News Corp announces MySpace to miss revenue target - Murdoch to bail?
By Dave Parrack
In terms of traffic, popularity, and general buzz, social networks such as MySpace, Facebook and Bebo are doing phenomenally well. However, making them a profitable venture still seems to be a hard task, as News Corporation, the owners of MySpace have now found to their cost.
News Corp has warned that it will fail to hit this year’s revenue targets for MySpace by about 10%. The targets set were for $1 billion revenue over a twelve month period. The warning comes hot on the heels of third quarter revenues falling from $233 million to $210 million.
With a recession either having already started, or about to start, depending on who you listen to, the economy could be to blame, but News Corp chief operating officer Peter Chernin instead blamed social networking itself, and the aggressive targets placed on them.
According to The Guardian, he said in a statement to analysts and investors:
“It’s still difficult to quantify the economic value of a friend in the social networking space.”
“Despite the obstacles we’re facing, what we’re accomplishing is extraordinary. We’re incredibly optimistic about the future of social media and our role in shaping it.”
Despite the profit warning, News Corp is convinced that MySpace is still top of the social networking tree. In the US particularly, it is still miles ahead of nearest competitor Facebook, boasting 73 million regular users compared to Facebook’s 36 million.
News Corp bought MySpace for $580 million in 2005, and despite the fact that it has already paid for itself many times over, there is speculation that News Corp’s chairman Rupert Murdoch may ditch the social network sooner rather than later.
The Register claims that few Murdoch watchers would be surprised if he decided to sell the business, possibly to have it rolled in to a larger Web brand such as Yahoo!.
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