It was July 19th, 2005 when Robert Murdoch surprised Wall Street when he spent $580m to purchase MySpace, So how does the investment look 2 1/2 years later?
When Murdoch bought MySpace it was predominately a US social network. Today it is a worldwide force with 24 local versions. Besides introducing new musicians and playing host to amateur filmmakers, MySpace is also signing artists to its own record label and developing online video series. Earlier this month it introduced a content guide called MySpace Celebrity.

All these changes have worked out well for MySpace. With an estimated 110 million monthly active users, and more than 1.3 billion page views a day, MySpace has become a favorite of advertisers.

Richard Greenfield, a media analyst for Pali Research was interviewed by the New York Times recently and he said expected MySpace to have around $800 million in revenue in fiscal 2008, mostly through advertising. That $580 million purchase price looks pretty cheap now.

Chris DeWolfe, the co-founder and chief executive of MySpace is working on changing the image of MySpace.

“Some people still perceive MySpace like it was in early 2004, as a niche place for scenesters in New York and Los Angeles. That’s how it started, but it’s become very mainstream,” Mr. DeWolfe, 41, said. “It’s about consuming content and discovering pop culture.”

As part of its makeover, MySpace is starting to resemble more and more a traditional media platform like Yahoo or AOL than a traditional social networking site. Peter F. Chernin, the president and chief operating officer of the News Corporation, called MySpace a “contemporary media platform” and said the site existed to “create content and connect people to one another.”

There is no doubt that the purchase of MySpace by Robert Murdoch was a smart business deal. The site dominates the social networking space in terms of visitors, page views and advertising revenue.

What will be interesting to watch in the coming twelve months is how MySpace develops as a media platform. MySpace has the potential to match the growing media platform that is Google. At the moment Google and MySpace are business partners, but I expect that relationship to be challenged as MySpace continues to grow.

Remember that since the MySpace acquisition Murdoch has purchased the Wall Street Journal. An advertising platform that covers Music, Celebrities, TV and Finance could be a Google killer.

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