The NY Times on MySpace’s economics and challenges

I came across this New-York Times article about MySpace, its economics and challenges: For MySpace, Making Friends Was Easy. Big Profit Is Tougher (sub req’d). It is full of interesting data points, and is especially interesting in the light of the growing importance MySpace has in the Web 2.0 ecosystem. Not only is MySpace the second largest Internet web site in page served, it has also become a common launchpad for new startups that offer widgets that can be integrated in users’ home pages. Bambi Francisco had a good piece on this “trick” two weeks ago: MySpacenomics (sub req’d).

Interesting snippets:

• MySpace now has over 70 million signed users (but the article does not mention how many users are actually active — logging at least once in the last 90 days).

• As mentioned, only Yahoo serves more pages than MySpace which is getting close to one billion pages per day.

• The yearly revenue of MySpace is pegged at $200M, with an average CPM of 10 cents — which is very low. Yahoo’s revenue is about 20 times MySpace’s — based on a more efficient monetization of their traffic (and a suite of subscription-based services).

• MySpace has so much page views to monetize that even the largest advertising networks cannot/do not want to deal with the inventory. The following tidbit is telling:

A sign of that challenge is seen in Mr. Levinsohn’s effort to expand the use of text ads — the rapidly growing format pioneered by search engines. He has been running tests with Yahoo, Google and several smaller ad providers and has sought proposals from them for longer-term deals.
The answer he received was a shock. Not one of them, not even the mighty Google, was sure that it could provide enough advertisements to fill all the pages that MySpace displays each day, Mr. Levinsohn said. The search companies did not want to dilute their networks with so many ads for MySpace users, whom they said were not the best prospects for most marketing because they use MySpace for socializing, not buying.

• Not surprisingly, MySpace is going to try and integrate advertisers and sponsors in the site, and build more precise profiles of its user so that given sub-demographics can be targeted more effectively.

• A marketplace or classifieds of some sort will eventually be developed.

NewsCorp is not only counting on MySpace in their Internet strategy:

Indeed, rather than squeeze all its Internet ambitions into MySpace, Fox Interactive is assembling a network of Web sites, including IGN, a collection of sites focused on video games, and Scout, which runs Web sites for about 200 local sports teams. The News Corporation is also developing a portal devoted to entertainment, drawing from its Fox network programs, the Page Six gossip column of The New York Post and show-business reporters at the 35 local television stations it owns, Mr. Levinsohn said.

Lots of comments on the article, which is currently on top of Memeorandum.

Tags: myspace