Google will pay the parent of social networking company MySpace.com at least $900 million in shared advertising revenue over the next three and a half years, and become the exclusive search engine for the site.
This is significant because News Corp paid $580 million for Intermix Media, which owned MySpace, last year. This deal means that News Corp will have already gotten that much in revenue, and more, from the income its gets from Google. Then you add the $350 million in revenue MySpace is reportedly making per year, you realize NewsCorp may soon be getting close to the black on this deal already ($350M revenue does not mean profit, so we’ll have to know more, as reader points out in comment). And to top it off, News Corp going forward will still own one the most promising sites on the Web and everything that comes with it.
It is good for Google because it will apparently kill off any aspirations by MySpace to develop a search technology of its own (though we don’t know if the terms actually rule that out).
More importantly, it prevents MySpace from allying with Yahoo or Microsoft. The jury is out on whether Google will actually make money off this. It depends on whether MySpace users decide to use the search bar to buy things. Our hunch is they probably are only searching for friends, because that’s all we’ve used the MySpace search for. (After all, everyone knows you can switch over to Google if you want to buy things. This just makes it easier to search Google from within the MySpace page, but according to the deal, “a majority” of the resulting search revenue is going to News Corp!).
News Corp.’s Fox Interactive Media unit will add Google search boxes to MySpace and other sites, likely by the end of the year. Google will provide search results and keyword ads targeted to people’s search terms. Google will also get first rights to sell any display ads not sold by Fox directly.
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