Myspace is planning to launch a $50m Spotify rival, as the former social media market leader looks to reposition itself as a social music tool.
Digital media agency Specific Media LLC, which acquired Myspace last year, plans to raise $50 million to take on Spotify and Pandora in the digital music business.
The move into music subscriptions has been rumored for quite some time, but Business Insider published a leaked slide deck that appears to confirm it on Monday.
The company plans to use $10 million of the proceeds to fund marketing for a Myspace relaunch, and the rest for acquisitions, new licensing agreements with labels, and “general working capital purposes,” according to an investor presentation that was leaked Tuesday online.
Specific Media and its parent Interactive Media Holdings Inc. had not filed its fundraising plan with the Securities and Exchange Commission as of Wednesday afternoon.
The company hopes to take market share based on cost advantages over the segment’s two big players.
Myspace is projected to account for about $15 million of Specific Media’s $228 million in revenue this year, according to company documents. MySpace operations are expected to lose about $43 million this year.
Specific Media expects to remain profitable overall in spite of that projection.
Myspace had about 28 million monthly users in August.
Its members have free access to a library of 42 million songs that can be heard on mobile devices or through the Internet.
The library’s content comes from licensing deals with Sony, Universal, EMI and Warner along with thousands of independent record labels. Specific Media’s library includes 27 million songs from unsigned artists.
Pandora has surpassed 75 million registered users, while Spotify has some 16 million active users.
Specific Media bought Myspace from New York-based News Corp. last year for $35 million with the hope of turning around the struggling site.
Last week movie and pop star Justin Timberlake, who recently took an ownership stake in Myspace, debuted the site’s new look that focuses more on music, listeners and linking the two.
The site is invite only at this point as developers and engineers conduct beta tests. At its peak Myspace was valued at $580 million.
Since then the struggling social network has been a case study in the meteoric rise and fall of technology and media companies trying to find a profitable niche in the ubiquitous social networking segment.
View the Business Insider report here
