MySpace: Pali Sees Big Rev Drop; Expects Layoffs
The time has come for big changes at MySpace, according to Pali Research analyst Richard Greenfield.
In a research note this morning, Greenfield asserts that, with just over a year to go on the News Corp. (NWS) unit’s search advertising deal with Google (GOOG), “it appears as though Google simply does not care about social search.” He contends it is difficult to imagine Google paying anywhere near what they were previously shelling out to MySpace, “especially as the inherent functionality of social networks is diminishing the importance of search.” The current deal expires in June 2010.
Greenfield estimates that MySpace will get about $300 million in revenue from Google in both the June 2009 fiscal year and in FY 2010, or about 35 percent of revenues in each year. He says there could be some competition for a new deal from Yahoo (YHOO), AOL (TWX) and MSN (MSFT), but he nonetheless sees a 50 percent drop in search fees. He also notes that Fox Interactive Media, the NWS unit that includes MySpace, is seeing costs increase even as revenues shrink.