June 14, 2006, 9:55 AM — MySpace, the social networking phenomenon that has become one of the world's most popular Web sites, may "auction off" its search business to a major search engine operator, an executive from its parent company, News Corp., said Tuesday.
Too many users leave the social networking site to go to external search engines, so MySpace needs to improve its search functionality and make its search box more prominent, said Peter Chernin, News Corp.'s president and chief operating officer.
In fact, the external site most MySpace users jump to is Google Inc.'s Google.com main search page, and every time that happens, MySpace loses an opportunity to generate advertising revenue, he said at the Deutsche Bank Media and Telecom conference.
"So we will redesign the page to make search more prominent, and we will probably look to auction off our search business to one of the big 3 search players, Google, Yahoo [Inc.] or [Microsoft Corp.'s] MSN, and see what's the best deal we can get," he said, responding to questions from a Deutsche Bank financial analyst.
MySpace currently uses Yahoo's search engine and carries sponsored search ads from Yahoo's network. MySpace didn't immediately respond to questions about what different type of arrangement News Corp. wants MySpace to have with its search engine partner. It's probably safe to say the company wants to strike a broader, more formal, more profitable deal than its current arrangement with Yahoo.
MySpace (http://www.myspace.com) ranks second only to Yahoo Inc. in page views in the U.S. It has more than 73 million registered users worldwide and adds about 250,000 new ones every day. It is used mainly by teens and young adults to set up personal profiles, post photos, keep a journal and stay in touch with friends.
Last year, global media conglomerate News Corp. paid more than half a billion dollars for it and other Web sites owned by Intermix Media Inc., and the parent company is now focused on increasing the site's revenue.
Although News Corp. doesn't disclose MySpace financial details, financial analysts generally agree, based on estimates, that the site's revenue should be much higher than it is, considering its enormous audience.
Chernin said MySpace's revenue is reaching "large numbers" and that it has been doubling every four months or so this fiscal year. "Revenue is growing incredibly quickly, and we think we've just scratched the surface of how to monetize this [site]," he said.
To boost ad revenue, News Corp. has increased MySpace's ad sales representatives fourfold or fivefold since it bought the company, he said. Now, MySpace needs to sell more high-value, cost-per-impression display ads, as well as sponsored search ads, hopefully by partnering with MSN, Google or Yahoo, he said.
MySpace also needs to figure out whether it wants to keep sending traffic out to sites that host its users' photos, videos and other content, or whether it wants to provide those services itself and cut off the outgoing traffic, he said.
"Do we say, 'If you want to look at videos or store photos you need to do it here' or will our users look at that as something that hurts the site? That's a complicated and interesting question for us, and not one we've made any decisions on."
