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

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THR: Do you expect movies to play a role on MySpace or is long-form content not suited?
Vanderhook: Movies the way movies are created today I don't think are fantastic for digital consumption. You want to watch movies on a high fidelity screen. You want them to be big. You absolutely want to lean back and have popcorn or whatever it may be and really enjoy that experience. I think online, you will see shorter content or maybe shorter episodes of what may be a single story.

THR: How about movie clips?
Vanderhook: Absolutely. Movie clips themselves people view as content, so they love following whoever they may be a fan of and immersing themselves. We want to make available all types of content.

THR: Can MySpace return to sub and ad growth?
Vanderhook: What Specific Media brings to the partnership is that advantage on the revenue side - the ability to have a sophisticated technology platform and a very large sales force on a global basis.

I think driving revenue isn't going to be the challenge for MySpace moving forward. I think the challenge for us is turning the subscriber growth back up.

There is the old mantra of content is king. That absolutely rings true. So, if we can bring a high entertainment value of content to consumers - whether it is music or original programming and digital video - and build a community around that, I think we can get the actual subscribers and usage to go back up. We are bringing a tremendous amount of firepower in regard to creative ideas with Justin Timberlake.

We have gone in eyes wide open. It is a challenge we believe we can solve, even if it's never been done before. That's what drew us to this opportunity - the ability to take what was a high-flying brand at one time, which has lost some of its shine. The ability to return that to growth has never been done before in the digital space. There is not a single Web site I can think of that has gone from peak to trough back to a peak. That challenge as an entrepreneur is something we are very, very excited about.

THR: There have been all these Internet IPOs as of late. Is Specific Media considering one?
Vanderhook: In its previous incarnation as a digital advertising business, Specific had been looking at the public markets. We are very focused on growing a big business. Every time you build a big business and compete against huge companies out there like Google, you always need more capital to grow that business.

With MySpace, we want to do it and do it right. So, we'd like to integrate this business and take our time and really get the product right and get it on a right trajectory and then from there, we'll probably need more capital to grow the business. We will want to grow on a global scale. What's interesting in digital is that this isn't just about the United States. It is a single platform that can grow globally and reach hundreds of millions of consumers in every part of the world. As we do that, we're going to need more capital to finance the business, and the public markets will be the right spot for that.

So, I wouldn't say in the short-term, but as we integrate the business, that will be something we will do at some point in the future.
 

THR: How long have you been on MySpace? What about Facebook? Any policies on Facebook usage for your employees? Are the allowed to use it?
Vanderhook: I obviously use MySpace very heavily now. I don't have a Facebook profile and never had.
 

But I have certainly used the service under different names. For MySpace when we were acquiring the business, we were trying to keep a low profile, so we were not under my exact name that we were doing usage under. But now I have actually named myself and continue to use it and build it up.
 

We don't have a policy. Facebook has a great product. We don't view them as something we are trying to re-build. Obviously, historically they had very similar functionality, but our future direction isn't to compete with Facebook in terms of communications tools or tagging of photos and things like that.

I hope all of our employees use Facebook and they use MySpace. That's really our hope for all consumers out there that we can build a product that everyone is excited about and that they want to use. For us, there is no point to force-feed one product on everyone.