Bertelsmann plans rival MySpace site

German media giant Bertelsmann is working on plans to develop an entertainment-driven social networking Web site to compete with MySpace

German media giant Bertelsmann AG has begun crafting plans to develop an entertainment-driven social networking Web site to compete with MySpace and other similar sites, a source familiar with the discussions said Monday.

The news comes less than one week after Bertelsmann agreed to sell video content to the popular Internet video site YouTube, which has a social networking component and which was acquired days later by Google for US$1.65 billion.

With the new site, Bertelsmann aims to create a community for its music and video projects, according to the source.

The company plans to meet with its RTL television and Sony BMG music divisions to discuss the Web site, the source said.

Bertelsmann declined to comment.

MySpace, which is owned by News Corp, is one of several social networking sites, including Facebook.com and Live Spaces, that offer a Web experience encouraging two-way participation; they go beyond static places where people search for news and information to offer gigantic forums that allow users to share opinions and stories, swap photos and videos and more.

A move by Bertelsmann to launch a social networking Web site would represent yet another curve in the company's winding -- and at times unwinding -- Internet strategy.

During the Internet bubble phase, under former Chief Executive Officer (CEO) Thomas Middelhoff, the media giant acquired a stake in the former American Online (AOL), which had merged with Time Warner, and made an investment in the peer-to-peer music exchange Napster, in addition to launching numerous e-commerce services of its own.

But when the bubble burst, Middelhoff was fired and the company began to retrench, selling its stake in AOL and folding many of its Internet businesses and projects.

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