Why Tim Vanderhook Paid $35 Mil for MySpace (Q&A)
The Specific Media CEO details his plans for the troubled social network, including persuading Justin Timberlake to join.
Few in Hollywood had heard of Specific Media, an online advertising network led by CEO Tim Vanderhook, until it came out of left field in late June to buy News Corp.’s troubled social networking platform MySpace for $35 million. The Irvine, Calif.-based company then shocked many by naming actor/pop star Justin Timberlake as a minority investor and creative force.
The Hollywood Reporter: Was your decision to bring Justin Timberlake on board as an investor mainly a marketing ploy? What is his exact role?
Tim Vanderhook: When we looked at MySpace, its current challenges and our strategies, what we needed and didn't have in terms of internal expertise was a profession artist, someone who has a multi-faceted career not just in music. Although Justin is rooted in music, he has successfully crossed over into television and movies. He has so many angles about him and clearly very talented - singing, dancing and now acting. As we were designing our strategy to build this platform for content creators, artists themselves, we needed someone with that expertise who could help us design it. We have the technology expertise - how to build technology and sophisticated algorithms to make it relevant, but we really lagged a third leg of the stool - somebody who is really an extremely bright and intelligent creative person. Justin will really help us design the strategy from an artist's point of view. The best way to describe it is he will be the creative force behind the platform.
THR: How involved is he really?
Vanderhook: Obviously, he has tons of careers, and he is extremely busy. But he has an office. I communicate with him almost every single day. He is extremely excited about it. He has tons of ideas that he wants to get working on. When he does have an opening in his schedule, he will be working out of our offices. We are having him create a team of about six individuals that will be working out of the MySpace offices to help him execute what he wants to do while he is out. Just since this has happened, he has already cancelled days to meet and talk with us and go over the strategy. The one piece that has probably been underreported is actually the level of involvement that Justin has. I think most people look at it as a marketing ploy. Up to this point, that is absolutely not even close to what reality is. He is extremely excited and involved and passionate about making MySpace relevant again.
THR: Did you know him before?
Vanderhook: We were looking for someone as we were looking to acquire MySpace. We looked at who is the most talented creative person who fits this bill. We came up with a couple, and he was on the top of that list. We didn’t know him. We got a chance to meet with his agent Johnny (Wright). I think we really struck a chord with Justin as he is passionate about helping other artists and giving back to that community. I think he was probably searching for something like this, and when we came up with this, I think we struck a chord with something he is passionate about.
THR: When did you actually bring Justin on board?
Vanderhook: We probably struck the deals simultaneously. It was really hand-in-hand. The final meeting with him was the day before the acquisition from News Corp. went down. We were with him in New York that Tuesday and strategizing and getting to know each other better. We just had a lot of things to finalize to get the acquisition done.
THR: What will his title be and any insight on how big his stake is in the company?
Vanderhook: He has a minority stake. The details we can’t disclose due to the confidentiality agreement. He doesn’t actually a title. He is just owner of a minority stake. He won’t have an actual president title or so. It is more about his equity stake and building the platform.
THR: So, should we expect he will be involved for a while, even after you guys develop the strategy?
Vanderhook: Oh yeah, absolutely. And strategy is always continuing to move.
THR: Give me three reasons for why MySpace fizzled!
Vanderhook: I think the turning point was when News Corp. signed the advertising deal with Google. It was obviously a huge deal and made a lot of sense for News Corp. But with the strings that came attached with that deal and the amount of advertising that had to be involved, the site lost its direction and ultimately lost its way of what it needed to be. It went from a social network where people could connect to be more like a portal and try to drive page views to generate more advertising revenue to achieve thresholds needed in the Google advertising deal. I don’t blame News Corp. for that deal. I think anyone would have done it given its size. But you started basically compromising the experience of the user for the benefit of revenue. And then Facebook came along and built a great product.
We are going to try and bring MySpace back to what it was supposed to be and really come back to its roots and clean up the site to make it simplified and have a better user experience.
THR: Where do you see the main opportunity beyond that, and will entertainment play a role?
Vanderhook: We are going to stay in the entertainment category. That is absolutely important. Inherently, content has changed due to social media. Obviously, we will still have a social element to the site where the community can connect and discuss and talk to each other. One thing that hasn’t been made as widely available to consumers as it should be is the strength of the MySpace music service. We have a unique opportunity. We have a huge library, almost the entire library from all the major labels, of free, streaming, on-demand music. And we are looking at what type of premium subscription model we can do with that as well. Music will be a very important pillar of the entertainment strategy as we move forward.
We also think there is a huge opportunity, when you look at something like YouTube, which is user-generated, and Hulu, which is more premium rerun television, there is no new original programming that has been produced to entertain consumers in the digital sphere. Post-Hulu, there hasn’t been a lot off exciting stuff going on. It’s gotten kind of boring. We will look at whether we can entertain the masses and create a platform for these really bright creative minds, and we’ll bring an audience, which today is 70 million people. For all the woes the MySpace brand has had, the amount of traffic every single month is absolutely gargantuan relative to other Web sites out there. People will get a kick out of being entertained again and find something that is really unique.