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Deeper Into The Shadows Of MySpace

Jason Lee Miller
Staff Writer
Published: 2006-04-11

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MySpace.com has garnered a lot of attention lately as the 70 million member website became teen phenom. Though the loyal membership was richly concerned with the News Corp. buyout, many have noted that Intermix Media had cloudy and questionable history.

This is Part 2 of a two-part series. For Part 1 click here.

It may have never occurred to the charter members of MySpace, that being run by a media juggernaut like News Corp. would be a positive.

Perhaps coinciding with News Corp.'s purchase of Intermix (the reference here posts these two happenings on the same day), the MySpace terms of use were conspicuously changed. The earlier version (i.e., pre-News Corp.) was much more exploitative of users.

By posting Content on any public area of MySpace.com, you automatically grant as well as represent and warrant that you have the right to grant to MySpace.com… an irrevocable, perpetual, non-exclusive, fully paid, worldwide license to use, copy, perform, display, and distribute such information and content to MySpace.com. MySpace.com has the right to prepare derivative works of, or incorporate into other works, such information and content, and to grant and authorize sublicenses of the foregoing.

It was changed, according to the source, to the following:

By posting any Content to the public areas of the Website, you hereby grant to MySpace.com the non-exclusive, fully paid, worldwide license to use, publicly perform and display such Content on the Website. This license will terminate at the time you remove such Content from the Website.

Dudeck was quick to distance MySpace.com from any association from Intermix Media, Inc., calling the operations "very separate," and with good reason. News Corp. is not Intermix, and one may assume, from News Corp.'s perspective, MySpace is also not Intermix.

Our journey begins with Trent Lapinski, now CEO of AppleXnet.com, and then a young journalist who claimed, that after researching a "web of controversy" surrounding the founders of MySpace.com, specifically MySpace CEO Chris DeWolfe, he was sent a letter from their legal team threatening to sue him if the article was published.

"He was accusing MySpace of criminal behavior. He was warned that printing mistruths could make him liable for defamation," said Dudeck, who was not with MySpace at the time of the alleged incident.

In response, Lapinski told WebProNews that he hadn't made any accusations toward DeWolfe specifically, but had questioned the activities of executives in connection with DeWolfe.

These activities of his associates involve banking scandals, spyware and adware, and spamming. The allegations are almost "guilt by association" in nature, and included a link of MySpace executives with supplying adware to file-sharing network Kazaa.

Dudeck disputes this claim. "We absolutely do not distribute spyware," she said, "nor does MySpace or its founders have any connection to Kazaa."

The first part is certainly true. The second part, though, is only technically true. Again, it is a matter of those associated with the founders, and more specifically Intermix Media, Inc.

Intermix Media was formerly eUniverse.com, a company that changed its name after authoring a threat advisory about its own adware that secretly installed itself onto user computers via free downloadable screen savers, online games and others. And, from the threat advisory:

The EUniverse.PerfectNav variant is bundled with the Free Ad Supported version of Kazaa Media Desktop 2.6. and also likely to be found in software supplied by eUniverse sites, such as thunderdownloads.com, myfreecursors.com, cursorzone.com and mycoolscreen.com.

About a year ago, New York Attorney General sued Intermix Media, alleging that the firm was the source of spyware and adware secretly installed on millions of home computers. Intermix settled out of court for $7.9 million.

But before the suit, there was an investigation, according to Intermix founder and largest shareholder Brad Greenspan, who left the company in 2003.

Greenspan alleges that when the executives of Intermix received word of Spitzer's impending lawsuit, several of them (calling them by name) begin selling off stock. After the lawsuit was announced the stock price was cut in half.

Greenspan, who has since filed suit himself, also alleges that Intermix was sold on the cheap to News Corp. without offering competitors like Viacom the opportunity to make a competing bid. Intermix, along with their prize possession MySpace, was sold to News Corp. for $580 million - a deal where Google's Eric Schmidt (Greenspan alleges) told Rupert Murdoch that acquiring the company would be "the best deal of his life."

Why were the executives of Intermix so quick to sell their brand to News Corp.? Greenspan says:

According to the proposed agreement, News Corp. has agreed to indemnify and pay for all the misdeeds of the Intermix Board of Directors (even criminal acts), rather than obligating these individuals to pay out of their own pockets.

I believe that the Board and certain executives would face financial exposure totaling upwards of $150 million for lawsuits and other fines for insider trading and other misdeeds. With this ominous burden in mind, the Intermix Board was personally motivated to stick exclusively to the proposed News Corp. deal to eliminate their personal financial exposure.

News Corp. spokesman Andrew Butcher called Greenspan's lawsuit against Intermix "frivolous," and expressed confusion about the event.

"He voted for the deal (to sell to News Corp.). He seems to be suing after the event."

With all of these allegations in mind, the MySpace faithful might find that a News Corp. MySpace is freer of mind than an Intermix MySpace.

Chris DeWolfe, Tom Anderson, Intermix, and Fox Media's Ross Levinsohn could not be reached for comment.

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About the Author:
Jason L. Miller is a staff writer for WebProNews covering technology and business.

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