Myspace Lays off More Than Half Its Staff
Myspace Lays off More Than Half Its Staff

It's official: NewsCorp has sold Myspace to advertising network Specific Media.

The official release announcing the move did not mention a sale price, only that as part of the deal NewsCorp will take a minority equity stake in Specific Media. But earlier in the day, AllThingsD pegged the price at $35 million.

That's a far cry from the $580 million NewsCorp paid for Myspace back in 2005, and far lower than the reported $100 million it was hoping to get from the struggling unit.

So far there's no indication of what the sale means for Myspace Music, the music division of Myspace, which is a joint venture between the four major record labels and Myspace proper. Typically, streaming rights don't transfer automatically to a new owner if a music service is sold. It's not yet clear whether that's the case in this sale, nor is it clear whether or not Specific Media wants to continue operating the free-streaming music feature. Myspace Music is the only authorized source of free, on-demand streaming music in the U.S., supported by advertising.

"There are many synergies between our companies, as we are both focused on enhancing digital media experiences by fueling connections with relevance and interest," said Specific Media CEO Tim Vanderhook in a statement. "We look forward to combining our platforms to drive the next generation of digital innovation."

Sources close to the situation tell that the details of Specific Media's plans will become clearer in the days ahead. One thing we know is that CEO Mike Jones will be leaving the company in two months after helping manage the transition to new ownership, according to an internal email published by TechCrunch. Sources within the company expect some 90% of the remaining workforce will also be let go as part of a major restructuring in the wake of the sale.

Presumably, the labels involved in the joint venture will see some return from the sale. But at a sale price of $35 million, it won't be much. The sale is almost certainly a disappointment for the record labels, which had hoped Myspace Music would be the foothold needed to enter the emerging social media space.

When AOL bought social networking site Bebo for $850 million, the labels felt as if they were owed a cut due to the role music played in that network (AOL later unloaded Bebo for a measly $10 million two years later). With Myspace, they wanted to make sure that didn't happen again, and as such demanded equity of some kind in return for granting streaming music rights. Now, they're getting a cut, but of a much smaller pie.