Home Unlocking MySpace’s Value

Unlocking MySpace’s Value

The media blitz from News
Corp. executives on MySpace is increasing, with two excellent articles on The Hollywood
Reporter and Washington Post.

The Hollywood Reporter
, Fox Interactive Media president Ross Levinsohn says that
social networking is just a platform for “peer recommendation” services:

“What’s next for FIM is leveraging MySpace’s online community and communication into a
peer recommendations framework for leads on everything and anything: the best children’s
playgrounds in Los Angeles to the best concert seats in Madison Square Garden to the best
steakhouse in Dallas. Such peer recommendations provide a gentle seaway into targeted,
fine-tuned behavioral marketing for national and local advertisers wanting to reach
MySpace’s 15- to 34-year-old core user.”

This is apparently going to add to the bottom line, with MySpace’s much-maligned
to monetize
set to change:

“The prospects for generating revenue and profits are just as limitless. Murdoch said
FIM will post at least $350 million in revenue this year, up from $47 million last year,
and at least $500 million in 2007. Some analysts, who expect MySpace revenue to top $1
billion by decade’s end, say the site will turn profitable this year with about $13
million, and that could increase to $50 million in profits in 2007.”

Advertising is what is going to drive this growth:

“About 80% of MySpace revenue will continue to be generated by advertising, with the
remainder coming from subscriptions, fees and transactions.”

Since acquiring MySpace nine months ago, its user base and revenue have more than
tripled – according to the article. For all that, there’s a lot of infrastructure work to
be done before Levinsohn’s big projections have a chance of coming true (which he
acknowledges). And there’s still the small matter of MySpace’s extremely low average CPM
to overcome – by most
currently less than 10c per 1000 page views. 

For a higher level view of MySpace’s future, check out Internet seer Rupert Murdoch’s
on WashingtonPost
. He says that “we have to find ways, without destroying its
character, of getting more advertising revenue.” And therein lies perhaps MySpace’s
greatest challenge – monetizing their core user base, without driving those same users away to the
next big social networking system.

See also my earlier post: News Corp: portals are
out, mini-portals in

Photo: jasoneppink

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