BusinessWeek on the Problems of Monetizing MySpace

Nate Elliott | April 10, 2007, 07:16 AM

It's a decent read, but it underplays the value of the Google deal. That deal basically ensures that, if MySpace can hit its pageview targets, NewsCorp will make its $580m back over the next three years -- meaning there's almost no way to lose money on the investment. That should give the MySpace guys a chance to play with revenue models without being pressured to make a fortune right away. It may turn out to have undervalued the inventory on MySpace -- but considering that the site was making just $.10 CPM this time last year, this was a very shrewd piece of business by NewsCorp.

Meanwhile, MySpace continues to launch their localized sites across Europe. Last autumn they launched in France, last weekend I went to their German launch party in Berlin, Spain should be next, and they've got lots of others in beta. I've said in the past that language localization alone isn't enough to guarantee the spread of social networks. But MySpace does seem to be doing a good job of getting local bands and content on their sites as well -- which is the key to successful localization -- and according to the company the new sites are doing very well at growing the audience in each country.

I still think the total potential universe of networkers is smaller in Europe than in the US -- consumers just don't engage as much with the Internet here as they do in the States, and kids have already taken to the mobile phone as a key communication channel -- so it'll be interesting just how big they grow in each localized market.