The deal will see Mr Timberlake take a stake in the social networking site and shape its strategy alongside Specific Media, a California-based digital advertising agency.
The price paid falls short of the $100m News Corp is believed to have wanted and is a fraction of the $580m that Mr Murdoch handed over for then then dominant site in 2005.
The sale also crystallises the dramatic decline in a company that was founded in California in 2003 and just three years ago was still the world’s biggest social networking site.
“There’s a need for a place where fans can go to interact with their favourite entertainers,” Mr Timberlake said. “I’m excited to help revitalise Myspace by using its scoal media platform to bring artists and fans together.”
Myspace, which started as a site on which users could share their interest in pop and rock bands, has in the last three years been eclipsed by the explosive growth of competitor Facebook.
Founded by Mark Zuckerberg, Facebook says it has 600m registered users and is expected to launch a multi-billion dollar flotation within the next 12 months.
“This was a good example of how to turn $580m into a lot less virtually overnight,” said Michael Gartenberg, an analyst at Gartner, a technology research firm. “In many ways, it was a failed merger.”
Myspace has been bedevilled in recent years by confusion over its strategy and, according to analysts, failed to innovate at the pace required. Its user numbers peaked at 73.6m in October 2008 and has since shrunk to 35m, according to the latest figures from ComScore, which tracks the market.
Despite its troubled history, analyst said that the decision by Mr Timberlake and Specific Media to focus its efforts on music is a sensible one. “There’s still a lot of brand equity in Myspace,” said Mr Gartenberg of Gartner. “That strength if focused on music and music discovery.”
Specific Media, founded in 1999 by Tim Vanderhook and two of his brothers, is expected to shrink MySpace’s staff numbers to about 250.
The company, which had almost 1,500 staff just two years ago, has already radically shrunk its operations outside America. The agency said they and Mr Timberlake will lay out their plans for Myspace in more detail later this year.
MySpace proved an increasingly painful financial headache for News Corp, which in February took a $275m charge to write down the site’s value and pay for a restructuring.
At the time, Chase Carey, News Corp’s chief operating officer, said the interest in MySpace has ranged from “A-Z, from industry players and financial players.”
News Corp did not disclose the scale of Myspace’s losses, but the division it was in lost $575m in the last financial year.
However, as part of the sale, News Corp will retain a small stake in the Myspace. Shares in News Corp finished the day 1.3pc higher at $17.84 in New York.