Peter Kafka

Recent Posts by Peter Kafka

Google, Myspace Finally Land New Ad Deal

Google and Myspace have finally struck a new ad deal, replacing the three-year, $900 million pact that expired this fall.

The two companies aren’t handing out details on the new pact, but have made it clear that it’s not going to be anything like the old one, which provided Myspace and the rest of News Corp.’s Web properties with massive guaranteed payments.

But we’ve known that for a long time: The first deal got done when Myspace was white-hot, and Google was competing fiercely with Microsoft to lock up prime real estate.

Now, of course, Myspace is well into a protracted decline, despite News Corp.’s efforts to turn it around (News Corp. also owns this Web site). And Microsoft isn’t nearly as aggressive as it used to be on these kinds of deals.

The real question for Myspace is what happens now. News Corp. has been quite clear that it’s not happy with the site’s performance, and if anyone were willing to pay anything for it, I’m sure Rupert Murdoch would be happy to part with it.

But who wants to buy a shrinking, money-losing Web site? News Corp. may not be able to do that much about the audience decline, and the money-losing part is tougher to fix than it seems from the outside.

That’s because Myspace is still stuck amortizing fees it picked up in the go-go years, like the big settlement/licensing deal it struck with Universal Music Group, which allowed it to start up MySpace Music in 2008.

Those aren’t operating costs, but they’re still real, and they don’t go away. “You start off every year $70 million in the hole,” says a person familiar with the company.

So how else can you cut costs? There are some obvious ways to go, and they won’t be pleasant for Myspace’s remaining staff.

UPDATE: Nature of news on the Web–this story was a scoop for all of about three minutes. Here’s the release–note the news about the Myspace inventory being offered via Google’s DoubleClick Ad Exchange.

MYSPACE AND GOOGLE RENEW AND EXPAND SEARCH
AND ADVERTISING AGREEMENT

LOS ANGELES and MOUNTAIN VIEW, Calif., December 16, 2010 – Myspace and Google, Inc. today announced a multi-year agreement to renew and expand their long-standing search and advertising relationship. Under the terms of the new agreement, Google will continue to power Myspace search and search advertising and will also provide additional display advertising services to enhance the rich
entertainment content experience inherent on Myspace.

This agreement brings together Google’s expertise in search and advertising with Myspace’s strength in social entertainment. Specifically, the agreement provides Myspace with:

Web search and search advertising
Full display ad solutions (including participating in the Google Display Network and DoubleClick Ad Exchange)

“We’re thrilled about renewing our partnership with Google. Their best-in class technology will continue to provide our consumers with a robust search experience,” said Nada Stirratt, Chief Revenue Officer of Myspace. “We look forward to participating in the Google Display Network and DoubleClick Ad Exchange to increase yield across our display ad inventory.”

“We’re excited to deepen our partnership with one of the largest social Web properties in the world, Myspace,” said Henrique de Castro, Vice President of Global Media and Platforms at Google. “We’re pleased that our technology will benefit Myspace’s users on its newly redesigned site, and that Myspace has chosen our display advertising solution to increase its returns.


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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik