MySpace – Bidding Starts at $100 Million. Any takers?

Yesterday, the news came that Friendster is going to delete all profile data by May 31, 2011. When I read the article, I got a hunch that MySpace would be next since Facebook is obviously taking over the social networking world and I don’t know anyone who uses MySpace anymore. Except for my musician friends. And so as obvious as my guess was, today news came out that News Corp announced in an earnings call last February that it is ready to sell MySpace. Even with the numerous layoffs and massive site redesign during February, the company “recorded a $275 million pre-tax charge for the impairment of goodwill related to the Digital Media Group and an organizational restructuring at MySpace.”

The Wall Street Journal, which shares a parent company with the stumbling social network, reported that News Corp is expecting to get at least $100 million out of the sale. Potential buyers according to them include Redscout Ventures, Thomas H. Lee Partners, and Criterion Capital Partners LLC, which also owns Bebo.

In 2005, News Corp purchased MySpace for $580 million. Perhaps because at that time, they didn’t see any other social networking site as a threat. Especially Facebook. It was only a year and half old and it hadn’t even acquired its URL. To make matters worse for them they had recorded a net loss of $3.63 million for the year. Even after 2 years, in 2007 Facebook’s traffic was still more disappointing compared to MySpace’s.

But by 2009 MySpace’s site traffic took a dive due to a massive amount of users switching to Facebook. The social networking site never really recovered from this drop. By 2010 even Twitter, which is a relatively newer site, was getting more traffic than MySpace.

With that, do you think there’s still a chance to save MySpace? Or is it slowly drowning with no hope at all of ever resurfacing.. Is anyone even going to take that $100 million offer?


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