The last $75 million payment on the $900 million Google/News Corp. search advertising deal will be paid to News Corp. a year from now. That deal has accounted for about a third of News Corp.’s online revenue from MySpace and some of its smaller Internet sites, and the looming end of that particular gravy train is causing more than a little consternation for new Digital Media chief Jonathan Miller and his new MySpace exec team.
Google revenue is the difference between profitability and the opposite of profitability at MySpace and its sister sites. And unless a new deal is negotiated that can bring in similar revenue after next year, MySpace is facing massive layoffs and a general downsizing of its business, we’ve heard from multiple sources close to MySpace.
Here’s the good news: Google is at the table negotiating a new deal to take over in July 2010.
Here’s the bad news: Sources say Google thinks the deal is worth, tops, $50 million – $75 million per year, significantly less than the $300 million/year they’re paying now.
Why? Sources say that while Google has gotten plenty of advertising impressions (MySpace uses any excuse to put Google search results and Google ads in front of users), those ads don’t convert well. Add to that the dramatic shrinking of MySpace page views and the predictive modeling gets ugly.
Google knows MySpace is shrinking by about 20% a year. And unlike the last time they negotiated with News Corp., they now have nearly three years of actual operating history with the company. They’ve got real data to value the deal.
Unless Microsoft or perhaps Yahoo comes in and bids very aggressively, MySpace is going to get slaughtered in the negotiations.
If rumors are correct News Corp. has brought in EVP Mike Lang to run the Google negotiations. This is the guy who led the creation and funding of Fox’s Hulu joint venture, and is considered a top notch negotiator. But News Corp. needs more than a top negotiator to save MySpace’s revenue stream. They need a miracle worker.
Did you guys see Twibeo launched today! http://www.twibeo.com
Can you stop spamming James Stark
Myspace must include some ajax and tidy up. Otherwise no future.
I’m not spamming James Spark, Nishant!
Oh, the difference a comma makes.
The curse of Google. Imagine someone like Murdoch being this beholden to Google? Wow! This is what FIM gets for NOT learning how to turn their own traffic into revenue!
MySpace is dying, which means Obama probably wants to bail them out.
har har
because of bush.
so why dont they just do the adsense thing the way everybody else has to ? Ie getting paid per click.
But like ive said before, advertising cant be the be all and end all of the internet. There is a reason why market ecconomics, for the past 800+ years have revolveed around making and selling stuff. Advertising is neccesary, but when you have a vast amount of companies funded soley by advertising, funding other companies by advertising, it looks alot like a bubble.
why cant they just start a leading small business social network with its own form of advertising that puts addense too sleep?
20 million small businesses in need of a place to call “social home.” video on our site.
get 1 million of the 20 million small businesses to pay you a dollar a day.
-$30 a dollars a month. for premium natural language location based social networking services. services that bridge the internet and mobile divide. 365 million annually.
KillerLocator.com – good night
‘
5 million annually.
if NewsCorp could harness say 1million in one year paying 30 dollars a monththat need help. watch the myspace video on my site.
donkeylocator.com
Time for MySpace to join Friendster at the back of the “matters” queue.
MySpace is dying…. but…. what will all the pedophiles do? Where will they go now??
Oh right, MTV….
lol
Here’s a distinction for you . . . if users are not paying for your solution, they are not customers . . . they are prospects (or simply just “users” that are “using” your service and never intend to be a paying customer).
Once a user (or prospect) pays for your solution, then you can call that paying user a customer. MySpace has no customers, they only have users (that is their fault, they didn’t value their offering enough to even attempt to charge for it and thus why would their users value it as well . . . alternatives exist . . . not enough differentiation / no competitive advantage / market position is not defensible).
You need profitable customers to sustain your business. Without them, you are not a business . . . you are (1) a charity, (2) a hobby or (3) betting on the slim chance you will be acquired.
In the case of MySpace . . . #3 above applies and people got paid (profited) . . . but note the “sustain” part of my statement above . . . and that is exactly what MySpace is trying to figure out, before it is too late.
MySpace . . . Let me know if you’d like some help.
Another thing to think about is that I can’t imagine MySpace’s demographic is all that valuable.
http://www.trad...spx?symbol=goog
I wonder when Michael Arrington decided to only blog about rumors. Pretty much everything this site blogs about is based off speculation.
Michael Arrington is the new Perez Hilton.
not that i think michael arrington is a saint, but if he blogged only off of facts, he’d be more like the news. And that doesn’t offer added value.
If you only publish verified news you will be as popular as you are.
“Google revenue is the difference between profitability and the opposite of profitability at MySpace and its sister sites”
Does that mean anything to anyone else?
Google can buy Myspace if they are planning to overtake. Google is a big company with vast resources.
myspace is not dying…nor did it live.
Am i the only one that thinks that calling myspace or facebook billion dollar companies just because they have “users” is the stupidest thing ever?
THEY SHARE THE SAME FRIGGIN USER BASE!!!
guess what? Twitter has the same users that are on facebook/myspace.
When these companies start generating real dollars, and not just users, then lets talk about how much they are worth.
> When these companies start generating real dollars
Hm… they do ! (except for Twitter of course).
ok, you got me. I should have been more specific.
I meant when these companies start generating revenue that justifies these valuations or funding, then they will be worthwhile.
f
plase
bye