Google has ponied up nearly a billion smackeroos to be MySpace’s search and advertising partner, leaving MySpace’s former ad partner, Yahoo, in the lurch. One wonders if Google will refuse to run ads near MySpace’s naughty bits, as is its practice for other AdSense partners, or whether MySpace is a “friend with privileges.”
UPDATE: Eric Schmidt answers my question: ““We are not going to cover MySpace with ads.” I think that means that the naughty bits will remain uncovered. Which is a good thing, on many levels.
Considering Yahoo’s somewhat incumbent position within MySpace, they likely decided to walk away from an unprofitable deal. MySpace claims it will be receiving the majority of the rev share arrangement (see Tech Crunch blog). Google really had nothing to loose, since they don’t have a competing social network to speak off and Yahoo does. For these reasons, Google is the perfect partner for MySpace. Some of the terms of the agreement that have come out so far seem to suggest this deal could be quite one-sided. It may even be more profitable for MySpace than News Corp developing or acquiring their own search engine (ie, Ask.com or Technorati) — certainly a lot less risky. Google may have been thinking defensive strategy here.
$900M… wow. That’s hardly chump change – or bunk change for that matter :)
And I would imagine that just about all of it will go directly to Fox’s bottom line. The neat thing about Adsense or a Google search box is that there is almost zero cost for the publisher associated with implementation or ongoing management.
I think that $550M price tag is officially a bargain now.
Nick, whether or not the kids think they are social networking, they are apparently doing something that has created some real financial value.
This is a great deal for all of the participants (well, except for Yahoo! who lost out on it). Fox gets $9M (nice deal), Google gets access and usage of another 100M users of their search engine (I am talking here about creating brand awareness and loyalty) and the opportunity to leverage AdSense to their network partners. Another benefit Google gets that it doesn’t have to worry about the headaches of running MySpace.com (Google had a chance to purchase it and passed) and still gets what it wants: Financially, this deal will pay for itself in less than 2 years.
… I guess.
And it’s converging towards the old media.
I made a small cartoon.
Bye,
Oliver