News Corp.'s youth-oriented Web portal extends its influence into the wireless world.
SAN FRANCISCO (Business 2.0) - MySpace.com, the website that has become a nationwide craze, is headed to a mobile phone near you.
If you aren't familiar with MySpace, the nation's most popular social networking website, your children, nieces or nephews almost certainly are. It has become a daily meeting place for hundreds of thousands of 15-35-year-olds who are looking to stay in contact with friends, find the latest music, or check videos of their favorite artists.
The site has an estimated 55 million users, and MySpace.com is the second-most-viewed-website in the U.S.—just behind Yahoo (Research), and ahead of Google (Research) -- and accounts for 12 percent of online advertising. News Corp (Research). spent $580 million last summer to get ahold of this audience and let advertisers reach its coveted -- and famously fickle -- youth demographic.
Now News Corp. CEO Rupert Murdoch hopes to extend MySpace's influence beyond the PC. Today, the popular site is expected to announce a partnership with Helio, a wireless carrier backed by Internet service provider EarthLink (Research) and SK Telecom, a Korean wireless carrier which operates what's viewed in the industry as the world's most advanced cell-phone network. This spring, MySpace and Helio will launch a service that will let users access MySpace from their mobile phones.
MySpace on my phone
For MySpace, the deal is another move to keep its users bound tightly to it, communicating with friends or listening to music from artists featured on the service. Such innovation should help MySpace avoid the fate of social-networking pioneer Friendster, whose users ended up going elsewhere when it failed to introduce new features.
The move also gives News Corp a foothold in the rapidly growing mobile market. More than 60 million teenagers now carry cell phones, and most take them everywhere they go. MySpace Mobile, which is a free service, could turn into another lucrative advertising venue for News Corp.
For Helio, the partnership will vastly increase awareness for the fledgling wireless carrier, which is also set to begin operations this spring. Helio's deal with MySpace is exclusive, so MySpace fans will need to buy one of Helio's two specially designed, advanced phones to access the service.
EarthLink and SK Telecom, Helio's parent companies, are investing $440 million to launch the new carrier, so they'll need to find a way to attract subscribers quickly to break even. EarthLink founder Sky Dayton, who is serving as Helio's chief executive, estimates Helio will need 3 million subscribers to recoup the partner's original investment.
"I think its a smart play on Helio's part," says Forrester Research analyst Charles Golvin. "This gives Helio a strong tie to users most likely to try data services."
Ringing up minutes
Wireless users who subscribe to data services typically ring up higher bills than customers who only make voice calls. So Helio's plan is to use MySpace Mobile as a way to introduce users to their phones' data features. The more Helio users go online, the better chance the wireless carrier has of charging for highly profitable data services, like downloading ringtones and sending cameraphone pictures.
While Helio's success depends on MySpace users' reaction to the wireless service, the idea is not without precedent: In Korea, where Helio partner SK Telecom operates the nation's most popular wireless network, consumers are accustomed to watching live television on their cell phones, as well as snapping pictures and downloading music over the airwaves.
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