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Doing The Math On MySpace: Who Gets The Failing Grade?
from the something-doesn't-add-up dept
It seems like MySpace is the media darling lately, following their buyout by News Corp. Even if it's unclear what Rupert Murdoch is going to do with the site, the media loves the idea that it's the new MTV. So, it's really no surprise to see Wired Magazine put out a glowing profile of the company that seems to have tossed any sense of skepticism out the window. In fact, the numbers presented in the story (without sourcing) seem extremely questionable. The article first claims that MySpace received more pageviews than Google in August. That's a surprising statement, and probably should be backed up by a source, but there's none. Then, it claims that MySpace actually has 12% of all ads on the web which seems extremely high -- and again, has no sourcing. Of course, even if we take that at face value (which seems pretty questionable), it's hard to square that with the very next statement (which is the only one that is sourced): "MySpace should gross $30 million to $40 million this year." So, they have more page views than Google, a significant portion of all online advertising... and yet they're going to make a tiny fraction of what Google makes in a single quarter? Also, by that math (assuming MySpace is really 12% of the market), doesn't it mean that the entire online ad market is equal to somewhere between $250 and $333 million a year? Either someone's done the math wrong or the management at MySpace deserves to be fired for their ad sales deals. Update: Jeff Howe, who wrote the article for Wired Magazine, stops by in the comments to claim that the numbers are legit and are from Nielsen. While we had no doubt he got the numbers from somewhere legit, it still seems worthwhile to question those numbers, as the math makes almost no sense. If you have 12% of all ad inventory online and you're only making $40 million a year, something very big is very wrong. As we said, it may be with MySpace's dealmaking ability or it could be something else -- but some big explanation is clearly missing.
Reader Comments (rss)
Myspace and Google
It seems to be ovious that myspace is not working as a monopoly, first it fails to break one of the very most important rules which is profit maximization. The whole truth of why Google and Myspace are able to harnest this market is that there is very little marginal cost. But this is soon to be exploited because new firms will seek to grab a chunk of the profits that are being made and thus drowning the market, demand will fall, and zero economic profits will be made. If Google wants to control the market they should've bought myspace as soon as they heard about it. Now they have alot of catching up to do.
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