Wall Street Journal Throws A Softball To MySpace

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I’m sort of scratching my head at the Wall Street Journal’s article (mostly behind a paywall) that MySpace is in negotiations over some kind of new search advertising deal.

“News Corp. is in discussions with Google Inc., Microsoft Corp. and Yahoo Inc. about replacing MySpace’s crucial search-advertising partnership with Google, which expires next month, according to people familiar with the matter,” says the WSJ, which is also owned by MySpace parent News Corp.

Well, yeah. Their deal with Google is ending. Supposedly in August, although the Google agreement I read said it ended in June 2010. Everyone knows MySpace has been trying to figure out a way to replace that $300 million/year in revenue. And everyone knows it isn’t going to happen.

But anyway, here are some interesting things that the WSJ left out of their article:

First, Fox Audience Network, which serves most of the ads on MySpace, is supposedly on a tear with their self service platform. Our understanding is that News Corp.’s goal is to grow FAN to the point where MySpace doesn’t need an outside partner for search advertising.

Second, FAN is definitely up for sale by News Corp., and at least one bidder – Silver Lake Partners (they own part of Skype, and made a failed bid to invest in Facebook) – has made an offer. If FAN is sold, it’s a solid bet that MySpace will quickly be sold, too. The two companies live off each other.

Third, the WSJ says MySpace thinks it can carve a niche for itself by exploiting Facebook’s privacy weakness (good idea, but way too late now). Apparently there will also be a new logo.

MySpace is apparently still counting on artists and bands to keep users happy - “A band, for instance, could use MySpace to share music with fans and get feedback, as well as adjust their touring schedule to add concerts in Texas, for example, if the musicians see their MySpace fan base is heavily from that state.” But sometime this year, probably sooner rather than later, MySpace is going to turn off their free music streaming and move to a subscription model.

A related point – MySpace Music was driving most of the searches that made up the massive page view obligations that MySpace had under the Google Agreement. With free music going away, those page views will go away, too. Meaning a search deal is even less lucrative.

There’s no real news at all in the WSJ article, although it will certainly help ensure that Microsoft, Google and Yahoo all know that the other guys are maybe looking at a deal, too. I think the far more interesting questions around MySpace have to do with what’s going on with FAN, and what will happen to their music business, none of which was addressed in the article. Far be it from me to say that there’s a conflict of interest in this story given that the WSJ and MySpace are owned by the same company – I’ll let others say it instead. A more critical approach may have been a better choice.

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