Rumor: MySpace to buy iLike for $20 million

San Francisco (CA) – MySpace is reportedly in talks to buy iLike for a lucrative $20 million. The music recommendation service – which launched in 2006 – boasts more than 50 million registered users and is the top music application on Facebook, Bebo and Hi5.

According to Tech Crunch, buying iLike would allow MySpace to solidify their already leading position as the most popular online identity for bands. However, David Pakman of Venrock told PC Magazine that iLike was bleeding cash and lacked anything resembling a coherent business plan.

“I think the reason for the distressed sale of iLike despite lots of ‘user traction’ is that there is no business model here, the company was running out of money, and active users on a FB app don’t necessarily amount to a business,” said Pakman. “We’ll see if MySpace can do anything to try and direct those users into Myspace Music to try and get ad revenue from them or sell t-shirts/tickets, but I am skeptical.”

Indeed, it remains unclear if MySpace – which is currently contending with a declining user base – will be capable of transforming iLike into a profitable business. As TG Daily previously reported, MySpace was recently ousted by Facebook as the reigning US social networking champion.

Nevertheless, MySpace still managed to generate $1 billion in advertising revenue during 2008, compared with Facebook’s $300 million.

“[Facebook has become the] largest player on the global stage, dominant in many countries, [replacing] MySpace as the world’s most popular social network. Whilst part of Facebook’s huge appeal is the simple layout of an interface that carries very little ad inventory, MySpace’s offering possibly makes its inventory – of which there is a lot more compared to Facebook – easier to monetize, particularly in terms of immersive advertising,” explained Nielsen.