MySpace worth $3 Billion?

Last summer Fox's Rupert Murdoch bought LA Internet start-up MySpace for $600 million; now, almost a year later, Fox execs are speculating that the social networking phenomenom is worth about five times that, according to the British site The Observer, which wrote two stories today about the media giant.

MySpace is one of those online places where young people hang out - though 'swarm' might be a more accurate term for the kind of 'social networking' that goes on there. It is fantastically popular with teenagers, who use it to link up with online 'friends'. And it has been growing at internet speed. When Murdoch bought it last July, it had 16 million visitors. By the end of 2005 it had 29 million and currently claims to have 55 million registered users.

Given that MySpace users generate most of its 'content' (relieving its proprietor of the tedious need to employ journalists), plus the fact that those users are young and obsessed with movies, music, celebrities, sex and the dysfunctionality of the adult world, you'd have thought that this was a space where advertisers would want to be. So it has proved to date, and the site's advertising revenues have been correspondingly healthy.

Healthy, despite the fact that some schools and lawmakers are attempting to ban access to the site for a variety of reasons, from the manageable (bandwidth) to the repulsive (child molestation, stalking). Young people rank it as their favorite destination on the web, whereas parents and teachers see it as the biggest threat to the innocence and future of the youth.

Fox sees it as a way out of Old Media and a way to reach a new audience.

Murdoch and News Corp have been relentless in lobbying and pushing for deregulation in the media, allowing them to spread their influence. They have been hugely successful. Murdoch also has an eye on all possible futures. He has entered the new technology of satellite broadcasting by snapping up DirecTV and the internet by buying MySpace. Both moves look savvy and could counterbalance future declines by traditional media outlets. It has long been predicted that piracy and DVDs will hurt movie studios, and that the internet will wipe out newspapers.'In 30 years' time the media world will be utterly different,' says [Robert] Lichter [president of the Centre for Media and Public Affairs].

Fox announced Tuesday that it will be auctioning off their search business to either Google, Microsoft, or Yahoo! - whichever bids the highest.