Microsoft’s MSN is in preliminary talks with MySpace about using the social networking site’s music service, MySpace Music, to help power music offerings on the giant portal.

While sources at both companies cautioned that the talks are still early, Microsoft (MSFT)–which has its own music site that it programs with original and partnered content–execs are interested in goosing it.

That’s because MSN Music consistently ranks substantially lower than other big online music properties in terms of traffic, while MySpace Music is always near the top.

Sources said Microsoft execs don’t think they can do as good a job as MySpace is doing and don’t see the point in striking needed but complex deals with music labels, which the News Corp. (NWS) property already has.

In an April report by comScore (SCOR), for example, MySpace Music was No. 2, just behind AOL Music, with 27.4 million unique monthly visitors. MSN Music was No. 6 with just 7.4 million.

Nonetheless, music is an area MSN cannot lag so badly in, given that entertainment is one of the key categories it is focusing on as it preps for a major renovation of the portal.

As BoomTown wrote in mid-July about a wide variety of changes coming to MSN:

MSN, Microsoft’s online portal, is also preparing a major redo of what U.S. and, possibly, international consumers will see, as it doubles down on five key content verticals, while cutting back on others.

In a new focus that will start to be apparent in the next month, MSN will heavily add to its News, Sports, Finance, Lifestyle and Entertainment offerings, weaving more data from [its search service] Bing into the mix.

“It’s a decision to make it so MSN does less better,” said one source close to the situation. “So there will be a focus of attention on a smaller number of categories in which we can be either #1 or #2 in, rather than #4 or #5.”

It is not clear exactly what the financial terms would be in any tie-up between MSN and MySpace, which could include licensing of content and other services related to music.

But such a deal is not unusual–MSN’s sports site is powered by Fox Sports, which is another News Corp. property.

And such a partnership would also key into concepts that MySpace CEO Owen Van Natta outlined in a recent interview onstage at the Web 2.0 conference.

Key among them was boosting music and entertainment overall and making them the prime focus in the site’s efforts at reinvigorating itself, as well as expanding distribution of MySpace.

In fact, MySpace recently bought social music service iLike to expand its distribution all over the Web, for example–including on Facebook, the longtime social networking rival from which MySpace is now trying mightily to differentiate itself.

In his appearance, Van Natta also unveiled a music video hub, the ability by users to buy music using Apple (AAPL) iTunes, and a set of better analytical tools–called MySpace Music Artist Dashboard–to help artists figure out how to best work with fans.

But MySpace needs more than these, and a link with Microsoft would provide it with a traffic gusher, since MSN’s main page remains one of the most trafficked sites on the Web.

If such a distribution partnership were struck, it would also raise the question of what will happen regarding MySpace’s negotiations with Google (GOOG) over renewal of their search deal, which expires next summer.

Dissatisfaction over the pricey three-year deal has been expressed by both sides; their mutual grumbling is one of the biggest open secrets in Silicon Valley.

Doing a search deal with Bing is the obvious and only alternative, although few expect any agreement to be as rich as the one MySpace did with Google in 2006 for $900 million.

Interestingly, it was recently reported that both Google and Facebook were bolstering music search and sales offerings, and Google’s apparently includes the use of the iLike player.

In other words: This could get really complicated.

Execs at both MySpace and Microsoft I reached out to declined to comment.

(Full disclosure: News Corp. owns Dow Jones, which owns this site.)

In a week, the entire advertising sales staff of MySpace will gather at a swanky new seaside resort about 20 miles south of Los Angeles to get a first glimpse of the fresh direction the company is preparing to take under its new management.

The beleaguered social networking site has been in the midst of an effort to reinvigorate its image, spur innovation in its product and–most of all–pull itself out of a too-long slump, even as longtime rival Facebook has seen explosive growth.

Now, with a new team of execs, the News Corp. (NWS) property is putting the finishing touches on a master plan, which will include a new redesign of its hopelessly messy interface and doubling down on a product strategy that will center on, said one source, “what we own”–namely, music and entertainment.

On the agenda, aptly enough, for the 150 ad sales employees, who will gather at Terranea in Palos Verdes, is Ben Sherwood, author of “The Survivors Club: The Secrets and Science That Could Save Your Life,” and founder of a Web site of the same name that describes itself as “the place for surviving and thriving.”

Also coming to the meeting will be several bands that have successfully leveraged MySpace as a platform, to talk about their experiences and to play for the crowd.

And, perhaps most importantly, the group might also get to meet its new boss by then, as several sources close to the situation said that MySpace has settled on an exec to fill the key job of running its ad business.

While it is unclear if the deal is completely done, sources said MySpace management will announce the pick this week.

Sources added that MySpace has been particularly interested in one exec from Viacom (VIA) and another from Microsoft (MSFT).

While the sources would not name the Viacom exec, several pointed to Keith Lorizio, Microsoft VP of U.S. sales, as someone MySpace has been targeting.

In late August, MySpace sales and marketing head Jeff Berman left the company as MySpace hired MediaLink, a New York- and Los Angeles-based media consultancy, to help get its ad sales business back on track.

That effort has been led by MediaLink President Wenda Millard, who is well known in the ad industry and was longtime leader of the ad sales force at Yahoo (YHOO).

Getting an experienced top ad exec in place will round out a recent spate of new hiring by MySpace, including a new CTO, Alex Maghen, who moved over from its MySpace Music joint venture, and a new CFO, Mark Rosenbaum.

This has been part of a wholesale flushing out of most of the top execs who worked under co-founder and former CEO Chris DeWolfe by new CEO Owen Van Natta.

Van Natta, along with COO Michael Jones and Chief Product Officer Jason Hirschhorn, have been squirreled away since late April, working at cleaning up the company by replacing management, restructuring its various units and cutting costs, including massive layoffs.

They have also been trying to come up with a plan to differentiate MySpace from Facebook, a good strategy since it is now well-nigh impossible for the Beverly Hills-based MySpace to catch up with the Palo Alto, Calif.-based Facebook’s galloping growth.

While the whole new offering will not be rolled out prominently until at least the first quarter of next year, said several sources, some changes will begin sooner, including a gradual redesign of the site.

Under the new plan, said several sources, the main idea will be to shift the focus to engagement over sheer audience numbers. While MySpace is still huge, with about 70 million monthly U.S. visitors, increasing how much time they spend on the site is the goal.

“It’s not like numbers are not important, but the better metric for MySpace will be how involved users are,” said one person close to the situation. “MySpace needs to win on minutes.”

And, rather than the wider and more scattershot approach of past years, the new direction being stressed is more scalable and focused.

“It is not about getting everyone and their mothers on MySpace,” said a source, “but about being a better site to those here.”

That will include stressing “ownership” of online categories, which for MySpace are music and entertainment, with the hope that advertisers will be attracted to more engaged users.

Unlike Facebook, which is often described as a utility platform for communications between friends, sources said MySpace will be aimed more at being a platform for communities of interest.

That includes using tools from other companies, such as MySpace’s recent two-way synch with Twitter, the hot microblogging service, to link those communities.

Presumably, the company’s August purchase of iLike, the social music start-up, is also part of that plan.

“Instead of the ability to just connect friend to friend in a single social graph, this will be about connecting a person to their communities of passion and interest and to others like them anywhere,” said one source.

Music is the obvious key leverage point, the still-bright spot of MySpace, followed by adding big entertainment categories like movies, television, gaming, video and other pop culture arenas.

(BoomTown request: Become the HQ for “Gossip Girl” addicts, um, fans, and I am so there.)

“MySpace should represent pop culture online to customers and advertisers,” said one source. “The core strength has always been music and that is where the site will really excel, because it binds customers to the service.”

The even heavier music focus on the main juggernaut site, noted several sources, does create an odd situation with MySpace Music, the separate joint venture the site has with music labels to create a massive music community.

While sources do not think News Corp. will attempt to suck MySpace Music back into the main site, due to the complex partnership issues, the idea is to make them even more deeply integrated and to sell them to advertisers as one powerful marketing message.

In any case, several sources noted that one of the most successful parts of the new plan has been to convince News Corp. leaders that MySpace does not have to beat Facebook to be successful.

Sooner than later, of course, MySpace has to do just that.

Will it work? Who knows, but said one source close to the situation quite correctly:

“There is no silver bullet for MySpace–it just has to climb back step by step.”

(Full disclosure: News Corp. also owns Dow Jones, which owns this site.)

The board of iLike planned a meeting earlier tonight to go over a buyout offer by MySpace, several sources close to the situation said. But it was suddenly canceled because of some thorny tax implications related to the talent-retention part of the deal to purchase the social music start-up.

This does not mean the pending acquisition is in jeopardy, sources said, and it could be on track to be signed as early as today, barring any more complications.

That is what both iLike and MySpace execs are hoping, said sources, one of whom described the outstanding issues as a “technicality.”

What’s also been unclear is the actual price the social networking giant is paying for iLike, which has been reported as about $20 million.

In fact, only $13.5 million will be paid upfront in cash, with about $8 million of that money likely going to one of its major shareholders, Ticketmaster Entertainment (TKTM), due to its preferred shares.

Another $6 million has been promised by MySpace in forward payments to retain some key employees–including iLike co-founders and twin brothers Ali and Hadi Partovi.

Although those employees can remain in Seattle, where iLike has its HQ, they must stay employed at Beverly Hills, Calif.-based MySpace for two and a half years to get their money.

It’s that talent part of the deal that caused the Partovis to cancel the iLike board meeting, which they explained to key investors was necessary due to some confusion over how the money paid to these employees would be taxed.

A person briefed on the issue said that if it was taxed as compensation, it would have a much higher tax rate than if it were considered long-term capital gains.

The Partovis said in the email that they were working on the problem with their advisers on the sale, Allen & Co., as well as with lawyers and accountants.

Tax snafus in the middle of a sale are not exactly the way the entrepreneurial Partovis envisioned it was going to go for iLike (see my various video interview related to iLike below) when they created the compelling music sharing and recommendation service in 2006.

After only a few years, the innovative start-up claims it has 50 million registered users overall.

A lot of that growth was due to iLike quickly becoming one of the most popular widgets on social networking sites like Facebook, where it has also been the top music application, with 10 million active monthly users.

The Partovis–who once were close with execs at Facebook (see my party video below), particularly founder and CEO Mark Zuckerberg–placed great faith in its growth lifting all Web 2.0 boats.

It did not turn out that way, though, especially from the important financial point of view, and iLike scrambled to diversify.

The iLike service recently began offering a music downloading service, for example, as well as other such features, all of which would be attractive to the music-centric focus at MySpace.

Once an Internet sensation, MySpace has been struggling to restructure itself after losing momentum and buzz in recent years, as well as a huge advertising revenue drop in its most recent quarter.

Its owner, News Corp. (NWS), replaced its founders with new management four months ago, including former Facebook exec Owen Van Natta as CEO.

After making major staff layoffs and rejiggering management, Van Natta and his new team have been working on an overhaul of the MySpace product and seem to be refocusing it to become a global music and entertainment service.

MySpace also has a joint venture with major music labels, MySpace Music, which has been trying to attract consumers and build a viable business. Sources said MySpace Music could also buy into the iLike deal or simply license its technology to improve its features.

Thus, purchasing iLike would fit in well with MySpace’s overall plans.

And iLike has also been in need of a fix itself.

For all its popularity, especially on Facebook, it has moved slowly toward profitabilty, and its $17 million in funding has been dwindling, as has its viability as a standalone company.

Back in more frothy Web 2.0 days, iLike’s generous funding gave it a valuation of more than $50 million, which has also lost steam over time and as the economy has worsened.

In the last quarter of fiscal 2008, for example, Ticketmaster wrote down its $13 million investment by $6 million.

Tensions between its execs and iLike have gotten worse over time, although some thought at one time that Ticketmaster would buy iLike.

No longer, which is why the founders turned to Allen & Co., as MediaMemo reported as far back as November, to find another big investor or buyer.

Wrote Peter Kafka: “Delivering free music on the Web has so far proven to be a high-cost, low-revenue endeavor…”

So, the New York deal-making firm ginned up a small group of suitors, which included Facebook, Activision Blizzard (ATVI) and Microsoft (MSFT), as well as MySpace.

Of the three, Activision was most serious, with interest in integrating iLike’s community and technology tools with its Guitar Hero franchise.

But Activision never actually made a formal bid, said sources.

Both Microsoft and Facebook also considered the purchase, but sources said they would only offer stock in a deal. But iLike wanted cash in the deal.

The Partovis were also was wary about working at either place.

Both Partovis, for example, had worked at Microsoft (Ali after selling it LinkExchange in 1998 for $265 million; Hadi several times, once following Microsoft’s acquisition of Tellme Networks, which he co-founded).

As it has turned out, in its short life, iLike’s last, best alternative is apparently MySpace.

“Look, iLike has been shopped around for a while, and while the team and technology are great, it only has one choice and that’s to be sold,” said one person involved in the various scenarios. “The question for the buyer then is whether it was worth it to pay up or just move on and do it ourselves.”

So until the bean counters settle this IRS nightmare, here is my video interview with Hadi Partovi about a year ago at iLike’s HQ in the Capitol Hill section of Seattle, when times were a little more hopeful:

And here is a very dark and very shaky video I did when iLike threw a fete in Silicon Valley to celebrate its start-up two years ago and to send some appreciation in Facebook’s direction–it is so dated that Facebook COO Sheryl Sandberg, who is in the video, is still at Google (GOOG).

(Full Disclosure: News Corp. also owns Dow Jones, which owns this site.)

]]> http://kara.allthingsd.com/20090817/sale-of-ilike-to-myspace-135-million-in-cash-6-million-for-talent-retention-delayed-over-tax-issues-reallyplus-the-list-of-other-suitors/feed/ 0 http://kara.allthingsd.com/20090710/digital-musical-chairs-at-myspace-and-fim-keeps-going-and-going-and-going/ http://kara.allthingsd.com/20090710/digital-musical-chairs-at-myspace-and-fim-keeps-going-and-going-and-going/#comments Fri, 10 Jul 2009 12:23:00 +0000 Kara Swisher http://kara.allthingsd.com/?p=15662 As BoomTown previously reported, there have been a lot of exec moves at Fox Interactive Media and its MySpace unit, which seem to be continuing.

Especially departures, it seems, as the massive restructuring of the digital units of News Corp. (NWS) keeps shaking out.

Top engineer Max Engel (pictured here), who ran the social networking site’s open initiatives, for example, is leaving to join the new stealth start-up being helmed by ex-MySpace employees, including former COO Amit Kapur.

In a blog post on his Web site yesterday, titled “Farewell, MySpace…,” Engel did not say where he was headed, but noted:

“While MySpace presented opportunities through their scale and reach, I’ve spent the past 3 years at large companies, and now I’m ready to go small and give the startup life a try.”

In addition, while I was poking around on this story, sources also told me that there are more higher-level departures in the works, including those whom the new team of execs at Beverly Hills, Calif.-based MySpace had kept in place, despite a recent round of layoffs.

Those execs include Tom Andrus (pictured here), who was a key product exec in the last regime at MySpace, sources said, but is poised to go. His former charge was as SVP of product management under MySpace co-founder Tom Anderson.

While Anderson remains at MySpace, his role has been changed and product is now headed by Jason Hirschhorn, and Andrus reportedly decided recently that he did not want to stay at the company in a lesser role.

Andrus is also listed as a developer at Gray Ghost Ventures on LinkedIn.

In the longer term, sources said it is also likely that once he completes the work to downsize MySpace’s international operations–which were cut drastically–its head, Travis Katz (pictured here), will move on in the fall.

While some thought he would leave during MySpace’s international layoffs several weeks ago, he did not, given all the work involved in closing down a lot of operations there after 67 percent the staff abroad was cut.

Katz, sources said, is preparing to move to California in the next several weeks and is interested in working for a start-up, after many years at News Corp.

Lastly, on the goodbye train, is MySpace Music’s SVP Strategy and Global Marketing, Jamie Kantrowitz (pictured here).

She had previously worked as a top exec in MySpace’s international business.

Not everyone is bidding adieu, though, although they are moving chairs.

Dan Fawcett (pictured here), president of Fox Digital Media, is likely to be moving to work with News Corp. digital head Jon Miller as his general counsel and right-hand man at the Fox Interactive Media division.

The former GC, Mike Angus, has moved to FIM’s Fox Audience Network, run by Adam Bain.

FIM, of course, is being rejiggered into a new smaller unit, as I previously reported, and is likely to be renamed simply the Digital Media Group.

(Full disclosure: FIM is owned by News Corp., which also owns Dow Jones–owner of this site.)

]]> http://kara.allthingsd.com/20090710/digital-musical-chairs-at-myspace-and-fim-keeps-going-and-going-and-going/feed/ 1 http://kara.allthingsd.com/20081110/the-video-i-forgot-to-post-from-the-web-20-summit-last-week/ http://kara.allthingsd.com/20081110/the-video-i-forgot-to-post-from-the-web-20-summit-last-week/#comments Mon, 10 Nov 2008 13:26:22 +0000 Kara Swisher http://kara.allthingsd.com/?p=6254

I blame post-election exhaustion for rendering me comatose after Tuesday, which is how this video I did at the Web 2.0 Summit in San Francisco last week got stuck in my to-do-later pile.

(I did manage to get the MySpace Music party video up though, but that was because it was more fun!)

Well, it has since been fished out, including interviews with conference organizers John Battelle and Tim O’Reilly, as well as Demand Media’s Richard Rosenblatt (who is apparently scared of me, which is just the way I like it) and Microsoft’s man-in-Silicon-Valley Dan’l Lewin.

The overall message of the Web 2.0 Summit: Batten down the hatches, except tech always rises to the surface like some kind of econalypse-fighting styrofoam.

Well, we will see about that particular miracle, but here is the video:

[ See post to watch video ]

]]> http://kara.allthingsd.com/20081110/the-video-i-forgot-to-post-from-the-web-20-summit-last-week/feed/ 0 http://kara.allthingsd.com/20081107/the-myspace-music-party-the-no-lionel-richiethey-still-wont-stop-believin-edition/ http://kara.allthingsd.com/20081107/the-myspace-music-party-the-no-lionel-richiethey-still-wont-stop-believin-edition/#comments Fri, 07 Nov 2008 22:55:34 +0000 Kara Swisher http://kara.allthingsd.com/?p=6232

Let’s get this out of the way: BoomTown completely missed Lionel Richie perform, cooling our heels outside behind the rope line at the MySpace party in San Francisco last night.

Major bummer.

That aside, I did finally get in and did a video at the rocking event, which the SoCal-based social-networking site–owned by News Corp. (NWS), which owns this site too–threw at the lovely Old Mint building, after the day’s proceedings at the Web 2.0 Summit.

It featured that exclusive performance by Richie, and also song-spinning by DJ AM.

But mostly, it was the scene of a lot of wild partying, with a lot of swinging, and packed most of the night, even as the supposed gloom of the econalypse was settling over Silicon Valley.

So here it is, including MySpace PR head Dani Dudeck, refusing to sing for me, as well as a madly-dancing-but-no-commenting Brandee Barker of Facebook.

(In my Richie-less addled state, I mentioned Neil Diamond’s “Hello, Again,” rather than Richie’s “Say You, Say Me” in the video. Sorry!)

Also, don’t miss the strains of Journey’s “Don’t Stop Believin’”–which has become the infamous song of the moment in the digital sector.

Here’s the video:

[ See post to watch video ]

]]> http://kara.allthingsd.com/20081107/the-myspace-music-party-the-no-lionel-richiethey-still-wont-stop-believin-edition/feed/ 0 http://kara.allthingsd.com/20081103/web-20-conference-this-week-lance-armstrong-al-gore-jerry-yang-mark-zuckerbergand-lionel-ritchie/ http://kara.allthingsd.com/20081103/web-20-conference-this-week-lance-armstrong-al-gore-jerry-yang-mark-zuckerbergand-lionel-ritchie/#comments Mon, 03 Nov 2008 16:00:53 +0000 Kara Swisher http://kara.allthingsd.com/?p=5981

On Wednesday, an always worthwhile Internet-focused conference, the annual Web 2.0 Summit, kicks off in San Francisco.

The lineup for the three-day event is particularly good this year and it is also a perfect time to take the temperature of the Internet’s movers and shakers, given all the hubbub of late with the weak economy. (BoomTown will thus be there with the trusty–and shaky–Flip video, chronicling it all for future generations.)

Speakers will include bicycle champ Lance Armstrong, Yahoo (YHOO) CEO Jerry Yang, former VP Al Gore, Google.org head Larry Brilliant, Paul Otellini of Intel (INTC) and Facebook’s Mark Zuckerberg, among others, chattering away on a wide range of topics. (You can see the full schedule here.)

There’s also, of course, a passel of parties, including one on Thursday night thrown by MySpace Music. And it will–shades of Web 1.0!–feature an exclusive performance by Lionel Richie (and also DJ AM).

I am, I shall admit it and without irony, a closet fan of Richie. And why not, with so much infectious fluff to choose: “Hello,” “Say You, Say Me,” “Three Times a Lady.”

Most importantly, I will be curious to see if there will be “Dancing on the Ceiling” among the beaten-down start-up crowd. (See that music video below and ponder exactly why you know you know each and every word to that funkadelic song.)

Hosted by Tim O’Reilly and John Battelle, the Web 2.0 Summit is called “Web Mets World” this year. By that, BoomTown is inferring that its organizers think it is time for the Internet to grow up. But why don’t we let them speak:

The commercial web is now a teenager—it’s been fifteen short years since Marc Andreessen released the Mosaic browser. To put this in perspective, television as a commercial medium reached its fifteenth birthday in 1956—the year Elvis Presley made his first appearance on national TV…as we pondered the theme for this year, one clear signal has emerged: our conversation is no longer just about the Web. Now is the time to ask how the Web—its technologies, its values, and its culture—might be tapped to address the world’s most pressing limits. Or put another way—and in the true spirit of the Internet entrepreneur—its most pressing opportunities.”

And, of course, here’s Lionel:

]]> http://kara.allthingsd.com/20081103/web-20-conference-this-week-lance-armstrong-al-gore-jerry-yang-mark-zuckerbergand-lionel-ritchie/feed/ 2