• by David Goetzl  @dgoetzl, February 9, 2007

News Corp.'s $650 million purchase of MySpace could propel the company to $3 billion in annual revenues in the digital arena over the next several years, company CEO Rupert Murdoch said.

He attributes the growth prospects to two areas: international and advertising.

Advertising on the site went from virtually nil upon purchase to some $25 million in profits per month, he said, and is growing at a rate of 30% per quarter.

Digital dollars, excluding sites related to off-line properties such as Fox.com, account for only 1% of News Corp. revenue now. But Murdoch, speaking at a media conference, predicted a 10%-plus gain in the next five years--if not sooner--provided that "we do things right and stay ahead of the game."

On the international front, MySpace is drawing increased traffic in Europe and Australia, which doesn't include the potential in the massive Chinese market.

There are also new revenue streams domestically, in addition to ad sales.

MySpace recently launched a mobile application on Cingular phones, costing the consumer $3 a month, with News Corp. taking home $2 per subscriber. Some 200,000 people have already signed up.

Murdoch dismissed two potential threats to MySpace: Facebook and YouTube.

He acknowledged Facebook's dominant position on college campuses, but said MySpace continues to attract a slightly older crowd. Murdoch stated he felt a little betrayed by YouTube partner Google's unwillingness to allow News Corp. to jointly invest in the site, but questioned its viability due to copyright issues, a lack of social networking and a murky ad model.

"It's not social networking," he said. "It's an experience. It can be quite hypnotic, but hard to monetize it."

He said much of the site's appeal is because of its low amount of ads, and adding clutter would deter consumers.