Why Tim Vanderhook Paid $35 Mil for MySpace (Q&A)

11:25 AM PST 07/13/2011 by Georg Szalai
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Tim Vanderhook

The Specific Media CEO details his plans for the troubled social network, including persuading Justin Timberlake to join.


THR: How much original content do you expect? And to what degree will you also integrate film and TV library content?
Vanderhook: On the music side, content is going to be licensed. And beyond that, we have a tremendous community of independent artists that create a ton of tracks. On the original programming side, I would expect a significant amount of original programming built specifically for consumption for the Web rather than built for TV and tried to be repurposed for digital distribution. In traditional media, you have broadcast and cable networks. We believe there is going to be an explosion of digital networks out there where you are using the Internet as the primary distribution channel. I think there will be a lot of content created for digital and it will be the next big boom in online.

THR: Who do you look to create that content? Anyone you are already talking to?
Vanderhook: We want to build a platform for professional content creators. We have been talking with a tremendous amount of production companies. These are the same companies that make movies and TV shows. What the digital stage gives us is another distribution channel to bring great ideas to consumers. We are going to create a platform that can capture all that and help them with that.

THR: Any content partners yet we can mention?
Vanderhook: We can’t. At this stage, we are focusing on original programming. We don’t want canned stuff. We want to really have it made specifically for digital consumption. From there it will take a while to actually create it. We have a number of partnerships that we are talking about now, but nothing I can announce today. Over the near-term, you will see us get a little more active on announcements.

THR: Do you expect to shell out much money up front for such content?
Vanderhook: On the digital side, you don’t have as big of a cost structure as on the traditional side. It is pretty high-quality content for digital distribution. And what really makes this model possible today is the online video advertising industry now that this will be over $2 billion this year. What Specific Media brings to the table is a huge global ad infrastructure. For digital ad dollars, we are competing with the likes of Facebook, Google, Yahoo, AOL and Microsoft. These are big, sophisticated companies, and Specific has competed with them for over a decade. We have over 500 employees. We will bring those ad dollars to professional content creators. Advertising will be the primary business model on the content side. On the music side, I think consumers would love to have a blend of opportunities – not just advertising-supported, but subscriptions, too.

THR: You mentioned AOL, Google, Facebook etc So, do you envision Specific Media and MySpace as bigger online players and do you compete most with social networks or portals?
Vanderhook: We don’t want to bring a product that has been done before. So, from a product perspective we don’t to compete with anyone. The product we are looking to bring to market I don’t think is going to be competitive with Facebook or Yahoo or any of them. We want to tie social media with content and build a community centered around the content rather than around the individual. Sure, I guess on the social side people will try and see it as competing with Facebook. From an ad perspective, our ad sales teams are all going after the same bucket of dollars for ad-supported content.

THR: What’s the MySpace user of the future?
Vanderhook: We would like the MySpace brand itself to appeal to all consumers. And then ultimately you go select online – music, original programming or a community centered around a passion – your demo will be similar to others there.

If you look at MySpace today, it's 18-34 with a sweet spot in the mid- to younger demos, which is obviously a very important demo. We are glad to have them.

But we'd like that platform to reach all demos and bring in mass audience to this community of content creators. The actual content creators themselves will probably have their own niche demo that their content appeals to that they are going after. Hopefully we can bring an audience of all 200 million people online in the U.S. to the content creation community, but maybe something focused on the 18-24 demo will probably appeal to that demo.

So, let's bring the audience and community and the platform for content creators and then there will be various niches.

Overall, what we would definitely want to have is a big, broad reach of the audience and then let the content creators decide who goes where.

THR: What type content for older demos?
Vanderhook: At MySpace, you have a tremendous music service that has the entire library. I think the music piece is going to have mass audience appeal. The best part about the digital space is that it is not Tim Vanderhook deciding the highest-quality content, but it's ultimately the community itself.

THR: What content will be produced that will attract an audience?

Vanderhook: I am so happy to not have the pressure on me to have to make that decision. Really, we just want to bring a platform for the creators and an audience, and whatever happens happens. And we'll support that community with the economics of advertising.

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