Why Murdoch Really Bought MySpace?
He is planning to create a competitor to MTV. Much like Viacom’s CBS decided to use the broadband web to bypass cable and compete against the 24-hour news networks like CNN and FoxNews.
Guest Post by Robert Young
There has been much speculation and analyses as to why Rupert Murdoch acquired MySpace. The prevailing consensus seems to be that News Corp’s motivation was to buy ad inventory targeted at the social network’s valuable young demographic (e.g. see John Battelle’s comments.) That’s overtly simplistic. Moreover, it’s very difficult to justify a $580 million cash payment on that basis alone.
Although ad inventory was surely part of the equation, I believe there is larger strategic reason that motivated Murdoch to make such a bold move: He is planning to create a competitor to MTV.
Much like Viacom’s CBS decided to use the broadband web to bypass cable and compete against the 24-hour news networks like CNN and FoxNews (see PaidContent’s coverage here), the acquisition of MySpace positions Murdoch to challenge the dominance of MTV in their category. I’m willing to bet that he will go even further by eventually extending the MySpace brand to include a dedicated cable & satellite network/channel. He is after all an old media guy.
In fact, just a couple of weeks before News Corp. announced the deal, we all witnessed the web’s potential in this context when AOL’s webcasting audience for Live 8 outreached MTV and ABC’s ratings of the same event (details here.) Such a data point can go a long way towards justifying a $580 million price tag.
In addition to live concerts, MySpace is an ideal platform to release music videos (which the major record labels are desperately trying to monetize), as well as other short-form reality programming (think Fox’s “American Idol”) that’s likely to attract the 22 million youngsters in the MySpace community… an audience that happens to also watch MTV.
No matter what you may think of Rupert Murdoch, he never overpays and you can’t underestimate his brilliance. After all, he challenged the 3 major TV broadcast networks by creating Fox, then he challenged CNN by launching FoxNews, and he’s currently revamping FX with a slate of edgy original programming to go against HBO. I believe he’s now going after MTV, and if indeed that was his reason for buying MySpace, not only was it another brilliant move by the media mogul, but the price he paid was a bargain.
Robert Young is a serial entrepreneur who’s currently focused on Weed (www.weedshare.com), a digital music service and P2P superdistribution pioneer. During Internet 1.0, he orchestrated the sale of Delphi Internet Services to Rupert Murdoch’s News Corp.
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If this is the case, which does make sense, the new entity needs a different name. “MySpace” is a terrible name, especially if there is to be a cable channel in the works. Hell, even “Facebook” is an improvement, but that would be a terrible TV channel name as well. Good luck with that one, News Corp.
He almost overpaid on Pointcast. Idealab was just too wrapped-up in the bubble mindset of the time to accept the offer.
Not sure if the purchase of Pointcast would have been overpaying. Think of how many people loved Pointcast, and how it could be used nowadays as a cool RSS reader, or content delivery system for such an MTV/Fuse type channel on MySpace.
I agree that it would be an odd name for a channel, but it isn’t much worse than Current.
A couple comments. First, I would argue that you have to look at the acquisition of MySpace of indicative of how deeply Murdoch gets the importance of user-generated content as a generational macro trend.
Social networking as a trend bucket is as much a reflection of consumers really enjoying pimping themselves up through customization and personalization and building affinity networks around that process, as it is about “collecting friends.”
Two, I believe that Murdoch gets that when you marry user generated engagement with rich media, you have a model for lock in and leverage since users increasingly have a common reference point for maintaining conversations and communal connections with their peers, which becomes a defensible “space” since it is so context-bound.
A couple links. One is a post I wrote on user generated content: http://thenetworkgarden.com/weblog/2005/08/the_user_create.html.
The other is is good article in Businessweek called The Birth of Murdoch.com: http://www.businessweek.com/technology/content/aug2005/tc20050816_5029_tc024.htm?campaign_id=rss_techn
Hey, yeah, I checked out myspace but I like this better..
If anyone wants to go check it out, do it up. It’s not affiliated with myspace whatsoever.. Murdoch can’t get his icy fingers around you at their site
Changing the name of a vehicle that is as successful as My Space would be a huge mistake. An entire generation is buying in on this name …. just mention it to anyone under 25 and a few of us in our 50′s and we’ll know. In a marketing environtment that speaks in new language (Skype just to name one) better get used to seeing business’ marketing their groove by the use of unfamiliar names.
The purchase of pointcast was DEFINITELY overpaying. Its very obvious now. But MySpace ont he other hand….
is that the same Bob Young as in Sociologist at Large?
A couple comments. First, I would argue that you have to look at the acquisition of MySpace of indicative of how deeply Murdoch gets the importance of user-generated content as a generational macro trend.
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Rumor has it that myspace is coming out with a better version of there site on another domain starting march 1st it will be another social networking site with extra features more i guess to stay ahead of tagworld also i heard it will be http://www.FriendWise.com i guess well just have to see if that happens.