Rupert Murdoch's News Corp. (NASDAQ:NWS) sold Myspace to ad network Specific Media for $35 million, a far cry from its 2007 valuation of $12 billion, and the $100 million News Corp was expecting from the sale.

The $35 million represents a 94 percent discount to the $580 million News Corp. paid to buy the social networking Web site in 2005.

Myspace allows people to create personal profiles and suggests music and other media and is available through multiple platforms, including online, mobile devices and offline events.

Additional terms of the agreement are confidential and will not be disclosed, Specific Media said in a statement. News Corp. would take a minority equity stake in Specific Media.

There are many synergies between our companies as we are both focused on enhancing digital media experiences by fueling connections with relevance and interest. We look forward to combining our platforms to drive the next generation of digital innovation, said Specific Media CEO Tim Vanderhook.

California-based Specific Media was founded in 1999 by brothers Tim, Chris and Russell Vanderhook.

Specific Media said it partnered with Emmy and Grammy-winning artist Justin Timberlake, who reportedly made an undisclosed investment in the company. Specific Media and Timberlake are expected to unveil their plans for Myspace in an exclusive press conference later this summer.

Rise and Fall

It was only four years before Myspace was valued at around $12 billion and had 300 million registered users.

Immediately after the acquisition, MySpace struck a $900-million ad deal with none other than search giant Google (NASDAQ:GOOG) that fetched more than double it spent on the acquisition.

Myspace, which was launched in January 2004, became the most popular social networking site in the United States in June 2006, a position that it held throughout 2007 until 2008, when Facebook entered the social networking space. By April 2008, according to comScore, Myspace was overtaken internationally by its main competitor, based on monthly unique visitors.

Since then, MySpace traffic has declined steadily and the drastic fall had even surprised some News Corp. executives.

Myspace had 34.9 million unique U.S. users in May 2011, according to comScore, while Facebook had 157.2 million unique visitors.

According to the latest statistics, Facebook has more than 500 million active users and over 250 million are currently accessing Facebook through their mobile devices. People spend over 700 billion minutes per month on Facebook, which is valued at around $100 billion.

Moreover, there are more than 200 mobile operators in 60 countries working to deploy and promote Facebook mobile products.

So what went wrong for Myspace?

I'm sure most employees (former or current) will argue that it was poor management, or a need to hit revenue targets once News Corp. took over, or a bottleneck in the technology department, or lack of resources given to their division, or a poor public relations effort, etc., that set the course of MySpace's downfall, Lee Brenner, the former director of MySpace's Impact section and now the publisher of HyperVocal, wrote in a blog post.

Unfortunately, I'll contend that once MySpace had won the masses with its cool appeal, it didn't put enough effort into developing its technology for, and marketing itself to, the elites of the growing world of technology consultants that were driving the social media usage throughout companies, charities, political and issue campaigns, and most importantly, news divisions (those people actually writing and talking about these new tools), Brenner added.

Meanwhile, with Myspace, Specific Media got a platform to sell its ads and a pool of data to target those ads as Myspace possesses one of the richest troves consumer data through its user profiles.

Though the site's popularity has waned, it still boasts more than 100 million users worldwide, half of which are in the U.S. Myspace has a 50 percent market share in the 13-35 demographic in the U.S. Myspace is localized in 30 countries and translated into 16 languages.

Myspace is also the home of Myspace Music, which offers an ever-growing catalog of freely streaming audio and video content to users. The site has a catalogue of 38 million songs and delivers 67 million video streams montlhy.

Users have logged 2 billion monthly impressions and 3.5 million monthly unique visitors on the iPhone; 700 million monthly impressions and 1.2 million monthly unique visitors on the Blackberry, according to Myspace.

Interestingly, Rupert Murdoch was not the only one who has been burned in the social networking space. In 2008 AOL bought Bebo for $850 million, then sold it a couple of years on for less than $10 million.