News Corp.'s MySpace is outsourcing its ad sales.

The social networking site has signed up advertising industry veteran Michael Kassan's consulting firm Media Link and its star advertising guru Wenda Harris Millard to run its sales organization. MySpace Chief Executive Owen Van Natta said the firm will "help manage our day-to-day sales organization." Jeff Berman, a veteran MySpace executive who most recently had been in charge of sales, is leaving.

Millard, who is well connected with Madison Avenue and is famous for her swanky dinner parties, is now charged with bringing home the bacon for MySpace. She is a former Co-CEO of Martha Stewart Living Omnimedia and also had a stint overseeing Yahoo's sales efforts.

-- Joe Flint

News Corp.'s struggling social networking site MySpace today announced it has a deal to acquire ILike, an application that helps users of social networks share music recommendations and playlists.

The combination would bring together MySpace, a site emerging and established artists have long used to promote their music, with an application that allows people to introduce their friends to new music.

“The iLike acquisition advances our relentless pursuit of innovation and the need to create new distributed social experiences in music and beyond,” MySpace Chief Executive Owen Van Natta said in a statement. “We are deeply committed to bringing world class talent into all areas of the company and this acquisition demonstrates our focus on this objective.”

The acquisition comes as ILike has been poised to introduce its own music store, in cooperation with all four major music companies. Brothers Ali and Hadi Partovi founded ILike in 2006. In two years, it has attracted 55 million users -- including users on rival social networking site Facebook. It is unclear what the acquisition would mean for Facebook.

“Combining MySpace’s existing platform, reach and resources with ILike’s syndication network and social discovery tools creates the potential for truly exciting innovation," said ILike President Hadi Partovi.

Van Natta said the acquisition would have no immediate impact on ILike users.

-- Dawn C. Chmielewski

Photo: MySpace CEO Owen Van Natta. Credit: Jacob Mosur / Los Angeles Times.

MySpace Music has come in for criticism from the labels, whose executives have publicly (and privately) said it has been slow to find ways to make money on its massive community of music fans.

Recently, through, MySpace Music is showing flickers of life.

Since the site’s launch in September 2008, it has grown from 4.2 million users to 12.1 million, ranking it ahead of other popular music sites like MTV Networks Music and the Internet radio site Pandora. It's gaining traction with people ages 12 to 24, who are more than twice as likely to visit the site than the average Internet user.

MySpace Music chief Courtney Holt hinted at Fortune's Brainstorm Tech conference in Pasadena today that new features are coming.

Holt said the recent executive restructuring at MySpace -- which saw the departure this spring of co-founder Chris DeWolfe -- has brought in a new team that's focusing on better integrating music throughout the social networking site.

MySpace Music is working on giving greater reach to online music taste-makers -- Holt dubbed them "social DJs." The site is trying to find new ways to highlight these arbiters, who influence their friends, so it can reach even more people.

"MySpace is trying to figure out how to give them more power," Holt said.

New artist tools are also in the offing.

Holt didn't announce a timetable for making available such long-promised features as as selling concert tickets or merchandise, but he did talk about the opportunity to promote live performances, where 50% of tickets go unsold. This is especially a problem for middle-tier artists who have moved beyond small clubs but are not filling up arenas.

"The No. 1 reason is lack of awareness," Holt said, "No. 2 is price."

-- Dawn C. Chmielewski

UPDATED:

News Corp.'s struggling social network MySpace said it would lay off nearly 30% of its staff -- or about 425 people -- as part of a plan to restructure the business.

“Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company,” said MySpace Chief Executive Officer Owen Van Natta. “I understand that these changes are painful for many. They are also necessary for the long-term health and culture of MySpace.  Our intent is to return to an environment of innovation that is centered on our user and our product.”

When Rupert Murdoch struck a deal to buy MySpace for $580 million in 2005, he was hailed as a a new media visionary, the mogul who got the Internet. News Corp. had out maneuvered rival Viacom for the site, which so annoyed Sumner Redstone that he pushed out his CEO Tom Freston.

Soon after the MySpace deal, Murdoch told Wired Magazine that the Internet "is media's golden age." That's yet to be proven but later in the interview he was a little more prescient. "God knows what we're going to do with MySpace," he said.

Now four years later that's what everyone else is wondering that as well. Facebook has surpassed MySpace as the top social network site in the United States. It has little buzz anymore and its advertising revenue has dropped over the last year. Its groundbreaking $900-million advertising deal with Google ends next year and that revenue will be hard to replace.

Inside News Corp., integrating MySpace into the rest of the spawling media company has proven a challenge. MySpace has never become the platform for News Corp. content that many thought it would be when it acquired the company. MySpace co-founder Chris DeWolfe often clashed with other executives and left the company last spring, succeeded by Van Natta, Facebook's former chief revenue officer.

Bringing MySpace back to the top may be a steep challenge for Van Natta and Jonathan Miller, News Corp.'s new chief digital officer. Unlike television where everyone is one hit away from returning glory, social network sites that start to fade tend to keep fading. Anyone remember Friendster?

--Dawn C. Chmielewski and Joe Flint

Photos: Top left: Owen Van Natta, courtesy News Corp. Bottom right: Rupert Murdoch. Credit: Vince Bucci, Getty Images.

UPDATED:

Fox Interactive Media, suffering from a steep drop in online advertising,  is preparing to lay off a significant number of employees, according to people familiar with the situation.  The number and timing are in flux, but the cuts are expected to encompass a broad array of workers at the Beverly Hills headquarters.

The layoffs are part of a restructuring of Rupert Murdoch's News Corp.'s digital operations and come only two month after former AOL executive Jonathan Miller was named chief digital officer, with oversight of media giant's online properties. It is not immediately known how many employees will be let go, but a year ago Fox Interactive employed more than 2,000 people.

“Like any company with new leadership, Fox Interactive Media is reviewing every aspect of our operations, performance and structure,” said a Fox spokesman. “ It’s no secret that we are looking for ways to improve our products, increase the value of our digital assets, and enhance the overall financial strength of the company.” 

The interactive division of News Corp. includes the MySpace social network and a collection of other online businesses, including IGN Entertainment, and entertaiment movie and product review site RottenTomatoes.com. In the most recent quarter, the News Corp. said Fox Interactive's revenue was down 11% from a year ago, reflecting a precipitous 16% drop in advertising. At the same time, costs rose 7% due to expenses associated with developing new features at MySpace.

MySpace's troubles have been widely publicized, culminating in the departure this spring of co-founder and chief executive Chris DeWolfe.

People familiar with the restructuring plans say MySpace will bear some of the burden of the cuts, but other divisions will also be affected.

The once-dominant social network has been surpassed by rival Facebook in terms of number of worldwide users. Another technological upstart, the microblogging application Twitter, generates more buzz among the technorati. The latest online traffic report from measurement firm comScore Media Metrix said Facebook and Twitter each added millions of new users, outpacing growth at Fox Interactive.

One industry analyst said all social networks, including MySpace, are struggling to figure out how to make money from their audiences. Spending on Internet advertising for the first quarter of the year is also down by 5%, compared with a year ago, according to the Interactive Advertising Bureau and PricewaterhouseCoopers LLP.

“The online networking space overall hasn’t turned out to be as lucrative as people originally thought. That’s one of the biggest problems,” said Charlene Li,  founder of the Altimeter Group, a research firm specializing in social networks.

In another sign of cost-cutting, Fox Interactive is also seeking to sublet new offices being built at Playa Vista development south of Marina del Rey. The group had agreed to rent 421,000 square feet of space, so it could consolidate its far-flung digital operations. 

-- Dawn C. Chmielewski

It got Rupert Murdoch on the cover of Wired Magazine, cost Tom Freston his job as chief executive of Viacom and even spawned a tell-all book.

But now News Corp.'s MySpace has gone from crown jewel to problem child.

While MySpace remains the largest social network in the U.S., rival Facebook, which rules the rest of the world, is closing the gap fast. In terms of buzz, it's no contest at all. MySpace has gone from the place where the cool kids hang out to the scary house down the street that parents tell their children to stay away from.

Integrating MySpace into the rest of News Corp. has also proved something of a challenge. Rather than use MySpace as the major platform for programming from its Fox TV operations, it opted instead to team up with NBC Universal and create Hulu as the online home for its content.

Now it's up to former Facebooker Owen Van Natta to reinvigorate MySpace. As Facebook's chief revenue officer and vice president of operations, Van Natta played a key role in the site's evolution from a college clique to worldwide block party.

But social networkers are a fickle bunch and comebacks are hard to manufacturer. Just ask Friendster. Even Facebook is now no doubt looking over its shoulder at Twitter, the fast-rising social networking site for people who find posting complete sentences just a little too taxing.

Van Natta's first task may be updating MySpace's look and technology. The site seems tired compared to Facebook, which sometimes takes heat for all its tinkering but ultimately is quicker to respond to how its members are using it.

Another challenge will be building MySpace's ad revenue. The social networking site's groundbreaking $900-million deal with Google ends in the spring of 2010 and those will be tough dollars to replace. While online advertising continues to grow at a far faster pace than traditional media, it too is being hit by the economic downturn as well as concerns about its effectiveness.

Van Natta may also be walking into hostile territory as many of the staff there spent years working with the now-exiled MySpace co-founder Chris DeWolfe and its president Tom Anderson, who may soon follow DeWolfe out of the company he helped build.

And then there is Murdoch himself. While MySpace is still a key part of News Corp.'s Internet strategy, it doesn't take much to fall out of favor with the mogul. Just ask the Dodgers and DirecTV. 

--Joe Flint

The election may be over, but Hollywood royalty are still voicing their support for President-elect Barack Obama.

Today, just one day before Obama is sworn into office, MySpace and Ashton Kutcher's Katalyst Productions are unleashing videos produced and edited by Demi Moore featuring celebrities pledging their service to the country's new president.

“The Presidential Pledge is a platform for people across the nation and throughout the world to make a first-person commitment of service to our new president," Kutcher said, "articulating a specific intent or action to become an agent of positive change."

Among the celebrities featured are Sean "Diddy" Combs, Cameron Diaz, Aaron Eckhart, Courteney Cox Arquette and David Arquette, Lucy Liu, Hayden Panetierre, Jaime Pressley, Alyssa Milano, Marisa Tomei and Ashlee Simpson.

MySpace users are asked to create their own pledge videos and upload them to http://www.myspace.com/presidentialpledge.

-- Denise Martin

Related:
"Ashton Kutcher, Taking Your Pledges Now"

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

If MySpace Music represents a hopeful new marriage between major record companies and Web 2.0, consider independent labels the jilted first wives.

Artists on indie labels flocked to MySpace early on because it offered an easy and free alternative to slick personal websites built by major label Internet whizzes. Their participation made MySpace a destination for music lovers, who could listen to songs and check tour dates for artists even if they didn't have a MySpace profile.

The new MySpace Music offers a far vaster collection of songs for streaming and slapping on personalized playlists. The site, controlled by News Corp., is banking on that collection to draw more users and plays. In exchange for ponying up their stars' oeuvres, major record labels received ad-revenue sharing deals and equity stakes amounting to 40% of the MySpace venture, as The Times reported.

But indies -- whose artists are still attracting traffic to MySpace with their profiles and selection of streaming and embeddable songs -- received no equity. And, indies say, major labels will reap the benefits of MySpace's growth, even if it's driven in part by independents.

"Our lovers were cheating on us," says Tom Silverman, founder and chief executive of Tommy Boy Records. "Now we need to hire a great divorce lawyer."

In other words, negotiations to get indies their share are continuing.

With the new iteration of MySpace Music poised to launch, the joint venture between News Corp. and three major music companies is still looking for someone to fill the top job.

Andy Schuon, a former head of programming at MTV and Infinity Broadcasting (now CBS Radio) and longtime Universal Music executive, is among two finalists interviewing this week, according to industry sources. The other candidate is Owen Van Natta, the former vice president of operations and chief revenue officer at rival social networking site Facebook.

Schuon's career has been at the intersection of technology and music. His most recent venture is "C" Student Entertainment, a boutique radio and mobile media company co-founded with Steve Lehman, former chief executive of Premiere Radio networks. It struck a deal to bring celebrity blogger Perez Hilton's celebrity and entertainment news to radio audiences.

Schuon was among the early label executives to embrace digital distribution. He did a stint as head of pressplay, an early, if hamstrung, venture started by Universal and Sony Music Entertainment to provide a legitimate source for music on the Internet. That service was acquired in 2003 by Napster.

Van Natta, who was responsible for business development and strategic partnerships at Facebook until he left in April, previously worked at Amazon.com, where he was vice president of worldwide business and corporate development and also was part of the founding team of its A9.com site, a search engine.

MySpace Music's six-month CEO search has reportedly met with its share of frustration. But company insiders contend it hasn't been that big an issue because Chief Executive Chris DeWolfe and Chief Operating Officer Amit Kapur are heavily involved in the launch.

Several other execs with Internet experience have been approached about the gig, including former AOL executive vice president Jim Bankoff, BigChampagne chief executive Eric Garland, and Benchmark Capital entrepreneur Dave Goldberg and Ian Rogers, both formerly general managers of Yahoo Music.

MySpace declined to comment on its search for a head of its music venture.

-- Dawn C. Chmielewski

Photo: Van Natta (Jakub Mosur for the Times)