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MySpace CoFounder Says Purchase Was A Scam

Posted by ryuzaki0 on from the missing-a-few-pennies-here dept.

Jonathan writes "Brad Greenspan says he's the real founder of MySpace, not Tom, and the sale of MySpace to News Corp. was a criminal act. In a nine-chapter report, he describes how this was accomplished by hiding the value of the site from Intermix Media's shareholders." From the article: "How was News Corp able to turn $327 million into $20 billion or more of value within a year? The Myspace/Intermix transaction was so low compared to other internet transactions that it is raising eyebrows by analysts and media everywhere. Everyone seems to be asking how News Corp. got such a good deal. It seems too good to be true! After signing the transaction to buy Myspace & Intermix (but prior to the closing), News Corp. itself even showed how strangely little it had paid for Myspace by immediately paying $3.99 per monthly page view for slow growing comparable IGN. News Corp. paid only .03 cents per monthly page view for the hyper fast growing Myspace. Therefore, we can conclude that the fair value of Myspace was 100x or more what News Corp. paid! "

26 of 214 comments (clear)

  1. Sounds like sour grapes by Scott+Lockwood · · Score: 5, Interesting

    How can you illegally sell a company? Surely both parties had to agree, right? If I agree to sell you my house for $20, I can't come back later and claim fraud. How, if both Tom, and this guys company agreed to the sale, can it now be fraud?

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    1. Re:Sounds like sour grapes by drcagn · · Score: 5, Informative

      What if _I_ sell your house for $20? In that case, yes, you can come back later and claim fraud--I didn't own your house. Note: I didn't RTFA, it seems to be /.ed already. But that seems to be what the summary makes it sound like.

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      Scorta futuere amo!
    2. Re:Sounds like sour grapes by Chris+Graham · · Score: 5, Informative

      From a brief scan of the article, I get the impression those running the company wanted to sell the company fast so that they'd cash in before their prior misdealings were revealed. The other shareholders were deceived to the true value of the company, so the fraud is between those running the company and the other shareholders.

    3. Re:Sounds like sour grapes by Spazmania · · Score: 5, Informative

      If I agree to sell you my house for $20, I can't come back later and claim fraud.

      Actually, you can. And you can even win the point in court. You basically say, "Your honor, there's no reasonable way I could have agreed to sell my house for $20. This was not intended to be a gift and comperable homes are worth $500,000. The contract is unconscionable and should be voided."

      The court then agrees that the contract is unconscionable and voids the sale.

      There is a famous case involving a cow that was supposed to be sterile but had a calf a few months after the purchase. I forget the name of it. The seller thought he was selling a sterile cow and priced it accordingly. When he found out it wasn't, he asked for more money. When the buyer refused saying, "Hey, I thought the cow was sterile too. Tough luck." So the seller sued and won.

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    4. Re:Sounds like sour grapes by God'sDuck · · Score: 5, Funny
      Also funny how those those story *all* seem to originate on media sources also owned by Murdoch.
      By "media sources owned by Murdoch," do you mean "television," "radio," or "congress"?
    5. Re:Sounds like sour grapes by Spazmania · · Score: 5, Informative

      It was Sherwood v. Walker

      http://lawschool.mikeshecket.com/contracts/sherwoo dvwalker.htm
      http://www.law.pitt.edu/madison/contracts/suppleme nt/sherwood_v_walker.htm

      There is some more discussion of the topic in general at:

      http://islandia.law.yale.edu/ayres/mutual.htm

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  2. In hindsight by iknowcss · · Score: 5, Funny

    In hindsight, yes. Yes it was a horrible scam, but then again I meant to invest in Billy Gates when he worked out of his garage. Dammit Gates! You owe me billions!

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    Life is rarely fair. Cherish the moments when there is a right answer.
  3. Yeah! by Jello+B. · · Score: 5, Funny

    And I'm the founder of Slashdot. Where's my money?

    1. Re:Yeah! by fm6 · · Score: 4, Funny

      Thanks for coming forward. You owe $300,000 in operating losses!

  4. News corp got ripped off... by Monkelectric · · Score: 5, Insightful

    Myspace will ultimately be worth nothing. Myspace is already past the height of its popularity, its just coasting on momentum which will run out eventually.

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    Religion is a gateway psychosis. -- Dave Foley

  5. If I had that much money.... by suparjerk · · Score: 5, Funny

    If I had that much money, I'd consider buying MySpace just so I could shut it down.

    --
    I caught the Mountain Wumpus! He gave me his treasure chest ($100) to let him go free again.
  6. Ok, who's the wise guy? by shoolz · · Score: 5, Funny

    Who's holding down the F5 key on the article's site?

    1. Re:Ok, who's the wise guy? by iknowcss · · Score: 5, Funny

      Sorry

      --
      Life is rarely fair. Cherish the moments when there is a right answer.
  7. i founded myspace by circletimessquare · · Score: 4, Funny

    i founded myspace as a how-to site on html design etiquette. myspace was originally intended to focus on page readability, intelligent page layout, good user experience, intuitive controls, and subtle interaction. i could be overreacing, but i think something went wrong somewhere though...

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    1. Re:i founded myspace by tpgp · · Score: 4, Funny

      i founded myspace as a how-to site on html design etiquette

      I see you followed those same principles in the site you link to in your sig (and the puncuation in your post). ;-)

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      My pics.
    2. Re:i founded myspace by MySpaceSpartacus · · Score: 4, Funny

      No, I founded MySpace!

  8. or does the water get him instead? by jjeffries · · Score: 4, Funny

    Therefore, we can conclude that the fair value of Myspace was 100x or more what News Corp. paid!

    Or can we conclude that they paid 100 times too much for IGN?

  9. Re:fp by gnaa323 · · Score: 4, Funny

    THat does it... I'm deleting Tom from my "friends list!!!!!!"

  10. unfriended! by smellsofbikes · · Score: 5, Funny

    I bet he's no longer one of Tom's friends...

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    Nostalgia's not what it used to be.
  11. Dear God... by Neovanglist · · Score: 5, Funny

    This is the epitome of MySpace drama. Literally.

  12. Oh well by ImaNihilist · · Score: 5, Funny

    The only fair thing to do is delete MySpace entirely.

  13. Netcraft Confirms it: MySpace is dying. by Pharmboy · · Score: 5, Funny

    Netcraft Confirms it: MySpace is dying.

    Yet another crippling bombshell hit the beleaguered social networking site today when recently discovered that its marketshare has begun to seriously slip, due to mainly to other sources of personal videos, such as Google's own service and uTube, combined with modern teenager's lackluster desire to socially network. Current random surveys indicate that a large number of new user signups over the last 3 months have mainly been middle aged single men and U.S. Senators.

    You don't have to be a genious to see the writing on the wall: All the teenagers that want to be on MySpace already have accounts, and there simply aren't enough pre-teens coming of age to maintain this rate of growth. The future of MySpace is indeed bleak.

    When asked for comment, MySpace founder Brad Greenspan replied "look, I just need a few weeks before you print this..."

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  14. If he were in Canada by Solandri · · Score: 4, Informative

    In Ontario, Canada, he would be out of a house.

  15. It could be worse for techies... by NeoBeans · · Score: 5, Interesting

    Imagine if every time you successfully overclocked a CPU, Intel or AMD asked for more money! :-)

    1. Re:It could be worse for techies... by AngryUndead · · Score: 5, Funny

      You shut your damn mouth right now.

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      I wear the ring.
  16. Pageviews as valuation? by aiken_d · · Score: 4, Insightful

    That's bizarre. Not all pageviews are equal. IGN's pageviews are people who are researching what games to buy, and are therefore prequalified for IGN's advertisers (and a large percentage *will* spend money in that area in the immedaite future).

    MySpace's pageviews are teenagers who have little income, and who are not prequalified for any particular product or service, so advertising return rates (and therefore advertising revenue) will be dramatically lower.

    I don't know about the "it was stolen from me" angle, but the pricing comparison to IGN is such incredibly fallacious reasoning that it really reduces the guy's credibility in my eyes.

    -b

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    If I wanted a sig I would have filled in that stupid box.