SAN FRANCISCO (Reuters) - News Corp’s MySpace, the world’s largest online social network, said on Wednesday it will allow outside developers further access to its service to counter the growth of smaller rival Facebook.
News Corp chairman Rupert Murdoch joined MySpace chief executive Chris DeWolfe to make the announcement before Silicon Valley’s Internet elite and answer questions about the media conglomerate’s digital future.
“We are opening our platform in the next couple of months,” DeWolfe said, confirming months of speculation that MySpace would follow in the footsteps of Facebook, which emerged as a serious competitor after allowing software developers to create applications for its users.
At the same time Murdoch signaled lower expectations for MySpace revenue in the company’s 2008 fiscal year ending in June, suggesting it may not reach a previous forecast of over $800 million.
“I might say $750 (million) but it’s at least 30 times what it was the day we bought it two years ago,” Murdoch said at the Web 2.0 Summit in San Francisco. “If we keep that trajectory going like that we’ll be very happy.”
Murdoch’s acquisition of MySpace for $580 million in 2005 crowned him as the smartest media executive at the time, once rivals realized the potential of its growing base of users for promotions and advertising.
But privately-held Facebook has surged to a strong second place in the social network world since it opened its site a year ago beyond an original base of college students and started allowing in May independent software makers to build applications for users and profit from it.
“There’s been so much excitement, energy and growth on the part of Facebook,” said Forrester analyst Charlene Li. “There’s a lot of pressure on MySpace to capture that energy.”
While MySpace remains the leader with nearly 110 million users, Facebook’s rapid growth to over 47 million members has made it a new media darling, with media reports pegging its potential value to investors as high as $15 billion.
“I would say we’re different (than Facebook) and in spite of all the hype we seem to be growing faster,” Murdoch said.
Asked what he thought of such a valuation, Murdoch added: “What it really does is it tells you that News Corp is totally underpriced.”
MYSPACE IS THEIR SPACE
For four years MySpace has allowed users to embed features from other Web sites by pasting bits of code on their MySpace pages. But Facebook’s open call to developers has already attracted 6,000 independent applications to its site.
“YouTube, for one, basically generated all their early traffic on MySpace,” DeWolfe said of the company’s traditional willingness to let other Web companies build businesses on MySpace. YouTube is the online video unit of Google Inc.
DeWolfe said he was seeking to create a far more lucrative environment for outside developers on MySpace than currently exists on Facebook, where so far advertising opportunities for independent application developers are limited.
“The idea will be to allow outside developers to tightly integrate their applications into MySpace,” DeWolfe told Reuters following his on-stage appearance.
Software programmers will be able to control key aspects of how features like photos or user authentication work, allowing them to build more complex Web services than the restrictive approach MySpace has employed to date with outsiders.
Importantly, the company plans to give developers control over advertising that runs on the Web pages they create to host new services on MySpace. “There is going to be paid revenue opportunities for all the developers,” DeWolfe said.
MySpace also plans to take steps to protect its users from potential security problems or overload created by a sudden flood of new applications. It is setting up a “sandbox” version of the site for 2 million users who elect to get early access to new applications while they are still in test mode.
DeWolfe also said he and MySpace co-founder Tom Anderson have signed up for an additional two-year contract. He did not disclose financial terms.
MySpace had already taken steps to bulk up its presence and showcase its technology expertise, opening an office in San Francisco this week with about 50 employees and plans to expand its team to about 200 people within the next year.
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