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How Long Before Facebook Just Buys MySpace?

MySpace (NWS) basically just conceded the general social network category to Facebook. The former social champ will let users get their Facebook updates streamed to their MySpace accounts. So now come two questions: What does MySpace offer and should Facebook should just buy the company?

To completely write off MySpace would be a mistake. Yes, it's in decline and Facebook is in the ascendancy, as the monthly unique visitor estimates by, below, show:

Although estimates, you can see other analyses, like this one by of unique visitors, show generally similar conclusions:

MySpace would seem to have something between a fourth and a third of Facebook's traffic in the US, and there may be some strong cross-over in users between the two. But that would still likely leave tens of millions of potential new users. Even at 20 million, with Facebook users spending roughly half an hour a day on the site, if users saw 20 ads a month, that could be an additional 400,000,000 impressions, or tens of millions in additional ad revenue a year.

Furthermore, MySpace has developed strength in music promotion and sales that Facebook has yet to master, as my BNET colleague Ben Popper pointed out in August:

MySpace is actually deeply woven into the Facebook Fan Page system already. iLike, the most popular application for hosting music on Facebook by far, has been a wholly owned subsidiary of MySpace since September, 2009. But that integration hasn't stemmed the loss of traffic to MySpace, which is what really matters when it comes to ad revenue.
Owning MySpace would give Facebook access to all that personal data about music interests, as well as effectively draw in major artists and celebrities that still use MySpace as a platform. In 2005, News Corp. (NWS) bought MySpace for $580 million. Earlier this month, News admitted that, given the slide in traffic, MySpace's "current losses are not acceptable or sustainable."

That's not going to turn around in the next quarter, meaning that it will be time for a fire sale. Facebook could probably pick up MySpace for a relatively low amount. Given the traffic drop and long-established trends, perhaps $100 million or even less. It would be a smart and economical buy.


Image: Flickr user feverblue, CC 2.0.
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