News Corp, Softbank in MySpace talks

Rupert Murdoch’s News Corp is to team up with Softbank, the Japanese technology investment group, to launch a local version of MySpace, the US online social networking site it recently acquired, to capitalise on surging demand for online networking services.

An announcement is expected on Tuesday while Rupert Murdoch, News Corp chief executive, is in Tokyo to attend a conference.

The tie-up would mark the group’s first venture into the Japanese new media market and MySpace’s first such joint venture with a telecommunications company. Mr Murdoch is said to be looking for partners in the field in China.

A Japanese MySpace would compete with Mixi, the country’s most popular social networking site, with an estimated 5.7m users. News of MySpace’s imminent arrival caused Mixi shares to fall 7 per cent on Monday.

Mr Murdoch declined to confirm the joint venture, although he told reporters he had discussed business tie-ups before with Masayoshi Son, Softbank’s chief executive.

“We like the idea of joint ventures. That is certainly a possibility,” Mr Murdoch said. “Mr Son and I are old friends. We’ve kept in touch and certainly I hope to do something with Mr Son but, if we do something, it won’t be on an exclusive basis.”

The joint venture, MySpace Japan, is expected to target mobile phone users in addition to Japan’s growing online population, as younger users in particular spend an increasing amount of time networking on the internet and on their mobile phones.

Since the arrival last month of number portability in Japan Softbank has struggled with a systems collapse and a regulatory investigation into allegedly misleading advertising.

To compete more effectively in the mobile phone market against much bigger rivals NTT DoCoMo and KDDI, Softbank needs to offer better applications.

MySpace, which was acquired by News Corp for an estimated $580m, already has 125m registered members globally, Mr Murdoch said.

Whether MySpace can wrest market share from Mixi depends largely on what value-added services it can offer, said Kazuyo Katsuma, analyst at JPMorgan in Tokyo. “It really depends on the details of the service,” she said.

One big difference between MySpace and Mixi is that MySpace is open to all, whereas Mixi is by invitation only.