Google Falls Short for MySpace
There years ago, Google and MySpace signed a search deal. Google agreed to provide web, vertical and internal search and contextual ad sales for MySpace and other Fox Interactive Media properties and pay them $900M (guaranteed as long as Fox met its traffic requirements) in shared advertising revenue over the lifetime of the deal. But it looks like this year, the last of the deal, Google has fallen short.
But, says MySpace execs and owner Rupert Murdoch, that’s because Fox has failed to meet its traffic requirements. Meaning traffic is down on MySpace, just a few short years after they fell into the “Trough of Disillusionment” in the hype cycle (translation: the MSM turned on them).
And just how much are they falling off? Rupert Murdoch’s initial assessment on the recent earnings call was that they wouldn’t see any income from Google this year—a $300M shortfall. But the other execs on the line disagreed, saying that they’d probably fall short by $90-$100M.
And because MySpace/FIM (now Digital Media Group, but whatever) didn’t meet their “very high guarantees,” as Murdoch put it, it’s their own fault. Interestingly, at first the deal “calmed some analyst and investor nerves, and allowed News Corp. to claim MySpace was paid for and then some,” says paidContent. News Corp bought MySpcae for $580M in July 2005, and they have seen at least that much in revenue from the Google deal.
What do you think? Was this deal not the good idea it seemed three years ago? Or was this an unforeseeable circumstance?