News Corporation has chosen Google to manage advertising on its wildly popular MySpace networking website, in a three-year deal that will finally help MySpace generate significant revenues. Google beat Microsoft's MSN division to land one of the web's most keenly awaited business deals.
With almost 100 million members across the world, MySpace offers Google's advertising clients access to one of the internet's biggest audiences. Google has guaranteed at least $900m (£470m) to News Corp over the three years of the revenue-sharing deal. MySpace will use Google's technology to allow its users to search the site and the wider web, and Google will match search queries with relevant adverts. Both sides will take a cut of the fee charged to advertisers when a user clicks on their ad.
News Corp, the media empire controlled by Rupert Murdoch, bought MySpace for $580m in July 2005, the first big piece in an acquisition strategy designed to build an online media business to rank alongside its television and newspaper interests. At the time, MySpace had 22 million members - mainly teenagers - and was growing fast, but it had little in the way of revenue.
Yesterday's deal with Google, the dominant player in online advertising, sent News Corp shares higher in after-hours trading on Wall Street. "Our partnership with Google underscores News Corp's continued evolution to become a powerful force in the digital media marketplace," said Peter Chernin, News Corp's chief operating officer. "This is just the first of many steps we plan to take with Google."
News Corp rolled MySpace into a new digital media division, Fox Interactive Media (FIM), which also looks after websites for the company's Fox television stations. The Google deal covers all of those sites.
Shares in the search engine company also rose in after-hours trading. Eric Schmidt, Google's chief executive, said: "MySpace.com is a widely acknowledged leader in user-generated content and incorporating search and advertising furthers our mission of making the world's information universally accessible and useful."
Under the terms of the agreement, Google will make guaranteed minimum revenue share payments to FIM of $900m, assuming MySpace and the other Fox sites achieve certain volumes of internet traffic and other commitments. Analysts said the potential income to FIM could be significantly higher if MySpace continues to grow.
The FIM websites covered by the deal include videogame and entertainment site IGN, college sports network Scout.com and the men's lifestyle site AskMen.com.