Internet Video

Murdoch's Next Space

9/22/2006 8:00 PM Eastern

When Rupert Murdoch's News Corp. paid $580 million for the company that owned two-year-old MySpace.com in July 2005, The Guardian newspaper in the U.K. said the deal “does not feel right,” likening Murdoch's move to a “septuagenarian” trying to dance to Girls Aloud. This summer, Tom Freston may have lost his job at Viacom Inc. for not making the same deal or better. Here are excerpts of Murdoch's comments about News Corp. and MySpace last Tuesday at the Goldman Sachs Communacopia XV Conference.

What are your goals for 2007?

I think [our goals for 2007 are] to continue our drive into digital transformation, to drive our profits at a better rate than our competitors, and that's really it. We're looking at all sorts of strategies. We're staying very flexible. But basically, we clearly have to keep driving this digital [transformation]. …

We've got technical problems with the growth that we've had of MySpace, for instance. Just buying enough space week after week to keep handling the million-and-a-half people that sign up every week. ...

We expect, certainly by this time next year, if not before, to be in 10 or 11 of the biggest countries in the world with MySpace. We're already in Britain, Australia, France. This week all our senior people are in China. ...

I think it will be terrific [in Asia]. It will be just the same [as here] — an explosion of popular culture as they download their music and their videos. There's been a lot of talk about YouTube; I don't want to knock it. … But already, MySpace has got 60% of the videos that YouTube has. And when we get it right, which we will in the next 60 to 70 days, we expect to get past YouTube. ...

A year ago, when we first bought [MySpace], it may have been right to say the average age was about 19. It's a lot older today. I think we've got all the 20-year-olds. The average today is a lot closer to 30, and it's people in their 30s starting off, so it will be much more of a 15-to-35-year old spread. Beyond that, you have to look at much more specialized sites. You haven't got people who are older than that. I think they are going to specialized sites and they are not spending the time — and they're not using the Web in the same way to make friends and talk to each other around the world. And that will come.

Will there be applications tied to MySpace?

Well, if you're talking about instant messaging, yes. Or VoIP, yes. Eventually, e-mail, absolutely. Certainly, video. All those things are happening now, or in process. We have about 300 jobs open. It is not easy to recruit high-quality software engineers in a month, when there is such demand. But we're going as fast as we can on all those things.

And for the other demographics, what are they going there for? They're going there for news, they're going for special purposes, like buying things.

There are a huge number of sites one could be in and we have to choose what areas we want to be in. it's not equated with buying companies or anything else.

We don't say, 'let's start in this area,' or 'let's start in that area.' No. There's got to be money there. As people get older they go to specific sites for specific things — and not many at that.

What about China?

I don't think you can [censor MySpace in China]. … We have to make MySpace a very shining site. I think we'll end up owning maybe only 50% of the Chinese site and have a lot of Chinese people there who are responsible for it. And if the government [makes them unhappy] they'll call them and not us. We'll have to see how it develops its own character and finds other ways of developing revenue than simply advertising, as other Chinese sites have done already.

September