There is always an element of the confessional about interviewing people, but I really felt like a priest when I interviewed MySpace co-founder and CEO Chris DeWolfe earlier this week. DeWolfe was keynoting San Francisco’s FailCon conference and our conversation naturally focused on failure – and particularly, of course, the meteoric failure of MySpace.

Not that DeWolfe considers MySpace to be a failure. Arguing that the company pioneered the social media revolution, DeWolfe – who is now the founder and CEO of the online gaming network Mindjolt – clearly has learned much from his turbulent experience as MySpace CEO.  And yet one can’t help suspecting that if DeWolfe had one wish, it would be to go back to June 2006, back to that now almost unimaginable moment when MySpace was the social network and it had just overtaken Google as the most visited website in the world.

This the second in a weeklong series of interviews about failure. Yesterday, Vinod Khosla confessed to me that he had experienced many more failures than successes in his seemingly illustrious career.

Rupert Murdoch withstood intense grilling at News Corp’s annual shareholder meeting today, which focused largely on the phone-hacking scandal that is causing such an upset in the company’s financials and leadership. But among other things, Murdoch owned up to the debacle that has been Myspace.

“I made a huge mistake,” he said. “We then proceeded to mismanage it in every possible way. All of the people concerned with it are no longer with the company.” Except for himself, of course. The fact that it was a mistake and a mismanaged one at that is not news to the rest of the world, but the unmixed apology for the billion-dollar boondoggle reflects how low recent events have brought the once-proud news giant.

As you no doubt remember, the flatlining social network was sold in June to Specific Media for $35 million, representing a loss of around 94% of the site’s value as bought, and a microscopic portion of the never-realistic $6 billion at which Murdoch once valued the property.

Despite his self-deprecating words, Murdoch was described as looking “a little feisty” by the New York Times, perhaps because he is confident that the company has already shed the requisite amount of blood and profits over its practices and investments. The Hollywood Reporter has collected a number of opinions from analysts and experts, and the consensus seems to be that no immediate actions would be taken, but that clearly the company is in dire need of redirection, and the solution may take some time to formulate.

[image: Justin Sullivan/Getty]

Myspace savior Specific Media laid off 8% of its staff yesterday, about 50 people. Those laid off were mostly Myspace employees, presumably eagerly awaiting their severance package according to one source; “The people that [sic] got let go were celebrating because Specific Media doesn’t have a clue what to do.”

In the past three months, Specific Media had gone from the excitement of new acquisition smell to post partum depression it seems like, recently scaling back this summer’s grand Myspace relaunch plans because of unfavorable progress.

We armchair tech enthusiasts can say that this was inevitable, but hindsight is 20/20 especially when you consider the ambitions Specific Media held for the company exactly a quarter ago, hoping that Myspace could find solace as a platform for premium celebrity online content.

At their grand entrance on Myspace’s sale day, Specific Media co-founders Tim and Chris Vanderhook sauntered into HQ to rally the troops — mainly with the news that former Mouseketeer and current superstar Justin Timberlake would also have skin in the Myspace game. One of those troops decided to record the speech for perpetuity, which you can listen to above in full.

It’s a pretty fascinating recording — in case someone at HBS is in need of a spare case study …

With their Pollyanna-esque enthusiasm, the Vanderhooks are basically making the classic mistake certain ad networks make, thinking that because they have the ads they can become a content or media company. Great media companies start with the media. Anyone can sell ads, but creating great content is an art.

Parts of the talk I found endearing …

“We wanted to move from just the advertising piece and truly become a digital media company.”

“What we were looking for was ‘Can we find a property that has scale and reach and really fits the bill that we could match up with our advertising infrastructure and then go head to head with Yahoo, go head to head with Facebook, go head to head with AOL, go head to head with AOL. Go head to head with Microsoft?’”

YIKES.

“We grew up in Southern California. We love Myspace. This is an iconic brand, we plan to bring back what Myspace was supposed to be. We want to invest in the business.”

“We are fired up, Justin [Timberlake] is fired up. He can’t wait to interact”

“I think it’s pretty simple, I mean you look at Myspace, it has a great platform, great technology, 70 million people still using the site. People can talk about the decline but there’s just one thing missing, it’s just got to be cool. At one point Myspace was cool and all of a sudden Facebook somehow became cool, We’re going to make Face uh – Myspace cool again.”

Denial is sometimes a lot more dangerous than that river in Egypt.

Myspace owner-Specific Media has laid of a percentage of its staff today, we’ve confirmed with the company. Specific Media said these layoffs took place in sales and operating areas, and was part of a consolidation effort to eliminate redundancies between the two businesses. As Specific Media says in a statement: The company is consolidating forces to ensure greater alignment between its workforce and the direction in which it’s headed. Specific Media says that “less than 8%” of the company’s employees were laid off. Specific Media has about 750 employees, so around 50-60 employees may have been let go.

Apart from Myspace, Specific Media is an ad technology company that aims to help drive viewership for content owners, engagement for brands and relevance for consumers. The company allows marketers to buy digital ads across the Web, TV, online video, mobile platforms. Of course, you may know that Specific Media (along with Justin Timberlake) bought Myspace earlier this year from News Corp for around $35 million.

Part of that deal included letting go half of Myspace’s then staff of 400 employees. These layoffs are in addition to those cuts made in June.

Chris Vanderhook, Chief Operating Officer at Specific Media and Myspace issued this statement about the news today: “We’ve made great progress in integrating the companies post acquisition, and have identified new ways to streamline the businesses. In addition to the synergies realized, there have been some real innovation and big progress made toward achieving our goals…We are well on our way to executing our plan and will invest in our strategy as we continue to grow.”

Unfortunately, Specific Media recently decided to scale-back the elaborate plans to debut the new Myspace. Traffic has also been declining for the beleaguered social network.

Editor’s note: This guest post is written by Tom Anderson, the former President, founder and first friend on MySpace. You can now find Tom on Facebook, Twitter, and Google+

This is just a guess, but I’d bet money that Vic Gundotra and Bradley Horowitz probably feel like their heads are going to explode. Anyone on the Google+ team who really cares about G+ is probably getting very little sleep, and are annoying their friends and family with their one-track G+ minds. There’s been such an amazing amount of feedback, the Google+ team can’t help but be overwhelmed—and what we see is just on the site and in the press. Imagine what’s coming into that “send feedback” inbox that’s at the bottom of every G+ page?

At MySpace I tried to digest that “inbox” and “community” by myself, and that worked pretty well for a few years. It was a little easier back then, but today’s G+ users are an entirely different breed. There are a ton of early adopters, technologists on G+, and they’ve all been through the social networking ringer before. G+ users are offering powerpoint slideshows, illustrated screen mockups and long-winded essays on what needs to happen. There is genuine, high-quality thinking going on in the “free advice” that G+ is receiving from the global community. How can the G+ team cut through the noise and decide what’s important? (Especially when there’s some really high quality noise being directed Google’s way.)

Here’s a few things I’d do right now, if I were Google.

1) Start seriously courting the journalists, tastemakers, and celebrities that are using and/or pontificating about G+. This doesn’t mean Google should ignore “regular” user feedback, or even that Google should do what the triumvirate says they should do. It just means they should have a real, personal relationship with those people. During MySpace’s run-up, journalists continually got their facts wrong about MySpace. They wrote story after story about how Facebook was bigger than MySpace when in truth Facebook wasn’t even 1/10th the size of MySpace.

Why? Because the journalists’ Ivy League educated children were using Facebook, and journalists have deadlines and other things to think about. If you get to know people, they think of a real human being when they write those stories, and they care a little more. I don’t want to say people are “sheep,” but if the general Internet population believes G+ is happening and here to stay, then they’ll commit the time to try it out. Popular opinion is the biggest “filter” for most people—they don’t have to try something if they’ve already been told it’s not cool. Popular opinion is the ultimate “social search” if you will. This doesn’t just apply to user counts (G+ hits 20 million!), of course. Popular opinion will shape every aspect of people’s G+ perception.

2) Exhaustively think through the privacy issues and tie up any loose/ends that G+ has on this front. I’ve seen multiple people share their phone number with me without knowing it. They may not be wanting to share other things as well, though those things have been less obviously private. I’d make sure that people understand how their posts can be shared/reshared, and how their other Google accounts (profile, Gmail, docs) and content (Youtube, Picasa) are connected to G+. I don’t believe Privacy is a real issue to most people, but most people think it is a real issue to them. As thus, it plays a big role in the psychological justification for defecting from competitors. “Safety” hysteria destroyed MySpace in the press. It got MySpace banned from schools, Apple stores, and by well-meaning parents who had been terrorized by what they were reading. Privacy advocates have tried to destroy Facebook and Google in the past. You need the best PR person in the world on your team, Google, but even more so, you need to make sure the software doesn’t give the privacy hounds something to be rightfully angry about.

3) Move Google’s top analysts (probably focused on monetization right now) onto the Google+ project to form a skunk works team. Mine the data about G+ usage like it’s Gold, because it truly is the future of Google’s long-term revenue and profit growth. (And I actually don’t think there’ll ever be advertising on Google+, theme for another article.) Facebook was really good at understanding their onboarding process, knowing what key activities led to later usage (adding x number of friends, putting up a picture and getting a response, etc.).  Google needs to closely track users who are not adopting the service, those that are, and try to understand what type of user is the one that is ahead of the curve—identify the user who is illustrating the future “common” use case through their pioneering activity. G+ needs to understand all three types of users and develop a plan for each of them.

4) Hire the best product executors & visionaries in the world, something that clearly has not been Google’s forte in the past. (In fact, it seems that some good ones have left, because they felt they weren’t valued at Google).  I’m not referring to run of the mill product managers and UI developers or “social media experts,” but rather that rare breed of people who have demonstrable experience leading users down the path to internet nirvana. Google has the engineering talent and ability to scale the G+ service (more valuable than people understand, right now, I think). But does Google have the product people? Google’s technical infrastructure will allow them to do things that other social sites could not do—in fact, they’re already doing that. They need product visionaries who can understand that. Though I love G+, some parts of G+ are really a mess right now, and two that are incredibly important at this stage are in need of much work: onboarding & photos.

5) There must be one ring to rule them all. One leader making decisions. Maybe that person is already in place at Google; I don’t know the internal hierarchies within the company. But the leader himself, and every employee must understand who this is. Making a website is similar to making a movie—hundreds of people work on it, one person makes the final decision, and they make them every minute of the day. I use the LOTR analogy because there may be 12 extremely important product people (point #4). But someone needs to make the decisions. And to further that analogy, if the ring goes bad, the Hobbits need to throw the ring in Mt. Doom and find a new leader. OK maybe this analogy doesn’t work, but you get the point. All the opinions and analysis will paralyze anyone who is not up to the task. That person has got to bring it all together and make decisions based on his gut and understanding of the overall company’s mission. No that leader won’t always get it right, but the clarity achieved and time saved is crucial. The Internet moves at lightning speed. If you mess up, a resolute leader can iterate and fix. This is worthy of its own dissertation (read Randall Stross on this point about Steve Jobs/Apple vs. Google right here).

You learn a lot when you mess up. I messed up a lot, so these are just a few of the things I learned. By the way, these lessons aren’t just for Google.  They also can be applied to any startup, so good luck everyone. I’m hoping to see you all make your mark on this world.

Gotta love Tom Anderson. Newly reinvigorated by the launch of Google+, “MySpace Tom” has become a social power user (and regular TechCrunch contributor!). As a man at the forefront of the early days of the social wars, he’s obviously full of information. And today he decided to share a bit more. This time, it’s a fascinating story about the time Microsoft, not Google, was about to land the MySpace ad deal.

In a comment on (where else) Google+, Anderson tells the story in response to my most recent post about the Google/Facebook war before Google+. Based on a Quora thread, I noted that the 2006 search/ad deal Google signed with MySpace (Fox Interactive Media) may have been the true kick-off of hostilities between Google and Facebook. As a result, Microsoft signed Facebook — which later led to the famous investment.

But as Anderson tells it, it almost didn’t happen that way. In fact, it was Microsoft that was just about to sign the MySpace search/ad deal. “The reason we ended up going with Google search is because I ran into John Doerr and told him we were about to close with Microsoft. Within an hour, Google brass helicoptered out to a News Corp. shindig at Pebble Beach,” Anderson says, noting that he wasn’t allowed in the closed-door meeting where negotiations took place. This resulted in the billion-dollar deal.

“The terms were so screwed up, that it had a big impact (a negative one) on MySpace’s future,” Anderson writes. “Things would have been quite different if that deal hadn’t happened,” he goes on to say.

A few more awesome things about this info:

1) Again, Anderson is leaving this comment on Google+ — the new service by the company whose ad deal way back when helped seal the fate of his company.

2) Anderson says this was actually the first and only time he had ever met Doerr.

3) Vic Gundotra, now the man in charge of the Google+ project, was on the other side at the time, trying to get the ad deal done for Microsoft (Gundotra left Microsoft for Google shortly before the MySpace deal was finalized). This is how Anderson met Gundotra, in fact.

4) Anderson says he had forgotten all of this info until my post.

Indulge me here for a second.

Just think about what would have been had Anderson not run into Doerr? Microsoft would have likely closed the MySpace deal, perhaps with better terms for MySpace. Google, presumably, would have then gone after a similar deal with Facebook. This perhaps would have given them a leg up a year later to do a Facebook investment, instead of Microsoft.

If my wild speculation holds, the Internet would have been a very different place right now. It may have been a place for Google and Facebook to be friends. In a relationship, even.

Professional social network Linkedin surpassed Myspace in terms of traffic to become the No. 2 most visited social networking site in the U.S. in June. LinkedIn, which has seen a resurgence of traffic after its IPO in May, reached an all-time high of 33.9 million unique visitors in June compared to Myspace, which saw 33.5 million unique visitors (that’s down from 34.9 million in May). Hopefully Myspace’s new owners can recharge the troubled social network.

Twitter posted record U.S. traffic, with June as the first month the site saw over 30 million unique visitors. Twitter.com had 30.6 million unique visitors in June, compared to 27 million unique vistors in May. The increase in traffic is actually a big win for Twitter, which splits traffic between its own mobile clients and the many third-party clients that are used to access the network.

Facebook also reached an all-time high in terms of U.S. traffic in June, according to newly released comScore data. In June, Facebook saw 160.8 million unique vistors in the U.S., which is up from 157.2 million uniques in May. The company also announced that it crossed the 750 million active users mark worldwide in June as well.

Tumblr saw 11.8 million unique visitors in June, up from 10.7 million unique visitors in May. In June, we reported that Tumblr was seeing around 400 million pageviews per day, thanks in part to international growth and faster response times.

You know what isn’t cool? $35 million isn’t cool … So in a move that makes truth stranger than fiction, Justin Timberlake, who played Facebook president Sean Parker in a movie called The Social Network, has taken an ownership stake in a real life social network as part of News Corp.’s Myspace sale.

Outgoing Myspace CEO Mike Jones just tweeted congrats to Timberlake on the deal. My verdict? This is super weird, especially considering the guy who Timberlake played in the film gave a lengthy explanation of why the social network failed, in an interview last week.

According to the press release, Timberlake will play a “major role” in strategy and creative direction for the beleaguered social network. The release makes no mention of exactly how much of a stake the pop star will have.

“There’s a need for a place where fans can go to interact with their favorite entertainers, listen to music, watch videos, share and discover cool stuff and just connect. Myspace has the potential to be that place,” Timberlake was quoted as saying. The new Myspace site will be unveiled at a press conference later this summer.

So is this Timberlake news an attempt by Specific Media to leverage the mother of all celebrity moments in order to begin the arduous process of reinvigorating the property? Well it’s definitely provided a distraction from the tales of doom and gloom surrounding the sale and layoffs.

@mathewi @edmundlee JT does realize he was just acting and isn't really Sean Parker, right?—
Cullen Scannell (@cullens) June 29, 2011

@TechCrunch @alexia "$580m isn't cool. You know what's cool? $35m! …. Also, drop the My. Just Space. Much cleaner."—
Mike Kramlich (@zodlogic) June 29, 2011

From what I’m hearing it’s been a rocky morning at the social network, which was bought by Newscorp in 2005 for $580 million, as job cuts went deeper than expected. The most significant departure? CEO Mike Jones will be leaving the company and is currently on a two month transition plan.

Myspace has steadily lost influence and value as Facebook’s “one graph to rule them all” campaign grew to dominate the space. On a more hopeful note, I’m also hearing that several of the laid off employees have already received calls from recruiters representing a mix of Silicon Valley and Southern California companies.

From: Mike Jones
Sent: Wednesday, June 29, 2011 11:26 AM
To: Myspace All
Subject: IMPORTANT COMPANY NEWS
Importance: High

Myspacers,

Today, we are announcing that Myspace will be acquired by Specific Media, one of the world’s leading online media and advertising platforms. Over the next few days you will be hearing from the team at Specific, including their CEO, Tim Vanderhook, regarding their exciting plans for Myspace and how it fits in with the overall vision of their company.

In conjunction with the deal, we are conducting a series of restructuring initiatives, including a significant reduction in our workforce.  I will assist Specific with the transition over the next two months before departing my role as Myspace CEO.

I wanted to take a minute to thank you all for the incredible experience it has been to lead this company and to work closely with all of you over the past several years. While I regret we won’t be working together at Myspace any longer, I am very proud of the work we have done here and believe we have performed with excellence – even under extremely difficult circumstances.

My time here at Myspace represents the most engaging and challenging time of my professional career. I have found our team to be comprised of the best people I have come across in our industry.

You can read the press release below.  Once again, thank you for all of your hard work and dedication.

Thanks,

-M

SPECIFIC MEDIA ACQUIRES MYSPACE FROM NEWS CORPORATION

Los Angeles, Calif. — June 29, 2011 – Specific Media, a digital media company, today announced it has acquired Myspace from News Corporation. As part of the agreement, News Corporation will take a minority equity stake in Specific Media. Additional terms of the agreement are confidential and will not be disclosed.

“Myspace is a recognized leader that has pioneered the social media space. The company has transformed the ways in which audiences discover, consume and engage with content online,” said Tim Vanderhook, Specific Media CEO. “There are many synergies between our companies as we are both focused on enhancing digital media experiences by fueling connections with relevance and interest. We look forward to combining our platforms to drive the next generation of digital innovation.”

Specific Media is an innovative global interactive media company that enables advertisers to connect with consumers in meaningful, impactful and relevant ways. Founded in 1999 by brothers Tim, Chris and Russell Vanderhook, Specific Media is currently headquartered in Irvine, CA and operates offices around the world.

About Myspace

Myspace, Inc. is a leading social entertainment destination powered by the passions of fans. Aimed at a Gen Y audience, Myspace drives social interaction by providing a highly personalized experience around entertainment and connecting people to the music, celebrities, TV, movies, and games that they love. These entertainment experiences are available through multiple platforms, including online, mobile devices, and offline events.

Myspace is also the home of Myspace Music, which offers an ever-growing catalogue of freely streamable audio and video content to users and provides major, independent, and unsigned artists alike with the tools to reach new audiences. The company is headquartered in Beverly Hills, CA.  http://www.myspace.com/pressroom/

About Specific Media

Specific Media is a digital media company driving viewership for content owners, engagement for brands and relevance for consumers. With capabilities spanning original programming, cross-channel distribution and addressable advertising, the company connects audiences, content and brands, adding meaning to each touch-point. As people discover new ways to consume content, Specific Media creates impactful media experiences no matter where they are.

www.specificmedia.com.

With reports of social network Myspace about to sell for ~$30 million, the tech world eagerly awaits the HBS study for why the service, which was bought in 2006 by Newscorp for $580 million and was at some point valued at $1.5 billion (a quote in a Business Week article referred to it as “one of the best acquisitions ever”) ultimately failed.

For those that can’t wait for the inevitable GSB white papers, former Facebook President and Napster co-founder Sean Parker explained why Myspace succumbed to Facebook in an interview with Jimmy Fallon at the NExTWORK Conference in New York.

While the entire interview is a delight to watch, the highlight is when Fallon starts asking Parker about whether Facebook is “it,” (“Is Facebook the end game?”) bringing up the failed Myspace for comparison. Parker answers,

“It’s never the end game. Facebook is now a platform upon which all kinds of applications are being built it’s definitely not it. It would be incredibly presumptuous and self-serving of me to believe that Facebook was the end of history. The only way it could possibly be the end of history is if it becomes some sort of artificial super intelligence that takes over the world.”

Able to put being the possibility that it was victim of some artificial super intelligence aside, at minute 20:54 Fallon asks Parker, “Where did Myspace go wrong?”

“The failure to execute product development,” Parker replies. “They weren’t successful in treating and evolving the product enough, it was basically this junk heap of bad design that persisted for many many years. There was a period of time where if they had just copied Facebook rapidly, they would have been Facebook. They were giant, the network effects, the scale effects were enormous.”

Parker goes on to credit the ingenious move of targeting college kids for Facebook’s eventually market dominance, “Facebook entered the market through college and the reason we went in through college was that college kids were generally not Myspace users. College kids were generally not Friendster users …”

Taking an almost Machiavellian tone, Parker also alludes to the latter social network’s displacement being deliberate, “It was this completely open market and it was a real longshot. Nobody actually believed, outside of us three or four people in Palo Alto, that you could enter the market through this niche market and then gradually through this carefully calculated war against all the social networks become the one social network to rule them all.”

“Carefully calculated war against all social networks” is a very interesting word choice by Parker especially when coupled with the extremely self-aware statement that “if they had just copied Facebook rapidly, they would have been Facebook,” a line which seems like it came straight out of The Social Network.

Well now is as good as a time as any to mark the end of that war; Myspace is selling for comparative peanuts while Facebook is valued at $70 billion. To the victor go the spoils, at least for the moment.

Myspace cut around 47% of its staff back in January and these new layoffs come as Myspace is preparing itself for a sale, which we’re hearing will be signed tomorrow and announced on Friday. While there are multiple rumors circling regarding who exactly will be buying the beleaguered social network, the names being tossed around include a bidding group fronted by Activision CEO Bobby Kotick, Buzzmedia, and even LivingSocial.

In any case this is turning out to be a banner week for Myspace, which closes its fiscal year on Wednesday. I’ve emailed Myspace PR for comment, and will update this post when they get back to me.

A message now appears on the feature’s former home that states, “Karaoke has been discontinued…If you have any questions, please contact us by clicking the “Contact Myspace” link on Myspace help at http://www.myspace.com/help”. A MySpace spokesperson further confirms the news and says that any remaining balances of the pre-paid service beyond June 15th will be refunded to users.

The Karaoke feature revolved around a widget that would allow users to record (using their PC’s video camera and microphone) and then share their karaoke performances. There were also some audio editing features to tweak pitch and distortion settings — users were limited to ten recorded songs, but could upgrade to a premium subscription if they wanted more (the subscription added additional effects and features).

It was mostly for fun and sharing with friends, but MySpace also marketed it as a way to potentially get noticed by professionals in the industry (it would occasionally feature MySpace Karaoke videos). The product was based on the technology of kSolo, a startup that MySpace parent company Fox Interactive Media acquired back in 2006.

So I was surprised to see unique visitors level off over the last two months, according to Comscore. And by level off, I mean a straight line floor at about 62 million worldwide monthly visitors and 37 million U.S. visitors. Look at that chart. It’s just weird. Uniques should have fallen another 8 million or so. Instead, MySpace held the line.

Curious, I dug a little deeper into their stats. Not good.

While worldwide uniques were flat at 62 million, average daily visitors dropped 13% during the month, total time on site dropped 23% and total page views dropped 23% to 3 billion.

U.S. usage dropped even more dramatically. Uniques were flat at 37 million, but daily visitors fell 28%, total time on site dropped 48% and page views dropped a whopping 50% from February 2011 to April 2011 (a two month period).

That’s a 50% drop in page views at MySpace in roughly 60 days.

None of this adds up. MySpace has long talked about making changes to improve user experience that would impact page views but actually increase time spent on site. That isn’t what’s going on here. What is going on here is that overall usage continues to disintegrate at an increasing pace, but somehow unique visitors are flat and not decreasing along with the other usage stats.

It’s extremely unlikely that something like this would just “happen.” Either MySpace bought a ton of traffic that hit the site and then vaporized, or they engaged in some sort of marketing to users like a massive email drive, or something else. From what we see MySpace has actually curtailed email marketing to users after a big push late last year that didn’t seem to work.

MySpace clearly doesn’t want to see their usage numbers deteriorate so quickly right in the middle of a sale process. I understand the incentive to have unique visitors level off. What I can’t figure out is how they did it. It just doesn’t look like a natural event to me with the other usage stats continuing to fall off a cliff.

Back in 2008 MySpace was on a roll. They racked up $900 million in revenue and the company was still growing. But a year later top execs started to bail (the smart ones went early). Within two months cofounder and CEO Chris DeWolfe was gone.

We’ve gotten a copy of the confidential MySpace pitch book that parent company News Corp. has distributed to potential buyers. Notably, that pitch book doesn’t include any historical financial or user data about MySpace at all. Everything is projected out and forward looking, and even then it’s bleak.

Revenue for fiscal 2011, ending June 30, 2011, is expected to be just $109 million. Expenses for the year are projected to be $274 million, and the company will lose a whopping $165 million for the 12 month period. That’s after massive waves of layoffs, although I expect much of the costs of the layoffs are included up front in 2011 expenses.

After 2011 the pitch book turns to pure fiction. After losing $165 million this year, they expect to actually have $15 million in ebitda in fiscal 2012. How? Revenue will decrease to $84 million, but expenses will fall from $274 million this year to just $69 million. The company will then be profitable, says the pitch book.

That means about $205 million would need to be found in operating cost savings in the next 14 months. That means even more massive layoffs. And yet somehow News Corp. argues that revenue will only fall 23% in the next year. Costs will decrease 75%, and revenue will fall just 23%.

Believable? Nope. But at least on paper it makes MySpace profitable.

The pitch book predicts 2013, 2014 and 2015 revenues to be $101 million, $119 million and $139 million, respectively. With the company losing 14% of its audience every month, it’s hard to see revenue stabilizing and then actually rising.

It’s extremely unlikely that anyone believes the projections in the pitch book are possible. Which is why News Corp. is in the unfortunate situation of trying to offload a money vacuum, and will be lucky to be able to even give it away.

The real question is how much News Corp. should be paying someone to take this off their books, not the other way around. MySpace, in other words, needs a dowry. A sad fate for what was once the largest site on the Internet.

She’s joining Tagged, a social network that has somehow survived, and even thrived, in a Facebook world. Her first day at Tagged as Chief Customer Officer is on Monday morning.

Part of her job will be what CEO Greg Tseng is calling “onshoring” of a bunch of customer service jobs. Fifty customer service reps working with Tagged in India as contractors will be let go, and the company will be replacing them with new full time employee hires in San Francisco.

Tagged, with more than 100 million users, is on track to meet their $50 million revenue goal this calendar year, and are currently at a $40 million run rate, says Tseng. They have 65 full time employees, and will be at 100 by year end (not including the new customer service reps).

Everyone knows MySpace traffic is going the wrong way, but the accelerating decline (and big financial losses) is a serious problem. Parent company News Corp. is in the middle of a sale process, and everyone from venture firms to private equity firms to operating companies are taking a look. “It’s like slowing down at the scene of an accident,” says one person with knowledge of the discussions, “everyone wants to take a look at how bad things have become.”

The problem with negative growth is that predictive modeling has to be thrown out the window. And an accelerating decline in audience suggests that MySpace won’t be stabilizing soon. Right now, people are fleeing as fast as they can from the site.

News Corp. seems sensitive to getting a lot less than they paid for MySpace – $580 million in 2005. That price isn’t going to happen, which means a spinoff may be the best PR solution for MySpace. It’s not clear, though, that MySpace head Mike Jones has a go forward plan that anyone really cares for, say sources. MySpace had around 95 million unique visitors when the site was redesigned from the ground up and relaunched late last year. By any measure that relaunch has amounted to nothing more than a medieval-era bloodletting, weakening the patient further.

MySpace, once the king of the Internet, is in very real danger of becoming just a footnote in Internet history.

This is a dramatic situation, and more drama is likely as the scene continues to unfold.

Former VP of Product at Myspace Todd Leeloy and Myspace Product Manager Joe Munoz have launched a semantic tagging network and link curation service today called Tagging Robot. Tagging Robot currently crawls your Facebook newsfeed and separates your links based on topics, as well as giving you relevant topics data for each link.

Tagging Robot uses NLP and Machine Learning to build users a topic-centered profile, and uses your Facebook Interests and Social Graph to populate the page. What you immediately see on your profile is a list of recommended links (based on followed topics), a list of all links shared recently by your network and your favorites (which you track by clicking the <3 symbol next to each link).

In addition to pulling from your Facebook Interests, you can follow topics on Tagging Robot by clicking on the “plus” or “minus” sign next to the link topic.

The service has shared over 1.5 million links and crawled over 45,000 user profiles so far, with just a hundred beta testers, and Leeloy said that they plan to add link-crawling capabilities beyond Facebook. But this isn’t a consumer product, and eventually users will be able to integrate this functionality onto any site that has an audience and a content index, like a blog or social network. “It’s really hard to demo and API, so we build out the demo as proof of concept” , he said.

“In a world where you encounter 500 links per day, you need to know what’s best from your social network and beyond,” he says. Tagging Robot is an attempt to increase this relevancy, and bring users more signal and less noise.

You can sign up for the beta here.

Remember MySpace Music? It was supposed to put online music streaming on the the right track. But with all the layoffs, shrinking audience and turmoil at parent MySpace, MySpace Music is singing the blues. According to comScore, only 17 million people in the U.S. visited MySpace Music in January, 2011, which is down 46 percent from the previous year. Pandora is now bigger on the Web, with an estimated 20.3 million monthly U.S. visitors.

Today, MySpace Music president Courtney Holt is stepping down. He joined two years ago from MTV. But with MySpace itself on the wane and Rupert Murdoch looking to unload it, MySpace Music can no longer hold its own.

Below is the internal MySpace email Mike Jones sent to employees announcing Holt’s departure. No replacement was named, instead Jones will be adding MySpace Music to his responsibilities.

From: Mike Jones
Sent: Thursday, February 24, 2011 10:44 AM
To: Myspace All
Subject: Organizational Update

Myspacers,

I wanted to let everyone know that Courtney Holt’s role in the company will soon be changing. Over the next several weeks, he will be moving from being the President of Myspace Music to becoming a key advisor to both Myspace and Newscorp. Courtney will provide guidance on the strategic direction of Myspace Music and lend his incredible depth of experience, industry expertise and creativity to Myspace and Myspace Music. Additionally, Courtney will continue to serve on the board of Myspace Music.

Sam Wick will now oversee all of marketing for Myspace and operationally I will be taking over as the interim president of Myspace Music.

Please let me know if you have any questions about these changes.

Songtrust (founded in October, 2010) and Myspace Music this morning announced a partnership to bring Songtrust’s music publishing management services to the social network’s (vast) audience of DIY songwriters and bands.

A division of Downtown Music, Songtrust’s digital rights management solution empowers indie songwriters and artists to manage their music publishing and related rights.

Songtrust thus aims to streamline what has historically been a complicated process of protecting song copyrights, collecting royalties, and maximizing creative licensing opportunities through a single dashboard.

Courtney Holt, President of Myspace Music, a joint-venture with equity stakes from major record labels, said Songtrust provides a much needed music publishing administration solution for the millions of do-it-yourself artists on the network.

Myspace Music says it will promote the Songtrust service to their audience of musicians.

It’s a partnership that makes plenty of sense, and it’s good to see Myspace Music focusing on offering songwriters and artists the tools they need to build a successful career in music, too.

So it’s no surprise they let half their staff go, some 500 people, in early January.

Another, smaller, social network has apparently found a say to be relevant in a Facebook world. San Francisco based Tagged logged revenues of over $30 million in 2010 and are profitable with a staff of 50. We reported on that in late 2010 when I interviewed founder Greg Tseng. They’ve been profitable for the last three years.

And now they’re hiring. In an email to Tagged staff that we’ve obtained, Tseng gave an across the board 10% raise to every full time employee. And he let them know that they intend to double staff from 50 to 100 employees.

How are they doing it? They’re focusing on something Facebook has ignored for the last several years – letting users meet other users on the site. Facebook wants to mirror your real world social graph and doesn’t provide many tools to meet new people. Tagged is all about that, something we discussed extensively in our interview last year.

The email is below.

Dear team,

As announced at today’s team meeting, we have delivered another record year in 2010, increasing revenue to over $30 million and completing our third straight year of profitability!

Who made this happen? WE ALL DID.

So, I am delighted that these results allow me to announce that Tagged will be awarding a 10% raise — across to the board — to every full-time employee effective January 1, 2011. Congratulations!

When the company does well, we all do well, so this is a well-earned reward for everyone. It is also in anticipation of big 2011 plans which will require all of us to contribute 110%.

This year, we aim to increase revenue to over $50 million, double our team from 50 to 100 full-time employees, and have our most productive year ever in product development. These are all important steps toward achieving our mission of enabling anyone to meet and socialize with new people.

I hope you are as excited as I am about 2011 and congratulations again on a record 2010.

Best,
Greg