MySpace CoFounder Says Purchase Was A Scam

Jonathan writes "Brad Greenspan says he's the real founder of MySpace, not Tom, and the sale of MySpace to News Corp. was a criminal act. In a nine-chapter report, he describes how this was accomplished by hiding the value of the site from Intermix Media's shareholders." From the article: "How was News Corp able to turn $327 million into $20 billion or more of value within a year? The Myspace/Intermix transaction was so low compared to other internet transactions that it is raising eyebrows by analysts and media everywhere. Everyone seems to be asking how News Corp. got such a good deal. It seems too good to be true! After signing the transaction to buy Myspace & Intermix (but prior to the closing), News Corp. itself even showed how strangely little it had paid for Myspace by immediately paying $3.99 per monthly page view for slow growing comparable IGN. News Corp. paid only .03 cents per monthly page view for the hyper fast growing Myspace. Therefore, we can conclude that the fair value of Myspace was 100x or more what News Corp. paid! "

Re:Sounds like sour grapes

[drcagn]

What if _I_ sell your house for $20? In that case, yes, you can come back later and claim fraud--I didn't own your house. Note: I didn't RTFA, it seems to be /.ed already. But that seems to be what the summary makes it sound like.

Re:Sounds like sour grapes

[Chris Graham]

From a brief scan of the article, I get the impression those running the company wanted to sell the company fast so that they'd cash in before their prior misdealings were revealed. The other shareholders were deceived to the true value of the company, so the fraud is between those running the company and the other shareholders.

Re:Sounds like sour grapes

[colonslashslash]

His mathematics are further off than that, the summary says 0.3 cents, not 3 cents ($0.03 as you used).

Re:Sounds like sour grapes

[Anonymous Coward]

Actually selling your house under market value is illegal as it is tax avoidance, here in Australia anyway.

Article hosted on a Cablemodem?

[gordyf]

It looks like this article is hosted on a cablemodem. itcc.hopto.org resolves to 74.67.58.67, which resolves to cpe-74-67-58-67.nycap.res.rr.com. It was probably slashdotted in seconds.

Poor guy.

Re:Sounds like sour grapes

[spammyd]

remember this was at the time there was alot of bad press about 35 year old freaks meeting up with 15 yr old high school kids and there was a threat of myspace type sites being shut down

TFA mirrors and a link

[dpaton.net]

Greenspan's site with his side of the story is here, for now: http://www.freemyspace.com/ [freemyspace.com]

Other news articles with similar content: http://news.google.com/news?hl=en&ned=&ie=UTF-8&q= brad+greenspan+myspace&btnG=Search+News [google.com]

Re:Sounds like sour grapes

[Spazmania]

If I agree to sell you my house for $20, I can't come back later and claim fraud.

Actually, you can. And you can even win the point in court. You basically say, "Your honor, there's no reasonable way I could have agreed to sell my house for $20. This was not intended to be a gift and comperable homes are worth $500,000. The contract is unconscionable and should be voided."

The court then agrees that the contract is unconscionable and voids the sale.

There is a famous case involving a cow that was supposed to be sterile but had a calf a few months after the purchase. I forget the name of it. The seller thought he was selling a sterile cow and priced it accordingly. When he found out it wasn't, he asked for more money. When the buyer refused saying, "Hey, I thought the cow was sterile too. Tough luck." So the seller sued and won.

Re:Sounds like sour grapes

[Sabaki]

I would think Newscorps' lawyers reviewed the sale with a fine tooth comb.

They most likely did, but a) they might not have had the technical expertise to understand the issues and b) as the buying party (who would benefit from the discount), they had millions, if not billions of reasons to overlook the problems.

Non slashdotted article

[DanEsparza]

Here is a non-slashdotted article that explains this a bit better.

http://www.pcmag.com/article2/0,1895,2025069,00.as p [pcmag.com]

-D

If he were in Canada

[Solandri]

In Ontario, Canada, he would be out of a house [thestar.com].

Re:Sounds like sour grapes

[Spazmania]

It was Sherwood v. Walker

http://lawschool.mikeshecket.com/contracts/sherwoo dvwalker.htm [mikeshecket.com]
http://www.law.pitt.edu/madison/contracts/suppleme nt/sherwood_v_walker.htm [pitt.edu]

There is some more discussion of the topic in general at:

http://islandia.law.yale.edu/ayres/mutual.htm [yale.edu]

Not quite

[mungtor]

IANAL, but in the sources you've cited, it was discovered the cow was pregnant before the money changed hands. That alters the situation significantly. If the cow had already been purchased and then became pregnant, the seller would not have any recourse.

Re:Sounds like sour grapes

[Skreems]

actually, 15-year-olds are legal in quite a few states in the country...

Gates never worked out of a garage

[Foerstner]

He worked out of his dorm room at Harvard.

Hewlett and Packard, Jobs and Woz, and even Page and Brin worked out of garages. Gates was born to one of Seattle's richest lawyers, and probably hasn't ever set foot in a garage.

Re:News corp got ripped off...

[Stokey]

I believe they own Orkut.

That's a social networking site, but certainly hasn't reached the volumes MySpace has.

Stokey