Get ready for MySpace Music, because you are going to be hearing a lot about it over the next couple of weeks as it prepares for launch.
The new joint venture, which tosses music rights from the big labels together with the existing MySpace Music property and users, is announcing a number of launch advertising partners this afternoon, including McDonalds, Sony Pictures, State Farm and Toyota. Each of these ad campaigns are rumored to be in the single or double digit millions of dollars.
But the big news is that MySpace Music has also been having exploratory meetings with private equity shops around a huge venture capital raise, say sources with knowledge of the process. The company is said to be considering a raise of well over $100 million, at a valuation of $2 billion or more. The money is there for the taking, we’ve heard, although the valuation is still up for negotiation.
Hulu, a TV and film joint venture between MySpace parent company News Corp. and NBC, raised $100 million at a $1 billion valuation in August 2007 from Providence Equity Partners, a Rhode Island based private equity firm.
We’ve confirmed that Providence Equity Partners is one firm that has expressed interest in investing in MySpace Music as well.
That joint venture plus a big capital raise worked out well for Hulu and News Corp., so it makes sense that they’d be looking to duplicate the process with MySpace Music. Our sources say no deal is imminent, however. At the very least investors may want to see a CEO in place before they put that kind of money into the venture.
I interviewed MySpace CEO Chris DeWolfe on a wide range of topics last week at TechCrunch50. Skip to 7:24 to hear just the discussion around MySpace Music:
Just goes to show that MySpace was sold to FOX for too low.
Shows the power of a “premium personalized location based domain name”+ billion dollar media empire spin+social app and wella’. not rocket science.
What is the Value of the Domain Name when it sold for 500 mill and what can it be considered worth now.
http://www.techcrunch.com/2008.....nt-2467069
Did they sell too cheap probably not, fox had the money at the time and some people wanted a legal big daddy clutch and too many hands in the investment bread basket. company needed an exit to clear the slate and a refresh.
you’ve got to be kidding. i know a lot of the techcrunch crowd doesn’t like myspace, but they have a really great product for their audience, and they’ve done a fantastic job actually making money without alienating their users.
you seriously think “myspace.com” is the reason they’re so successful? you better go offer $400mil for “myplace.com” then. hey, free $100mil, right?
myplace.com would be a great addition to the newscorp portfolio. they could use it for business social networking. a domain extention with an untarnished image is need for serious business social networking. 4 million could be considered a good deal for myplace.com based on market movement.
Proves MySpace was sold for too little
glitter graphics, worth atleast .5 billion
If you’re referring to Duc Chau, you’re wrong. He’s an executive at Rubicon Project now. They are funded by a multi-million dollar budget.
Developers never have significant rev share at large companies. Duc was only an employee of Response Base, the branch Brad chose to build MySpace in cold fusion.
A lot of people on the outside of Silicon Valley and LA have the impression that the business here is informal and that people are friends. It’s actually the opposite. It’s very professional. I went to several startups around LA, and they were all pretty much the same. There is a strict code of conduct at work and a hierarchy.
There’s no way Duc could have interjected in my opinion, and gotten some type of huge share away from Brad as a mere programmer at Response base.
1/3 of MySpace was purchased for $50,000 by Chris DeWolfe as part of the deal which had him developing it.
http://contracts.onecle.com/in.....2.17.shtml
“Section 2. PURCHASE PRICE. In consideration for EUNI’s sale, transfer and assignment of a one–third (1/3) interest in the Assets, Purchaser shall pay to EUNI the sum of Fifty Thousand Dollars ($50,000.00) (the “Purchase Price”)”
That was the deal. That was the only deal. NewsCorp had to pour so much money to develop MySpace to where it is now. They didn’t get that great of a deal. Plus they had to deal with the whole media fallout with the teens getting in trouble with acquaintances on MySpace and so forth.
The $50,000 for 1/3 was the deal of the century, and every Dick, Tom and Harry has been chasing it since. You can’t reproduce something like that. You have to be at the right place at the right time.
There are plenty of really good programmers in Vermont, and Ontario, ect… making 30k a year. If they were in Socal, they would be making 6 digits. You have to be at the right place at the right time for your skills to pay off whether you’re an executive or a programmer.
Mike Arrington tried doing something way out in boonf*ck Ontario as well with zip.ca. Even he couldn’t overcome the loserness that comes with being out of context.
DeWolfe and especially Tom were at the right place at the right time. Duc was too because he got great opportunities out of it. He isn’t screwed at all. What he did at MySpace lead up to what he is doing now.
Great new idea, same crappy MySpace logo. The massive number of MySpace users will guarantee success for any new venture they attempt, especially if it’s one to replace an existing successful product. Add to that those massive ad contracts and valuation and you get one scary, ugly monster.
How much does myspace really worth?
fox i give them mad props for getting such a ripoff of a deal buying myspace for 500 million
To all the people balking at how Myspace was such a sweet, great deal when they were bought…
I bet at the time, you were surprised that were bought for so high - you’re all a bunch of switcheroos with no firm opinion
huh?
Lawrence, go back to the orignal posts and comments regarding the sale, everyone was surprised at the low price, especially coming after Skype being bought for 4.1 billion. you really should learn some more before talking
In dealing with MySpace RIchard and all the people at myspace at the time told him he could NOT be done for that price. IT was TOO much.
Let anyone that writes for or on techcrunch.com has done anything like what Richard did for myspace at that time, sell a company for almost 600 million I will listen to them. Other wise stop saying that MySpace sold too little it is bullshit.
It is easy to make that call now that is was too low, also, what most people (techycrunchy) people forget is maybe the deal that myspace did was the driving force behind all this and without it, facebook and other website would of never got crap.
I’m not blaming anyone Tony
so myspace is taking all users to these new companies and getting multi billion $ valuation….they are doing same as what speeddate is doing, but in a different way
goes to show that there are great ways to monetize traffic !
Hmmmm…I really don’t like Myspace…but they seem to be making money and not going anywhere. Maybe their business model works somehow? (Although I’m still baffled at how much revenue those banners ads could generate for the site…)
they’re funded by Fox
The equity markets are in for a world of hurt even more so beginning this week. It’ll be interesting to see what effect it has on private equity. Take the money, while you can.
I’ve thought about this interesting post some more and I just have a feeling that within 12 hours the discussion won’t be about 2 billion dollar valuations but rather declining markets. I hope i’m wrong.
This is sort of surprising that they can only get a valuation of $2 billion. Mainly because a lot of people value Facebook around $5 billion (forget that ridiculous $15 billion valuation), but they monetize a lot better.
SchoolShift.com
No one said you had to go through school alone.
myspace MUSIC is getting a valuation of $2 billion, not myspace as a whole. that’s pretty damn good for a company that hasn’t even launched yet. i would not doubt the $2 billion figure is also a steal, since myspace essentially owns music online except for internet radio and downloads.
if myspace music does downloads as well as itunes and internet radio as well as pandora or last.fm, they will literally be the biggest player in music in HISTORY. considering how well myspace has done with the music community so far (record labels, indie artists, and music fans love them), i have a feeling that might turn out to be an understatement.
I can’t be the only one thinking tech bubble, can I? …Oh, maybe that’s taboo around here. Sorry.
yeah i can think of some more things that are taboo, pm me and i’ll show u
Are you trying to be cool, or can you back up your bubble claim? I’m tired of people screaming bubble when they don’t understand how something works.
the story is bad
They’ve actually been planning this since 2003.
that is good money from music
hmmm.. the valuations sound crazy but hey this is the web 2.0 or rather the bubble 2.0…
Still no word on EMI and still no deal to pay the indie artists out of that projected $2billion.
imeem has been owning the on demand music space for the last year, so you can bet that myspace will make sure they clone all the popular imeem features. And if they really get $2billion they can pay the major labels the ridiculous rates they want for long enough to let everyone else that’s doing something original go out of business.
That’s really bad news, these investors are supporting business models that are still hung up on replacing lost revenue from CD’s, which will remove the incentive for any experimentation. There are so many web2.0 music companies and the only onese which have enough identity and inertia to survive and compete will be imeem, last.fm and maybe pandora.
goes to show that there are great ways to monetize traffic !
Valuation in this media space, value of users x number of users.
According to Nielsen, 19 million users when News Corp purchased MySpace for $580 million. MySpace paid about $30/user. MySpace now has 183 million members. According to Murdoch, MySpace could now be sold for $6 Billion — about 10x return on the original $580 investment of two years ago. That’s at far less a per user price than Yahoo’s $1B offer to Facebook at $110 per user.
it be great if they helped the indie hip hop and rap artist. They will only cater to the indie.. i get hip hop beats and rap beats at http://www.beatslocker.com all A&R ‘d by major label music executives and produced by music producers that work with the top artists today.. the promo was the only thing left.. sadly myspace was what could of done it as traditional promo is too expensive..