MySpace Buys iLike in Effort to Best Rivals!

By Social Editors • on August 23, 2009

The Wall Street Journal by Emily Steel

MySpace is acquiring online music service iLike, as the social-networking site faces a drop-off in visitors and tries to remake itself as a destination for music, videos, games and other entertainment content.

Terms of the deal weren’t disclosed, but a person familiar with the situation said it’s valued at nearly $20 million.

ILike, started by tech industry veterans and brothers Ali and Hadi Partovi, lets users on social-networking sites share music. It was created in 2006 to retool GarageBand.com, which had sought to create an independent music community for recording artists to promote themselves. iLike is popular on social-networking sites, including Facebook, Orkut and hi5, and says it has more than 55 million registered users.
Digits

* Live-Blogging MySpace’s iLike Press Conference

The iLike acquisition serves MySpace’s “need to create new social experience in music and beyond,” MySpace’s CEO, Owen Van Natta, said during his first news conference since he arrived four months ago. Mr. Van Natta is charged with resuscitating the site, which is facing intense competition from rival Facebook Inc. and upstarts like Twitter Inc.

MySpace is owned by News Corp., which also owns Dow Jones & Co., publisher of The Wall Street Journal.

The acquisition is the first on Mr. Van Natta’s watch and comes as MySpace seeks to build on its popularity among recording artists and bands, to showcase their music and to help consumers find the bands and videos they like. Mr. Van Natta noted that MySpace plans to extend iLike’s technologies beyond music to other features on the site, so that users can share entertainment content such as video and games.

Mr. Van Natta said the acquisition is part of a broader effort to “bring world-class talent” to MySpace. iLike’s management team, which will stay with the company after the deal closes, has had a string of successes in the technology business. Ali Partovi founded and sold online-ad company LinkExchange to Microsoft for $265 million in 1998. Hadi Partovi co-founded and sold TellMe Networks Inc. to Microsoft for $800 million in 2007.

Traffic to MySpace continues to drop quickly. The site attracted 68.3 million unique U.S. visitors in July, down 9% from the same period last year. Meanwhile, Facebook drew 87.7 million unique U.S. visitors in July, more than double the number a year earlier.

Ad revenue at Fox Interactive Media, the News Corp. business unit that is made up mostly of MySpace, dropped 22% in the quarter ended June 30 from a year earlier. News Corp. took $680 million in noncash charges in the quarter, in part to write down the value of Fox Interactive Media.

ILike has raised a total of about $16.5 million. Ticketmaster invested $13.3 million and took a 25% stake in 2006. Other investors include Khosla Ventures, Messrs. Partovi and former AOL and MTV executive Bob Pittman. The company has 26 employees and will remain in Seattle.

Share this post on the Social Networking & Bookmarking sites below...