Murdoch Jabs At Facebook's Fast-Growing Audience

Rupert MurdochRupert Murdoch took a swipe at MySpace rival Facebook Thursday after News Corp. reported weaker-than-expected sales at its Fox Interactive Media unit, which consists mainly of MySpace. FIM online ad revenue during News Corp.'s fiscal third quarter ending Mar. 31 dropped 16% while the unit's revenue overall fell 11% to $187 million.

In its earnings press release, the media giant attributed the decline in FIM operating results to lower ad revenues combined with increasing costs related to MySpace Music, its joint venture with the major recording labels.

Asked about the 16% dip in FIM advertising during the Q&A portion of News Corp.'s conference call, Murdoch predicted growing traffic under new digital chief Jonathan Miller before training his fire on MySpace's nemesis:

"We are not going for the Facebook model of bringing hundreds and hundreds of millions of people who don't bring any advertising with them at all," he said. The immediate question that comes to mind is 'Since when do media conglomerates shun having audiences of hundreds of millions of people?'

On further thought, the remark seems to be a veiled reference to Facebook drawing 70% of its 200 million strong user base from outside the U.S., while most MySpace users are in the U.S. The inference: it's easier to monetize traffic from the dominant U.S. ad market than that coming from international markets.

Indeed, MySpace has long enjoyed an audience advantage over Facebook in the U.S. even though Facebook overtook its rival globally a year ago. But Facebook is closing in on MySpace on its home turf and could dethrone the News Corp. property as the top social network in the U.S. in the coming months.

Facebook added about 4 million unique visitors in March to reach 61.2 million and close within 9 million of MySpace, according to comScore. And while MySpace's audience of 70.2 million has contracted by 4% in the last year, Facebook's has surged 72%.

Certainly, MySpace is still well ahead of Facebook in revenue. In News Corp.'s last fiscal year ending June 30, FIM generated more than $800 million. And market research firm eMarketer estimated Facebook had U.S. ad revenue of $210 million compared to $585 million for MySpace in calendar year 2008.

But with MySpace's three-year $900 million ad deal with Google is due to expire in mid-2010 and Google earlier this year expressing disappointment with efforts to monetizing social network inventory, it's not a sure bet that relationship will continue.

Falling revenue aside, Murdoch Thursday boasted of MySpace's profitability. "Profitability, I must say, that has completely escaped our competitors," he said.

1 comment about "Murdoch Jabs At Facebook's Fast-Growing Audience".
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  1. Anthony Nunno from FD kinesis, May 8, 2009 at 12:30 p.m.

    Whether it was a contractual issue or one of choice, Rupert Murdoch really needs to take a good look inside FIM and MySpace. It is no secret that he allowed Tom Anderson and Chris DeWolf free reign to control the MySpace operation since the acquisition and in the process allowed them to destroy the brand equity of MySpace in the few years that followed.

    So my question is: Does Murdoch not understand the inherent issues involved with marketing to Millennial's and Gen Y's while they are in the process of enjoying the SocNet Effect? Does the question make the ole' skool print/TV media titans a relic of the past, much like an offline Dinosaur that has been left to fend for itself in the frozen digital tundra?

    It's completely amazing to me that MySpace is quickly becoming the Friendster de jour on Murdoch's dime. My opinion is that Murdoch allowed himself to be completely mislead by the MySpace top brass and he allowed FIM them to shutter its widget platform. Walking in and closing the operation with 2 days for all to vacate the profitable media revenue unit leaving tens of millions of dollars on the table and advertisers scrambling for new ways to rebuild and support their widget campaigns. The widget platform had all the makings of becoming its own ad network, one that was viral and movable. Branded SpringWidgets allowed users to become completely immersed in a brand and allowed MySpace users an opportunity to interact on the inherent social effect.

    It's great that MySpace has new brass and we will have to sit back and see if MySpace can play catch-up... but people move on and dont look back and advertisers that were screwed during an economic downturn don't easily forget.

    I cant think of a site that has made a comeback and much like the Dinosaurs, all that will be left are the scattered bones for SocNet Archeologist to dig up and examine. The answer will be easy for them to assess... MySpace was victim of the AnderWolf Digital Asteroid that suffocated the life out of the largest online network that roamed the planet!

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