MySpace continued its evolution from teen hangout to entertainment destination, announcing Wednesday that it would acquire ILike, one of the premier music recommendation services -- and the most popular music application on rival social network Facebook.
The deal, estimated to be worth about $19 million, signals MySpace's intention to dominate the online social music scene, building on the gathering momentum behind MySpace Music, a nearly year-old joint venture with the major music labels whose number of visitors has increased nearly 200% since its launch in September.
"MySpace is trying to claim the social music space for themselves," said Sonal Gandhi, a media analyst at Forrester Research.
ILike has attracted about 55 million users through features that tap into music aficionados' desire to find and share the songs they love with friends -- and that enable them to broadcast their passions through the reach of social networks.
Users can post playlists of the songs they're listening to, or indicate when they plan to attend a concert. People who discover tracks through a friend's recommendations are referred to online retailers where they can buy songs, concert tickets or mobile phone ring tones. ILike collects fees for referring these purchases.
MySpace Chief Executive Owen Van Natta said ILike was a natural complement to MySpace Music, where people go to learn about new artists and music and which now attracts 12.1 million unique users. But he said the ILike technology could be used more broadly, to enhance the other entertainment offerings available through social networks. MySpace is seeking to redefine itself as a destination for music, videos and games.
"We believe what ILike created isn't limited to just music but should extend to all areas important to MySpace users," Van Natta said.
Van Natta said the acquisition also would bring "world-class talent" to MySpace, which has undergone a dramatic restructuring that saw the departure of one of its founders, Chris DeWolfe, and extensive layoffs domestically and abroad.
The brothers who founded ILike, Ali and Hadi Partovi, have each started technology companies subsequently acquired by Microsoft Corp. Ali Partovi co-founded LinkExchange, an online ad company sold in 1998 for $265 million. His brother co-founded automated call center service Tellme Networks, which was bought for $800 million. Van Natta said the Partovis would remain with ILike in Seattle.
Analysts say the ILike acquisition could be viewed as a direct challenge to Facebook, which has surpassed MySpace in users and buzz. When MySpace unveiled its music venture, analysts said Facebook responded by more tightly weaving the ILike application into the user's experience.
"It could be a shot across the bow at Facebook," said Debbie Williamson, senior analyst for researcher EMarketer, who specializes in social networks.
It's not clear what the MySpace deal would mean for Facebook, which accounts for about 40% of ILike's traffic. Van Natta said in a conference call that he valued the application's broad reach onto other social networks.
Facebook isn't publicly quaking.
"ILike was one of the first applications built on [the] Facebook platform and has become a success with more than 10 million monthly active users," Facebook spokeswoman Brandee Barker said. "We expect that users will continue to discover and share music through the ILike application on Facebook."