EXCLUSIVE: I'm told that MySpace founders Chris DeWolfe and Tom Anderson have made a very aggressive (some would term it rather fanciful) compensation proposal to owner News Corp for when their contract is up in October. They're asking Peter Chernin and Rupert Murdoch for a 2-year deal worth $50 million total. That comes out to $25 million each, or $12.5 million a year. Plus, the pair want a development fund of $15 million to invest in internet companies. Even though MySpace is probably the most integral part of News Corp's overall corporate strategy (and Murdoch's company recently discussed swapping the social-networking site in exchange for a 25% to 30% stake in Yahoo!), no one has obviously told DeWolfe or Anderson that News Corp is also one of the cheapest companies on earth when it comes to executive compensation. 
One problem is that, if Murdoch/Chernin pays the pair such an outsized sum, it'll make their other moguls insane if they ever found out, including Jim Gianopulos, Tom Rothman, Peter Ligouri, David Hill not to mention Roger Ailes. I understand News Corp has countered with an offer of $15 million each spread over 2 years --- still more than every suit at News Corp except Ailes. I also hear Rupe has given the duo equity in MySpace China, so they already have a deal unlike anyone else's.
I'm told by News Corp insiders that the chances of DeWolfe and Anderson getting what they want pay-wise is "slim to none" and "highly unlikely". Even though the duo's MySpace is incredibly dominant in the social networking sphere, attracting almost 80% of all U.S. visits. Then again, Friendster was huge until next generation MySpace came along. So I think the duo had better hurry and nail down their deal because, every day, MySpace faces more huge pressure from smaller but increasingly popular Facebook, which now gets 12% of all U.S. social networking business. 
Analysts think Yahoo! would be better off looking again to buy much cheaper Facebook (after offering $1 billion for it last year) now that Terry Semel is gone (News Corp made the MySpace swap proposal to him when he was still in charge) rather than giving away the store. After all, sometimes it only takes one deal to get big into the Internet business. Remember that News Corp was an Internet also-ran; now its web presence rivals that of the giants after purchasing MySpace along with other Internet properties for $629 million when it acquired Intermix Media in July 2005. But even though MySpace has performed spectacularly since News Corp took control, it's still no where near News Corp's $12 billion valuation to Yahoo!. Though that News Corp overture had been described as informal and the discussions tentative, it's potentially ancient history now that Yahoo! co-founder Jerry Yang has taken over as CEO. 
So DeWolfe and Anderson don't have the leverage they did just a few months ago. True, DeWolfe and Anderson keep talking about the "great relationship" they have with their bosses at News Corp. (Some say it's way better with Murdoch than with Chernin.) The pair, who run MySpace from the second floor of Fox Interactive's glass-and-steel complex, also boast about having more money to grow, faster bandwidth and many programmers now while News Corp supposedly writes the checks and leaves them in total control. (Given MySpace's importance in the music world, not only do they attend film screenings at 20th Century Fox, they're asked what bands to put in the movies.) But there's always the chance that News Corp could decide to replace the pair with a big-time CEO. In the past, the duo have predicted that putting a suit atop a hip young business would kill MySpace. Sometimes good things don't come to those who wait.
UPDATE: Valleywag's Nick Denton (aka the Gawker Media empire-builder) comments that my news "helps explain why Rupert Murdoch has gone cool on MySpace". Turns out that, back on May 4th, News Corp management had a dinner up in Monterey and, instead of Chris DeWolfe, it was Mark Zuckenberg, the founder of rival Facebook, who had the seat of honor to the left of Rupert. Denton was there and noted "DeWolfe had to wait till dessert, after the sandal-wearing Facebook founder abandoned his chair for a late-night show of Spider-Man 3, to sidle up to the boss."
