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August 7, 2006 1:58 PM PDT

Google pledges $900 million for MySpace honors

  • 76 comments

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The amount of traffic Google gets from MySpace has more than doubled from about 4 percent early this year to 10.8 percent last week, said Bill Tancer, general manager of global research at Hitwise. When MySpace suffered a sporadic outage last month overall traffic to Google increased by about 4 percent from the previous weekend, he said.

"What I think that tells us is there are synergies between the two sites," Tancer said. MySpace is the biggest Web site in the U.S. in terms of market share of visits, with more than 7 percent of all visits to any Web site in the U.S. last month, according to Hitwise. The terms "MySpace" and "MySpace.com" are the top two search terms typed into search engines, Tancer said.

Traffic magnets
"When you have a site like MySpace growing at the rate it is, that tells us there is a paradigm shift happening with Internet users. There is a move away from static pages to interacting with (the Web) and posting your own site," he said. "I think it was a smart idea of Google to latch on to the leader in this space."

"So much of Google's volume of traffic was being generated by MySpace," said Greg Sterling, founder of Sterling Market Intelligence. "If they were to lose that search volume, that might be a significant chunk of traffic they would cede to someone else."

Google has taken a similar tack before. For example, it agreed to pay $1 billion for a 5 percent stake in AOL. It also agreed to share search ad revenue with Dell in exchange for Dell pre-installing the Google Toolbar for PC and Web search.

The Fox deal is ironic, Sterling said, given that Google could have bought MySpace for about half the price that News Corp. paid for it, according to an interview with News Corp. Chief Rupert Murdoch in a recent issue of Wired.

Nevertheless, News Corp.'s Chernin said the deal will pay for the company's investment in MySpace on a 100 percent margin, and that the relationship will have a positive effect on revenue this year.

Under terms of the deal, Google will have additional rights to serve search and advertising to Fox properties in the United States and overseas, except for two countries, which Fox executives would not disclose. MySpace executives have said previously that the social network plans to grow internationally, in countries including the United Kingdom.

As far as search, MySpace plans to mesh Google technology and ads with its own features for navigating the Web, member profiles, music, books and so on. Fox executives said that each MySpace member page will contain a Google search box, for example. The company also plans to release a toolbar that will incorporate Google technology.

Google ads will appear in the form of sponsored listings in search results and contextually targeted placements on MySpace pages. Google will also have first right of refusal to sell unsold display advertising on MySpace and other Fox properties.

Danny Sullivan, editor of Search Engine Watch, said the deal will be especially fruitful for Google when it comes to targeting ads within social environments.

"It's going to give them an incredible look into what's going on in MySpace. Given that MySpace is growing so fast, that's a cheap price to pay," Sullivan said.

News Corp.'s Chernin hinted that targeted advertising to members is the Holy Grail.

"The real potential for a home run is combining Google technology with our demographic information," Chernin said.

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wow, a lot of money for a social site
by rmiecznik August 7, 2006 2:40 PM PDT
Damn, that's a lot of money, $900 mill all cash deal ?

I think I need to start a web site called,

where_are_all_my_homies_at.com
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$900 mill for 3 year access to 100M eyebals? Cheap
by Robin Majumdar August 7, 2006 4:13 PM PDT
Kudos to G for expanding their reach. No this is not expensive. Although I haven't examined MySpace metrics and user demographics, me thinks that 80-100M GenY (and X) eyeballs with relatively good amounts of disposable income... and more importantly, the desire to PART with that income = good for Google, AdWords, AdSense and of course, the end advertiser.

Robin
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Google wins but still Loses?
by jawandapuck August 7, 2006 5:20 PM PDT
Considering Yahoo's somewhat incumbent position within MySpace, they likely decided to walk away from an unprofitable deal. MySpace claims it will be receiving the majority of the rev share arrangement (see Tech Crunch blog post). Google really had nothing to loose, since they don't have a competing social network to speak off and Yahoo does. For these reasons, Google is the perfect partner for MySpace. Some of the terms of the agreement that have come out so far seem to suggest this deal could be quite one-sided. It may even be more profitable for MySpace than News Corp developing or acquiring their own search engine (ie, Ask.com or Technorati) -- certainly a lot less risky. Google may have been thinking defensive strategy here.
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Myspace = News corp = Fox news = mind control & Lies
by free_people August 8, 2006 8:04 AM PDT
Lets not forget that MySpace is owned by Rupert Murdach who owns that most vile of news organizations called Fox. An organization which is about anything but news, it is about controlling people's mind and thoughts to allow US
and Israeli invasion and massacre of one country after another.
I mean about 100s of Thousands of people have been killed in Iraq, Gaza & now Lebanon over the last 5 years, while Fox reports these killings as just and encourages for More & More......!
Do you want this same organization now controlling your children "eye balls" online too???
If you do, or if you dont care, just keep in mind that today it is Iraqi and Lebanese that are being slaughtered while US media which goes from Fox, to Wall Street Journal, to Myspace, to Google, etc. Lie & Lie about it, but tomorrow it could be
your country or children that are being slaughtered by these same forces.
Are u going to wait until then to realize how dangerous it is for the control of all
information (aka "eye balls") to be in the hand of these few companies??
That is why I Urge you to get your own (Countries) equivalent of MySpace, or search engine, or auction site; FREE your mind from being controlled by these handful of US companies for obvious reasons. Tell your government officials that the security of your country is far better served by investing $20Mill to build your own local search
engine, or Xspace, than $20Mill on one Tank or one Plane.
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Its always someone else's fault isnt it...
by ccisat1dxj August 8, 2006 9:09 AM PDT
How about this: Maybe the fighting in the Middle East has been going on for hundreds of years, long before Fox arrived on the planet. How about a few MIND controlling Middle Easterners are getting EVERYONE pain, grief, heart ache, innocent and guilty deaths. Stop blaming Fox, they are just a huge media company (read huge equals dumb most of the time). And, how the hell does a TV station controls someone's mind unless THEY want to be controlled or believe what they hear?

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Better ads?
by TV James August 8, 2006 8:12 AM PDT
Does this mean finally I won't see dating ads on MySpace since they already know that I'm married and not looking to cheat?
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MySpace has GOT to improve
by ccisat1dxj August 8, 2006 9:05 AM PDT
MySpace is a terrible technical place to be. The only thing that you can really do is "add friend". What about IM buddy list browsing, friend radars, text messaging, collaboration? This is just another GeoSpace. I understand the owners have cashed out, and GREAT for them. When is it going to get better?

David Jemeyson
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Indeed.. MySpace is so Web 0.1 beta
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Thankfully I'm not the only old-school net player (old school is NOT Altavista, but rather BBSing, Sysops and DARPAnet/MILNET and 110bps)... that is so very perplexed by the utter ugliness of both graphical appearance and visuals of 99.9% of MySpace sites I have visited.

Robin Majumdar
View reply
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