Murdoch was Bubble Boy with Myspace purchase

If ever there were an example of what happens in a bubble economy it is News Corp.’s purchase of Myspace for $580 million in 2005.

Now the social network that was a media sweetheart has been sold for $35 million to Specific Media, an advertising network. In other words, it lost 94% of its market value in six years. Myspace did earn back its purchase price early on with a lucrative ad contract with Google, but it has never lived up to its expectations.

The reality check of Myspace comes at a time when a market value of $100 billion for Facebook is being discussed by supposedly sane people -- that is about 170 times the price Murdoch paid for Myspace.

And although Facebook shows a lot of promise, remember that the market value being discussed is 50 times revenue. I remember when a really good newspaper property might sell for two or three times revenue. That was before Bubble Boy.