MySpace Growth Tailing Off As Site Population Reaches Critical Mass

Includes: GOOG, NWS
by: Judith Levy

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MySpace, ByeSpace? [Wall Street Journal]

Summary: In an apparent backlash, social networking website MySpace is seeing a decline in visitors and the deletions of pages by members as users tire of the vast community. Like competitor Facebook, MySpace is confronted with the problem of too much success: its population is now so huge that it is no longer effectively linking its target audience to like-minded people. To make matters worse, the site's large hit numbers have lured ad spammers who are effectively alienating the site's faithful. Both MySpace and Facebook lost visitors in September: unique visitors to MySpace fell 4% to 47.2 million from 49.2 million in August, and visitors to Facebook fell 12% to 7.8 million. Seasonality is partly to blame, since the college-student audience is returning to school. But Judit Nagy, VP of consumer insights at Fox Interactive Media, which oversees MySpace, points out that the problem is more fundamental than that: MySpace is "moving from a growth spurt into a phase of maturity," which might imply that the site is approaching saturation. For its part, Facebook has made some strategic moves recently that have irked its users -- particularly its announcement last month that the site will now be open to anyone and not solely to college students. Traffic to MySpace inched up 3.1% in Q3 versus a 45% jump in the same quarter a year ago while Facebook's traffic fell 1.7% versus 11% growth last year. Despite the slowdown, Internet behemoths are still sweet on the sites: Google recently agreed to deliver at least $900 million in ad revenue over 3½ years to News Corp. for the right to broker advertising that appears on MySpace and other sites, while Microsoft has struck a deal to be the exclusive provider of advertising to Facebook.
Related links: RBC: MySpace Soon Worth $10-20 Billion for News Corp.Google's MySpace Deal Is Better Than ReportedNews Corp: Pay Attention to the MySpace FactorMySpace Should Grab Ad Bucks From Google-YouTubeValue of Facebook vs. YouTube - and Why Microsoft Still Doesn't Get ItWhy Facebook's Even More Attractive Than YouTube
Potentially impacted stocks and ETFs: News Corp. (NASDAQ:NWS), Google Inc. (NASDAQ:GOOG), Microsoft Corp. (NASDAQ:MSFT) • First Trust IPOX-100 Index (NYSEARCA:FPX), First Trust Dow Jones Internet Index (NYSEARCA:FDN), iShares S&P Global Technology (NYSEARCA:IXN), iShares Russell 1000 Growth Index (NYSEARCA:IWF), iShares Russell 3000 Growth Index (IWZ)

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