There's more to News Corp. than MySpace, but in Rupert Murdoch's bid to outfox us all, it's the perfect starting point: one friend at a time.
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Introduction
The Treasure Under the Fortress
Death to Trespassers
Hearst 2.0: The Battle for Content Rages Continues
The One-Man War Machine
Imagine you're a media mogul on the eve of a new millennium. You began your quest in 1953, building an empire that would come to span a range of media properties, from TV, satellite, film and newspapers. It was News Corp., and it was good. But by the late 1990s, you saw the not-so-humble signs of a threat to your old media empire: the internet. As a relative late-comer to what would eventually be known as the dot-com bubble, you earmarked $2.3 billion to colonize the growing web. Mercifully, you didn't spend much of that money (a deal to buy PointCast, a one-time red-hot internet property that let users customize their news, never went through). But maybe that was a good thing. You came out of the bursting dot-com bubble relatively unscathed, as compared to your rivals The Walt Disney Co. (Go network, anyone?) and Time Warner's Pathfinder. In 2004, as the internet rebounded with Yahoo's resurrection and a newcomer named Google became synonymous with search, you got back in the game, plunking down a half-billion dollars for MySpace. Since that time, it's been all digital, and the game has been for keeps.
Base Camp MySpace
In July of 2005, Murdoch made a clear ad play when he bought MySpace for $580 million.
"With a significant amount of advertising dollars moving from traditional outlets to online, News Corp., like most media companies, is looking to boost its internet assets," Alan Gould, an analyst at Natexis Bleichroeder, told Reuters at the time.
But Murdoch was way ahead of the curve, and it saved him a bundle. While some at the time questioned whether the media titan had overpaid for a social networking site that was the fifth most trafficked site, Murdoch's purchase now looks like a fire sale when compared to the string of recent acquisitions made by some of his competitors, with Google spending $1.6 billion on YouTube and another $3.1 billion on DoubleClick. Not to be out done, Microsoft dropped a $6 billion bombshell when it purchased aQuantive, and advertising giant WPP spent a whopping $649 million on 24/7 Real Media in the latest round of who's-buying-who.
But Murdoch got something the others missed in the MySpace buy; he got users where they live, not where they play, and he as much as said so.
In February, Murdoch addressed the McGraw-Hill 2007 Media Summit, saying he didn't think YouTube would be able to monetize the traffic generated from user-submitted videos.
"If you interrupt the flow of videos with commercials, [YouTube viewers] are going to go with [MySpace] or somewhere else," Murdoch told the crowd.
Translation: mere traffic without quality users doesn't mean much to Mr. Murdoch.