It's the end of an era — News Corp is finally selling MySpace. The media conglomerate has struck a deal to sell the struggling social network to ad network Specific Media for between $30 million and $40 million. The deal, which is being finalized right now, is a combination of cash and stock, though it's mostly stock, with News Corp retaining about 5 percent of MySpace. The deal is also contingent on MySpace slashing its staff of 400 in half, layoffs which should come down in the next day.
News Corp has been hustling to complete the deal by tomorrow, the end of its fiscal year. And this sale is far less than the $100 million it was hoping to get for the company. The company has revamped and rebooted a number of times — though it still does draw about 35 million monthly visitors in the US — it's been far overtaken by Facebook, and has become a punchline.
How far MySpace has fallen since News Corp bought the site for $580 million back in 2005. It's worth noting that MySpace was considered so valuable at one point, that Sumner Redstone fired Viacom CEO Tom Freston largely because he failed to snap up the hot social network. (Freston joked to me in a CNBC interview that he's "still waiting for his thank you note from Redstone).
News Corp did recoup its investment thanks to a lucrative Google ad deal, but the site's value continues to plummet. MySpace's worldwide ad revenue is expected to come in at around $180 million this year, according to eMarketer, down from over $600 million.
What will Specific Media do with MySpace? Specific media is one of the largest online ad networks in the country, reaching nearly 80 percent of US internet users. The company uses information about consumers—their browsing history and demographic information—to target ads. Acquiring MySpace will allow Specific Media to access a wealth of information about the site's users, while selling its own ad inventory instead of just other websites' ad inventory.
Why did MySpace fail when Facebook thrived? MySpace's failure can be attributed in part to its chaotic design—customizable and confusing in contrast to Facebook's clean lines. And while Facebook rolled out slowly and in an exclusive manner (just to people with a .edu college address at first), MySpace was available to anyone. Facebook never wavered in that users had to be themselves on the service, while MySpace was the wild west, enabling anonymity and impersonators. And many people would say that being under News Corp's umbrella didn't help MySpace.