Now that Justin Timberlake is a part owner of the once mighty (now flailing) MySpace, the plan of action is to try and revive the former social media giant and relaunch it as a rival to music streaming sites like Spotify and Pandora. This plan of attack somehow leaked its way online when documents outlining MySpace’s future plans starting showing up on business blogs. According to these leaked documents, MySpace is looking for $50 million dollars in new investor money to launch their music streaming service sometime next year. Could it be? Could MySpace really rise from the ashes of their social media failures and find new, successful life in the music streaming biz?
The parent company of MySpace is trying to raise $50 million in order to re-launch MySpace as a direct competitor to Spotify and Pandora in 2013. This is according to documents obtained by Business Insider … Six years after buying MySpace for $580 million, News Corp sold it last summer to a company called Specific Media for $35 million. Specific Media, a private company owned mostly by the Vanderhook family, changed its name to Interactive Media Holdings and took new funding from investors including Justin Timberlake. Then, Interactive launched a re-designed MySpace to a surprising amount of critical praise. Since December 2011, MySpace traffic is up 36 percent. But MySpace continues to flounder commercially. Documents show that it will generate revenues of just $15 million this year, up from a miserable $9 million in 2011. MySpace lost more than $40 million in 2012. Interactive Media expects it to lose another $25 million next year. Meanwhile, Interactive’s other big property, Specific Media, took a hit as ad buyers turned to real-time bidding solutions over traditional ad networks. Revenues declined from $42 million in 2011 to a projected $35 million in 2012 — both down from a high of $60 million in 2010. Now, Interactive Media holdings is out looking for another $50 million in funding. In pitch materials dated from November 16, 2012, Interactive says it plans to use most of the money to re-launch MySpace as an alternative to Pandora and Spotify. Of the $50 million, $10 million will go to marketing, $15–$25 million will go to licensing deals with the music labels, and another $15 to $25 million will be reserved for “general working capital.” Interactive says it plans to launch a music subscription business for mobile in the second quarter of 2013. In the deck, Interactive says the big competitive advantages for MySpace versus Spotify and Pandora is that it pays labels a lower rate for song plays than Spotify and Pandora. MySpace relies on 27 million songs from unsigned artists, who account for 50 percent of the music played on its site.
If you would like to see these leaked documents, you can do so HERE. They are a very interesting read if you’re looking for hard numbers. This kind of information is NEVER officially released by companies. These kinds of documents are used in pitch meetings or off the record conversations and are never meant to be seen by the public. I have to say, this is a very adventurous proposal but I, personally, don’t see how this will ever work. It’s hard enough getting people to stay committed to sites like Spotify and Pandora, let alone convincing people to abandon the services that already exist and work well to try something new … particularly since MySpace has such a tarnished image. IMHO, the name MySpace is associated with huge failure. I can’t even take the site seriously at all as a social network. They were king of the hill and they just lost it ALL to Facebook. I think it’s impressive that Justin Timberlake and his business partners are working as hard as they can to make MySpace thrive again but I just don’t think there is a chance in Hell that the site will ever make a serious comeback. Hopefully their investors don’t agree with me … cuz JT and co. are are lookin’ for $50 million MORE in investment dollars. I’m curious to see how this will work out but … yeah, naw, I don’t think this will be a success. Do you? If MySpace gets their money and relaunches as a music streaming site, would you be interested?