MySpace Tries To Catch Up To Facebook

| About: News Corporation (NWS)
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Although it may be a small piece of News Corp's (NASDAQ:NWS) pie for now, research suggests that the Web's social networking giant MySpace will see its revenues grow from US$812-million in 2008 to more than US$3-billion by 2013, according to a report from RBC Capital Markets analyst David Bank.

Assuming that MySpace will continue to grow at a rate of 8% in 2009 and 2% until 2013 and growth in page views remains steady, the website will see its display revenue stream become its main source of profit, while its revenues from its Google advertising stream remains constant at around US$300-million.

However, Mr. Bank points out News Corp. is sensitive to advertising expenditures, and a decline or adverse change could negatively impact many of the company's business units, including Fox Interactive Media which MySpace falls under.

It should serve as no surprise that MySpace will soon be working with third-party developers to create tiny applications onto its profile pages, similarly to what Facebook successfully has done back in May, according to reports on noted tech blog Techcrunch.

After making headlines for the past few years as the largest social networking website in its sector, MySpace is trying to play catch-up to Facebook, what may be the hottest website on the Web. Soon after Facebook launched its platform to third-party developers, the website experienced 37 per cent more growth, according to Compete.com.

That boom, coupled with Facebook's demographic-rich user base, made its advertising revenue skyrocket. That's a big reason why the Wall Street Journal reported that Microsoft (NASDAQ:MSFT) is in talks with Facebook to buy up to 5% of the site for a price between US$300-million to US$500-million and would value Facebook at about US$10-billion, a far cry from the US$580-million News Corp. purchased MySpace for back in 2005.