Is MySpace vulnerable to takeover?

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That we should even be discussing whether social networking phenomenon MySpace is likely to change hands over the coming months is one big, meaty signal as to how fast the Web 2.0 phenomenon is evolving.

What makes it all the more surprising, of course, is that MySpace was sold for big money in 2005, when Rupert Murdoch's News Corporation handed over $580 million (£290 million), in a deal that's increasingly looking like an absolute bargain.

For a media organisation, a social networking service such as MySpace is the latest must-have. It brings together the golden younger demographic audience for potential owners, and brings them in their tens of millions. That's one of the key reasons why rival service Facebook, should it ultimately change owners, is unlikely to attract a price tag below a billion or two.

There is another reason for that price premium, and that's the scarcity of really successful social networking sites. Sure, the sheer number of users and their potential spending power is enough to send PowerPoint presentations and Excel spreadsheets into overdrive, but it's also the simple law of economics at work here. Where really successful social networking sites are concerned, there is a hell of a lot of demand, but very little in terms of supply. Quid pro quo, up goes the price.

In spite of the undeniably speedy growth of rival services Facebook and Bebo, MySpace still rules the roost. Over 60 million unique users visited the site in July 2007, while Facebook stood at 19.5 million. The gap is certainly closing between the two, yet Murdoch's investment has been more than covered, with MySpace rumoured to be generating $800 million of review for the Fox Interactive Media division, in addition to a nine-figure profit. In the light of that number, for just twelve months of business, that $580 million initial outlay is one of the sector's savviest acquisitions of recent times.

While rumours that MySpace may be found a new home have hardly been thunderous, they've nonetheless been there. And there are a handful of reasons why a deal may appear on the table.

Why is it such a good deal?

First and foremost, MySpace is surely one of the most bankable cheques that Rupert Murdoch could write. So desperate are so many media and internet companies to get hold of something on the scale of MySpace, that it may be a bargaining chip that snares News Corporation an even bigger target. While Murdoch's bank account is, undoubtedly, robust enough to support its owners' ambitions - as demonstrated by the recent $5 billion (£2.5 billion) acquisition of Wall Street Journal owner Dow Jones - if ever he needed to tip a deal, then MySpace is certainly a tool capable of doing so.

The second reason for a potential sale? The fact that MySpace is an increasing magnet for bad publicity. Granted, given the scale of the News Corporation empire this isn't something that's likely to be particularly sensitive to the organisation, not least given the stranglehold of sorts that it has over global media. But still, it's worth noting that recent reports such as those relating to registered sex offenders using the service are not without impact, not least given the age demographic of the bulk of MySpace's audience. Other negative stories have seen phishers attack MySpace users, and criminals use the service to aid in identity theft. As with most successes, it's become a target, and a very sizeable one.

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