MySpace's Latest Plan To Make Money: More Of The Same Stuff That Hasn't Been Doing Much

from the how-do-i-add-profit-as-a-friend? dept

Despite crazy talk of how much MySpace is worth, the fact remains that it really isn’t much of a money-spinner, as it’s been unable to turn its heavy traffic into decent ad revenues. Last year, it earned just $90 million in advertising sales — hardly impressive for a site that’s supposed to be one of the most popular on the web. One Wall Street analyst predicts MySpace will make $271 million this year from ad sales (which is an odd estimate, given that Google is supposed to pay a minimum of $300 million per year for ads on the site), and while that’s some healthy growth, it’s still a hardly overwhelming figure, particularly as the site’s traffic growth is slowing and its user base is aging. But never fear, says BusinessWeek, which lays out MySpace’s plans for profits: adding video content and targeting ads to raise CPMs, selling profile pages to advertisers, letting users sell things from their profiles, and trying to enlist its users to help in viral marketing campaigns. Sound familiar? It should, since it’s the same sort of things MySpace has been trying for a while, but apparently without a lot of success. The MySpace story at News Corp. is following a similar pattern to that of Skype at eBay: following high-dollar acquisitions, corporate buyers struggle to turn popularity and huge traffic into significant profits.

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Comments on “MySpace's Latest Plan To Make Money: More Of The Same Stuff That Hasn't Been Doing Much”

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Peyote says:

great post except...

The Google deal ramps up over time, with ’07 being far less than $300 million. MySpace has yet to sell targeted video ads (thus new) and definitely hasn’t done anything in peer to peer commerce, like a deal with ebay for instance (thus new). The analogy to ebay/skype is absurd. Recent press reports have MySpace on a runrate of $30 million a month, which will probably be well over $400 milllion this year. They bought all of Intermix, including the 40% of MySpace that Intermix didn’t own, for $649 million. So that is about 1.6x forward sales, before even taking into account what all of Intermix’s other businesses are doing. Ebay bought Skype for $2.5 billion plus a potential earnout and Skype will do something like $300 million in revenue this year, for a price to forward sales multiple of 8.3x. So remind me again how this is a relevant comparison?

dan says:

Myspace is bad

I don’t know why so many people use myspace. It has to be the worst programmatic website in the world. Very convoluted. I believe it is a fad and its popularity will run dry. I would not invest a dime into that company. Most people I know are already saying they spend less and less time on the site.

loof (user link) says:

Re: Myspace is bad

Myspace is a good idea gone terribly wrong. From what I can tell it is dying (slowly). Most of the people I know are starting to graduate and kill their myspace profiles because they don’t want employers looking at them. As the people who made myspace popular get older they’ll shift towards other sites and the up and coming generation will (like always) find something new and exciting that isn’t myspace.

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