With iLike, MySpace extends its reach

It's a done deal.

After days of speculation – some of it conducted right on this blog – MySpace today announced it would indeed acquire iLike, a popular music streaming and discovery tool. The agreement strengthens MySpace's grip on the music market – iLike is second only to MySpace Music in popularity – and extends the reach of the social network, which has lost serious traffic in recent months to Facebook.

“The iLike acquisition advances our relentless pursuit of innovation and the need to create new distributed social experiences in music and beyond,” MySpace CEO Owen Van Natta said in a statement. “We are deeply committed to bringing world class talent into all areas of the company and this acquisition demonstrates our focus on this objective.”

iLike, which was founded in 2006, bills itself as “the Web’s leading social music discovery service and the dominant music application on the Facebook, Orkut, hi5 and Bebo platforms.” Over the past few years, the total number of users of iLike has risen to 55 million, making it an attractive target for a social network such as MySpace.

As we noted recently, MySpace has consistently beaten by Facebook in the traffic race. Grimmer still: MySpace, which was purchased by News Corp. in 2005, is fending off attacks from a batch of young upstarts, including Twitter. “MySpace is not firing on all cylinders like Facebook,” social networking expert Ray Valdes told CNN.com in June. “Their effort to improve the site seems to be fragmented. They need to get on track or they will continue to slide.”

So will the $20 million deal fix MySpace's problems? Don't count on it, says JR Raphael of PC World:

It'd be shocking if many users were motivated to change their social network allegiance based purely on a piece of music-sharing software – one that, by all indications, will still be available on Facebook (or will perhaps eventually be replaced by some comparable alternative). The typical social network user is focused on the overall experience, not the brand name of the apps associated with the site. And there are enough standalone music-playing and sharing services that I'd question how many people would surf over to MySpace solely to use iLike's functionality.

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