due in part to fear of user backlash, and in part to the lack of tools to pull data advertisers want from the collective user profiles. Indeed, with some teens moving over to Facebook due to privacy concerns, perhaps Microsoft (Nasdaq: MSFT  ) , in signing the site to a search deal, didn't do too badly in what many saw as a desperate reaction to Google locking up MySpace.

Still, perhaps with a more web-savvy partner like Yahoo! (Nasdaq: YHOO  ) or Barry Diller's Interactive (Nasdaq: IACI  ) , MySpace may be able to reap better synergies across the many Internet properties both own. Those companies will be free of the difficulties that come with potentially devaluing their own valuable TV content for Web shorts, and will be able to view the content landscape from an independent viewpoint. Perhaps it is no surprise that News Corp.'s Internet division president, Ross Levinsohn, who convinced the company to buy MySpace, resigned last week. Investors expecting great things from MySpace for News Corp. might want to reconsider -- MySpace's 15 minutes of fame might be drawing to a close.

More virtual zaniness:

Yahoo! is aMotley Fool Stock Advisorrecommendation. Microsoft is anInside Valuepick.

Fool contributor Stephen Ellis does not own shares in any companies mentioned. You canview the stocks he owns and check out his98th-percentile ranking in Motley FoolCAPS, the Fool's new stock-rating community. The Motley Fool has adisclosure policy.

Read/Post Comments (1) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 04, 2009, at 6:24 AM, MarketMaker007 wrote:

    MySpace and the like reach that point where problems, such as those you mention as well as user safty issues, will taint the platform. This issue of child safety on these sites is in the news today because of the Harvard report on the matter. MySpace were one of the contributors and 'wholey agreed' with the reports findings. That would be that it is 'expensive' to implement safety issues. My problem with theses ites is that their very existance is based on huge volumes so they can do these deals for "hundreds of millions to be the search engine of choice".

    Any safety and verification tools would reduce numbers and therefore the potential ad revenues. New sites such a, that provides a 'walled garden' environment for 7 - 18 year olds, which includes social networking platforms that have more functionality than MySpace and provide peace of mind for parents, could edge out the free, ad-driven sites in the coming years, or at least give them a very bloody nose.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 517520, ~/Articles/ArticleHandler.aspx, 10/21/2016 4:34:57 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
FOX $25.91 Up +0.55 +2.17%
Twenty-First Centu… CAPS Rating: ***
GOOGL $823.73 Up +2.10 +0.26%
Alphabet (A shares… CAPS Rating: *****
IAC $66.19 Up +0.36 +0.55%
IAC/InterActiveCor… CAPS Rating: *****
MSFT $59.66 Up +2.44 +4.26%
Microsoft CAPS Rating: ****
YHOO $42.17 Down -0.21 -0.50%
Yahoo CAPS Rating: **