Billion Dollar Baby for MySpace - Another Whopper for Google

Talk about a Billion Dollar Baby for News Corp and what a week so far for Google. Google is putting out a series of big announcements this week. I think that the MySpace announcement in combination with the Viacom deal is big for Google. Google announced today that it is paying up to $1 billion in minimum revenue to News Corp for exclusive search and ad-serving platform for News Corp’s properties including the coveted MySpace.

Here are the actors in this Billion Dollar Baby:

“Our partnership with Google underscores News Corp’s continued evolution to become a powerful force in the digital media marketplace. To have come this far and gained this much momentum in just over a year is truly remarkable,” said Peter Chernin, President and Chief Operating Officer of News Corporation. “This is an exciting time in our history as a forward thinking media company and this is just the first of many steps we plan to take with Google. We look forward to expanding our relationship into many new areas over years to come.”

“We believe that our innovative technologies will be of real benefit to Fox Interactive Media’s growing number of users,” said Eric Schmidt, Chief Executive Officer of Google. “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.”

“This deal is the next step in our evolution as a significant interactive player,” said Ross Levinsohn, President of Fox Interactive Media. “Forming a strategic partnership with one of the most innovative companies in the world to expand our business together, monetize our platforms effectively and leverage our combined scale will provide substantial growth for our businesses.”

“This agreement demonstrates our commitment to bring the same innovation to monetizing user-generated content that we brought to search advertising,” said Omid Kordestani, Senior Vice President, Global Sales & Business Development of Google. “We look forward to other opportunities to partner with News Corp. to the benefit of its community.”

Danny Sullivan, the original authority on “Search” reports the following …

“I’m at our Search Engine Strategies show in San Jose at the moment, so I don’t have time to do a long post on the news, which I’m still digesting. I’ve taken a number of phone calls on it already, so I’ll provided what I’ve given to some other reporters who have asked.

Big win for Google? Sure. Lots of traditional players are worried about MySpace, even if the site itself isn’t earning that much now, from what I understand. This gets Google in, keeps Yahoo and Microsoft out, and might be a cheap payment to protect Google’s front in the social networking wars. In other words, even if Google doesn’t make a net profit off of MySpace, the intangibles could be worth the cost. The closer ties also give Google deeper insight into the MySpace traffic, since it will soon see everyone going to these pages. That will be very helpful for Google if it wants to do a renewed social networking effort of its own.

Big loss for Microsoft and Yahoo? Maybe, maybe not. If social networking is hot, both of them — unlike Google — have very healthy communities in several international markets. In fact, that potentially could have been an issue in trying to win MySpace. Revenue-wise, Yahoo indirectly provides ads to MySpace, but current revenue doesn’t appear to be substantial, plus Yahoo already would have been giving a big chunk of this to whomever is the unknown middleman. ”

Look for more from John Battle - he wrote the book about Google called Search. Of course there will be something from Mike Arrington from Techcrunch.com

This entry was posted on Monday, August 7th, 2006 at 5:53 pm and is filed under Blog. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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