RUMOR: MySpace Planning To Raise $50 Million To Build A Spotify and Pandora Competitor

MySpace’s parent company is looking to raise $50 million in order to rebrand MySpace as a streaming music service that would compete directly against Pandora and Spotify in 2013.  News Corp. acquired MySpace for $580 million 6 years ago and sold it to Specific Media for $35 million last summer.

Specific Media is a private company that is owned by the Vanderhook family and they changed their name to Interactive Media Holdings.  One of their investors includes pop artist and actor Justin Timberlake.

Since December 2011, MySpace’s traffic has risen 36%, but the company’s financial stability still is not good.  MySpace generated $15 million in revenues this year and $9 million in 2011.  In 2012, MySpace lost over $40 million.  Interactive Media expects that MySpace will lose another $25 million next year.  MySpace’s revenues declined from $42 million to around a projected $35 million in 2012.  In 2010 MySpace hit around $60 million in revenue.  Now Interactive Media wants to raise $50 million in funding and they plan to use a lot of that money to relaunch MySpace to compete directly against Pandora and Spotify.

Of that $50 million, $10 million will be spent on marketing and $15-$25 will be spent on licensing deals with music labels.  Another $15-$25 million will be spent on “general working capital.”  Interactive Media is planning to launch a music subscription business for mobile in Q2 2013.

The advantage that MySpace has is that they are hosting 27 million songs from unsigned artists and that accounted for 50% of the music played on their website.  BusinessInsider has a leaked slideshow with additional details.

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