iLike Deal Signals Myspace’s New Direction

Myspace is apparently in serious discussions to purchase digital music site iLike. As far as social networking is concerned, Facebook sped past Myspace a while ago and has lapped them numerous times depending on the length of the hypothetical track I’m alluding to.  Myspace still maintains a massive user base and has aggregated an enviable repository of both professional and user-generated content (primarily music). The company’s recent seismic management shift has left the web community wondering how the News Corp. property plans on leveraging these assets to revitalize the brand.

The iLike deal seems to confirm suspicions previously expressed by two of my favorite web players, Marc Cuban and Docstoc CEO, Jason Nazar. In their eyes, it’s time for Myspace to wave the white flag and cede victory to Facebook as “a place for friends”, and refocus on monetizing media content (whether directly or indirectly).

Nazar:

“[Myspace] should be the next generation content/ entertainment portal that leverages millions of user profiles to more accurately provide data to advertisers on what is appealing to specific demographics.”

Cuban:

“You have a strong (although appearing to weaken) position in Music.  Take a close look at the economics of music and see how you can leverage them to your advantage…At this point, MySpace’s core competency becomes arbitraging its ability to buy and sell music to its user base. The user base thinks they are getting a great deal, and the bands have a source of revenue that they are paid up front.”

At first glance, the iLike integration would appear to supplement the Myspace Music service. Myspace Music is not generating ad revenue as anticipated and the service is caving under massive royalty payments.  According to Michael Arrington at TechCrunch, it’s more likely that iLike will replace Myspace Music rather than supplement it:

“The last thing MySpace wants to do is put good money after bad and throw more assets into MySpace Music…iLike isn’t just about music and music recommendations. The platform they’ve built to facilitate artist-to-user publishing and user-to-user recommendations can be used for content beyond music, such as videos and games. Our guess is MySpace intends to integrate iLike’s technology into more than artist pages. So having the assets at MySpace makes sense.”

So Myspace may have waved the white flag on more than just social networking. This may be an admission that the Myspace Music model of ad-supported streaming in partnership with premium content creators/distributors is kaput and that the future lies in iLike’s model, i.e., recommedation-generating, download-to-own, with a heavy community component to it.