Is MySpace Making Money?

• Posted: Saturday, February 10, 2007
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• Author: pradhana
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• Filed under: Internet Advertising, Market Survey, MySpace, Online Advertising, Online Services, Social Network

And how.

By Debra Aho Williamson - Senior Analyst eMarketer

MySpace appears to be on track to meet or exceed the $525 million that eMarketer projected the site would generate on ads this year.

Fox Interactive Media (FIM), the News Corp. unit that contains MySpace, generated $125 million in revenues in the fiscal second quarter of 2007, News Corp. said on Wednesday. FIM is on track to break even on at least $500 million in revenues in fiscal year 2007, which ends June 30. News Corp. executives expect that in 2008 FIM will turn a profit margin of at least 20%, and News Corp. chairman Rupert Murdoch said, "I think we can do a lot better than 20%."

eMarketer estimates that MySpace had US ad revenues of $190 million in 2006, rising to $525 million in 2007. eMarketer's estimates are for the calendar year, not News Corp.'s fiscal year, and do not include international revenues, which thus far have likely been minimal.

News Corp. executives did not specifically break out MySpace's revenues, but they suggested that MySpace accounts for the lion's share of FIM's revenues. In response to a question from an analyst, News Corp. president and COO Peter Chernin said that an estimate of $75 million in MySpace revenues for the fiscal second quarter of 2007, which ended Dec. 31, was "reasonably accurate."

Earlier in the call, Mr. Chernin said MySpace's revenues were up 25% from the previous quarter, which, if the $75 million figure is on target, works out to $60 million. That would indicate a total of $135 million in revenues for the period of July-December 2006.

International revenues will kick in more substantially in 2007 as MySpace continues its expansion. eMarketer estimates that worldwide online social network ad spending will reach $1.125 billion in 2007.

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