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Om Malik on Broadband : » Why Murdoch Really Bought MySpace? Om Malik's Blog About the next generation internet. About Contact Advertise Feed Widget Why Murdoch Really Bought MySpace? Posted in Broadband Life + Readers Writeback 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. Posted on August 6th, 2005 — 20 Comments so far 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. msteinbaugh at August 6th, 2005 at 10:11 AM — Permalink Why Rupert Murdoch Bought MySpace Robert Young thinks that Rupert Murdoch bought MySpace in an effort to compete with MTV in the new media space. I’m not entirely sure that I buy Young’s argument, but it’s compelling. Short-form programming is definitely here on th... The Indiana Jones School of Management at August 6th, 2005 at 10:37 AM — Permalink He almost overpaid on Pointcast. Idealab was just too wrapped-up in the bubble mindset of the time to accept the offer. Dan at August 6th, 2005 at 1:47 PM — Permalink […] and compete against the 24-hour news networks like CNN and FoxNews.” From Young (on Om Malik’s blog): I’m willing to bet that he will go even f […] Search Engine Journal » Rupert Murdoch’s MySpace To Challenge MTV? at August 7th, 2005 at 10:37 PM — Permalink A Rival To MTV Speculating on the reasons that News Corp (NYSE: NWS) bought out Intermix (AMX: MIX), with their hot social networking website, My Space. Robert Young speculates that Murdoch Co., may be preparing to launch a competitor to MTV, owned of course, The Stalwart at August 8th, 2005 at 5:26 AM — Permalink Ypulse Essentials Free the ‘Brats’ (an L.A. Times, reg. required, writer accuses ABC’s brat camp of teensploitation…I also keep reading news stories about teens on the show getting in more trouble…) - Help is in your hand (or your thumb. Ypulse reader… Ypulse at August 8th, 2005 at 8:41 AM — Permalink 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. Jeremy Pepper at August 8th, 2005 at 3:48 PM — Permalink […] e he will use his acquisition of MySpace to compete against MTV head on, as I speculated in my previous post here ). By integrating content and distribution, Murdoch has built a […] Om Malik’s Broadband Blog » Murdoch, WiMAX and The Two Way Web at August 13th, 2005 at 5:16 PM — Permalink […] annt zu haben. Gerade für Independent Labels ein interessanter Kanal. Es scheint an dem Gerücht, dass Fox mit dem Kauf von Intermix Media, dem Betreiber von MySpace.com, eine […] Market Talk » Blog Archive » Musikmarketing auf myspace.com at August 16th, 2005 at 12:27 PM — Permalink […] enomenon, MySpace is as important, if not more important, than MTV.” Oh didn’t Robert Young say that, like a month ago? In Asides Posted Sunday, August 28, […] Om Malik’s Broadband Blog » Secret Life of My Space at August 28th, 2005 at 5:15 PM — Permalink […] enomenon, MySpace is as important, if not more important, than MTV.” Oh didn’t Robert Young say that, like a month ago? Still a pretty interesting look at how MySpace […] Om Malik’s Broadband Blog » Secret Life of My Space at August 28th, 2005 at 5:18 PM — Permalink 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 Mark Sigal at August 29th, 2005 at 10:41 AM — Permalink 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 Mike at August 31st, 2005 at 2:25 PM — Permalink 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. marc calderwood at September 12th, 2005 at 2:01 PM — Permalink The purchase of pointcast was DEFINITELY overpaying. Its very obvious now. But MySpace ont he other hand…. Nikki at September 14th, 2005 at 8:48 PM — Permalink is that the same Bob Young as in Sociologist at Large? russ at October 31st, 2005 at 11:09 PM — Permalink […] As predicted, MySpace.com creates own record label. Is the music channel next? […] Om Malik’s Broadband Blog — » MySpace Records, out now at November 3rd, 2005 at 8:55 AM — Permalink […] Robert Young, earlier this year, explained to my readers why Rupert Murdoch really bought MySpace for $583 million. He argued that we should wait for Rupert to launch a record label and a music channel that takes on MTV and knocks it off its top spot. Well today, both those things happened. Young has decided to update story, and has written a stirring post, that reminds Murdoch’s men to not get blinded by the Hollywood Bright Lights, or else they ruin the carefully woven fabric of My Space community. This is not the first time he has argued for handling the community with velvet gloves. […] Om Malik’s Broadband Blog — » Bigger Than Google, MySpace is different at November 4th, 2005 at 9:32 AM — Permalink […] A few weeks ago, Rupert Murdoch’s satellite TV operator BSkyB shocked everyone when the company acquired Easynet for $373 million. No one was expecting the media giant to make a move into the high speed Internet access market, even though his acquisitions of MySpace and IGN for an estimated $1.2 billion did indicate his seriousness about the Internet. Now Reuters’ is reporting that he is considering a similar move in the US. “Here (in the United States), we don’t know,” Murdoch told the newspaper. “We may be forming a company with partners to build something out here that would give you broadband.” […] Om Malik’s Broadband Blog — » Murdoch’s Broadband Plans at November 7th, 2005 at 10:53 PM — Permalink […] In this nice little talk about blogs, and power of the community, there is the underlying truth: its about the advertising. The ad-dollars shifting away from traditional forms of media to newer mediums, it behooves News Corp to adapt. (That is precisely the reason I firmly believe that AOL should remain part of Time Warner, despite losing 300 users an hour, and if necessary, selling a piece to Comcast and getting some broadband traction is the best option for TW, than say teeming up with others seeking short term page view pop!) Anyone can buy what they want, shop where they want, talk to anybody in the world that they want (and) state their own opinions. There’s no mystery to a blog: Put up your thoughts (and) find friends….there are lots and lots of communities, and they can all blog — they can all write in a personal diary every week, or whatever they want. There are three very large Internet companies: America Online, which delivers data, which is really what’s keeping them very strong; everyone in the world goes to Yahoo! to do their e-mail, and search with Google. I think online, it’s the search for groupings, identifying search for groupings and providing sites for that — to meet, talk, discuss. These are very interesting; there are huge numbers of people. (We’re going to be) learning a lot about them and then selling advertising to them. Not too obtrusively, but when you target, there’s no waste: 50,000 people over here or 5 million people over there. […] Om Malik : » Rupert Murdoch speaks at November 16th, 2005 at 7:03 AM — Permalink Leave Your Comment: You can leave a response , or trackback from your own site. Name Mail (will not be published — Website Archives: Select a category… Connected Home Start-Ups Wired Unwired VoIP, the New Phone Digital Music Articles Miscellaneous Gigaom.com is the personal weblog of Om Malik, senior writer at Business 2.0 magazine ... Read More » Recent articles Gigalinks Om's most recent articles listed here for your convenience. What Is 30Boxes? Jan 11th, 2006 ( comments) 8086 and Apple, the Stock Story Jan 11th, 2006 ( comments) Skype, The Bandwidth Hog Jan 10th, 2006 ( comments) Its an IPod World... Believe It! Jan 10th, 2006 ( comments) AOL Buys Truveo Jan 10th, 2006 ( comments) And Now For The Real CES, Macworld Jan 10th, 2006 ( comments) What is Huawei? Jan 10th, 2006 ( comments) Shake Up At Juniper Jan 10th, 2006 ( comments) Mac Mini Ready for (PVR) Prime Time? 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