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Investopedia Advisor submits: Not since Yahoo! (NASDAQ:YHOO) and Google (NASDAQ:GOOG) have we seen anything quite like MySpace.com. With more than 90 million registered users, the social networking website is heralded as a front-runner in a latest Internet portal revolution. Indeed, MySpace.com is responsible for much of Wall Street’s new enthusiasm for its corporate owner, Rupert Murdoch’s News Corp (NASDAQ:NWS).

The company’s growth has been amazing since News Corp snapped-up it up a year ago for $580 million. It’s now the second most visited website in the world, behind only Yahoo!

But hold on a second. Before getting too excited, it’s worth pondering how MySpace.com stacks up as an investment, as opposed to a social phenomenon.

If MySpace.com’s contribution to News Corp’s prosperity was substantial, it might get some space in the media giant’s latest 10-Q, but it doesn’t. In the MD&A, News Corp gives details on all its other businesses, but there is no mention of the web site.

MySpace.com, along with the rest of News Corp’s interactive media outfits, gets lumped in the “other” businesses category.

It’s impossible to break-out, with much precision, MySpace.com numbers from the mix. But looking at the total performance of those “other” businesses, MySpace.com may well have produced as much as $100 million in revenue, with a loss up to $50 million in the most recent quarter.

That scale of revenue pales in comparison with the $2.25 billion of revenue generated by Google in its last reported quarter, and Yahoo!’s revenue of $1.57 billion. The bottom line is that Yahoo!, Google, Microsoft’s (NASDAQ:MSFT) MSN and Time Warner’s (NYSE:TWX) AOL have been able to generate substantial ad revenues from their users, while so far MySpace.com has not.

News Corp will generate more than $24 billion in top-line revenue this year, so MySpace.com represents a tiny drop in the revenue bucket. Even with MySpace.com experiencing triple digit growth, it will be some time before it adds up enough to budge News Corp's stock value.

I reckon that if MySpace.com were cut loose from Murdoch’s media group, investors would likely be better off. Stuck inside News Corp, MySpace.com must content itself with a revenue multiple of less than 2. Outside, MySpace.com would get a chance to trade at 9-17 times revenues: the multiples enjoyed by Yahoo! and Google.

What’s more, community networking sites like MySpace.com grow at such rapid rates, in a large part because they are outside the old-media ecosystem. As soon as users begin to suspect that a mega-corporation thinks it owns them, they will be off to another spot on the web. Because there are few barriers to building a web community, there will always be another one popping up on the Internet.

Call me a grump, but while MySpace.com may be part of a revolutionary trend, it is hard to see how it will transform News Corp’s bottom-line anytime soon.

By Ben McClure, Contributor - Investopedia Advisor

Ben McClure is director of McClure & Co., an independent research consultancy. Before founding McClure & Co., Ben was a highly-rated European equities analyst at city of London-based Old Mutual Securities. He also spent several years as a business/technology journalist at the Economist Group.

At the time of release Ben McClure owned no shares in any of the companies mentioned in this article.

Source: MySpace Needs Space Outside News Corp. To Grow (NWS)