The July issue of Wired includes a feature on News Corp.’s Rupert Murdoch, and what might be his current crown jewel, MySpace. The main value that MySpace provides the company is “the power to make hits.” Ever hear of Dane Cook? He’s a really popular comedian probably because of his MySpace page. The Arctic Monkey’s are becoming popular in North America with help from their MySpace page. Lots of celebs have them now. MySpace is huge, and shows no signs of slowing down.
Of particular interest to me, Murdoch claims that Google passed on the opportunity to purchase MySpace, for about half the price News Corp. paid (which was still a steal). Murdoch says:
I like those guys, but theres a bit of arrogance. They could have bought MySpace three months before we did for half the price. They thought, “Its nothing special. We can do that.”
This, dear readers, is what happens when you’re a media company that thinks you’re a technology company. I’m not sure it’s arrogance, so much as it is this incredible desire to be a technology company that blinds them from making any rational decisions. Google’s big three (Larry, Sergei, and Eric) all have technology backgrounds, yet Google is very clearly a media company. Almost all of their revenue is derived from advertising, and they increase that revenue with more eyeballs, not necessarily great technology.
As Om Malik points out, Google really, really, should have bought MySpace when they had the chance:
As widely reported, MySpace is now the largest source of search traffic for Google, accounting for over 8% of their inbound traffic as of early May. That essentially means that MySpace is responsible for about $400 million of Google’s annual revenues. Knowing this, MySpace is trying to capitalize by holding an auction for its search business. If Google wins, it will end up sharing a significant percentage of that $400 million with MySpace… John Battelle thinks the split to MySpace will be close to 90%. And Google would need to pay it every year. Needless to say, had Google acquired MySpace, no such payments would have to be made.
Om also points out that Google+MySpace=Largest-Site-on-the-Web. Or at least, that’s what could have been. More eyeballs than anywhere else. A media company thinking like a media company would have purchased MySpace, no question.
News Corp. doesn’t have any such delusions. They’re a media company. They purchased MySpace.
[In case you’re wondering, my very plain, very boring MySpace page is here.]