Financial worth of Myspace proves costly for Google
The decline of MySpace has been underlined by a new advertising deal with Google, showing its slide in terms of website promotion and sales.
New MySpace and Google advertising deal underlines website decline
Monday, December 20 2010 by John Burns
The decline of MySpace has been underlined in a recent advertising deal with Google, which changes what was once a landmark 2007 advertising deal into one with new terms that reflect how the social networking site’s fortunes have fallen.
In the website promotion deal, Google had guaranteed to pay MySpace a minimum of $900 million (£590 million) over a three-year period in return for powering a search service and placing search ads in front of its users.
However, the last three years have seen website promotion tactics failing for MySpace as Facebook became the resource of choice for those looking for their own space. As a result, advertising revenues have fallen and it is believed by the Financial Times that Google were unable to generate enough business to cover the annual payments as set out in the agreement.
This time, the internet companies revealed that new terms had been reached and that while the relationship to will be extended to include some of Google’s newer display advertising services, its financial worth is certainly lower and both companies refused to comment on the fiscal specifics.
However, the Financial Times claimed that an insider had said that Google is no longer paying any guaranteed minimums and any revenues made through advertising will be split between both parties in the website promotion deal.
eMarketer has already claimed that MySpace will make $347 million (£223 million) this year, a marked drop from $470 million (£302 million) in 2009. Rupert Murdoch had predicted MySpace to have takings of $1 billion (£643 million) a year.
Facebook may be improving its own website promotion in China this month. Founder Mark Zuckerberg, who is on holiday in China where his global social networking site is blocked, met with the head of the country’s biggest search engine today, aiming to strike a deal with the Baidu brand.
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