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JULY 29, 2005
MySpace: WhoseSpace? News Corp.'s acquisition of the social networking site has unsettled some members. But the founders, and a Fox exec, say don't worry The sale of MySpace to media giant News Corp. (NWS ) has created a delicate situation for the founders of the wildly popular Web site. MySpace is the leader of a new form of Net-based social interaction in which users form networks of friends by linking to homepages loaded with photos, messages, and streaming music and video. Less than two years old, the site already gets more page views than Google (GOOG ). And with 22 million users, it's well on its way toward achieving its ultimate goal: creating a major online destination on par with AOL (TWX ), Yahoo! (YHOO ), or MSN (MSFT ) (see BW, 6/13/05, "Hey, Come to This Site Often?"). "AWFUL COMPANY." But word that News Corp. (NWS ) would acquire MySpace parent Intermix (MIX ) for $580 million has unsettled some members of the service. The July 18 announcement sparked 800 comments to a story at BusinessWeek Online (see BW Online, 7/19/05, "News Corp.'s Place in MySpace"). MySpace, which is particularly popular among 16- to 34-year-old fans of alternative music, has an iconoclastic edge. The prospect of being owned by one of the world's largest media conglomerates, especially one known for conservative media outlets like the Fox News Channel and The Weekly Standard, raised more than a few hackles. "News Corp. is an awful company," wrote one user who identified himself as Rick. "Selling to Fox? What a terrible idea," wrote another user, "erinoly." And "blah blah" wrote that "These FOX peeps are control freaks that don't see past the dollar sign." NO MONITORS. MySpace President and co-founder Tom Anderson, 29, tried to calm their fears. He sent a note to members shortly after the deal was announced saying that the site will not change. He also addressed rampant rumors that were sparked by the sale. The full text of the brief note said: "Many of you have asked about NewsCorp buying MySpace.... Everyone seems scared that MySpace is going to change. I'm not leaving, and I'm still making the decisions about the site, and I'm not going to let things suck. "The rumors people are reposting in bulletins are not true: 1) We are not going to become a pay site. 2) We are not increasing advertising. 3) We are not allowing anyone to monitor the site. 4) We are not deleting any content or censoring people in any new way. (we've always deleted nude pics and hate speech) 5) We are not exploiting anyone's data or violating anyone's privacy. "MySpace has been my life for almost two years now. I know it's as important to others as it is to me. I won't let it get jacked up." KUNG-FU FIGHTING. The memo seemed to calm at least a few users. "I have a lot of faith in Tom and he will make all the right decisions," a user named "Chelle" wrote. And "CABRON" warned: "Tom is one bad dude and if Fox even thinks of trying to make us pay for our beloved little Web site -- we'll pull some kung fu on them and they will cry." In an interview with BusinessWeek, MySpace CEO and co-founder Chris DeWolfe, 39, said he didn't believe News Corp. would risk harming an asset it was spending money to acquire. He said the benefit for MySpace is that News Corp. will be able to fund the expansion and development of the site. The focus will be on adding international markets and communications features like instant messaging. BW Online reporter Steve Rosenbush recently discussed the future of the MySpace with News Corp.'s Ross Levinsohn, president of its newly created Fox Interactive Media unit. Levinsohn discussed the rationale behind the deal and said the company has no plans to interfere with the operation of the site. Edited excerpts of the discussion follow: Q: How did this deal come together? Why are you spending $580 million for MySpace? A: I've been in the Internet space for 12 years, and I've never seen a company grow and catch on at the rate that MySpace has. We [at Fox] are very good about displaying news, but not at capturing or understanding in any detail what's going on in social networking. How do you talk to consumers, and let them create content? That's not what we do. But MySpace has perfected it.
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