Media Money with Julia Boorstin

Is MySpace Over?

When MySpace announced the beta launch of its instant messaging system--MySpaceIM--I wasn't impressed, I was surprised that MySpace was so late to the game. And what kind of a beta launch is this? It had a soft launch a year ago to give it some legs, before MySpace announced the "official beta." Check out this comparison of traffic ranking of MySpace, YouTube and Facebook traffic. MySpace is flatlining. Literally. And while YouTube isn't making any great gains, it's Facebook that's most impressive. Still behind the other two, it's making gains fast.

Then here comes an interesting note from Michael Nathanson at Bernstein Research saying that MySpace has stellar traffic, but disappointing ad revenue--which he thinks is a good thing. His note points out that MySpace has stellar, virtually unprecedented reach--in May, 68.9 million unique web visitors. But in Fiscal 2007 it will only generate about $266 million in display ad revenue--less than Yahoo! ,AOL, and even CNET (CNET? Yikes, that doesn't make MySpace look very good). Bernstein research sees this as an indication that MySpace will be able to grow its ad revenue in Fiscal 2008 to contribute an incremental $200 million, to help the News Corp.'s  operating income grow by 16.5%.

My question is--if MySpace doubled up its ad push, would users be put off by so many more corporate messages? Can MySpace be subtle? Or will loyal users be disappointed by the change? Facebook has been innovative about incorporating advertisers without seeming too corporate--Chase banking's presence on the site was controversial in the media (pushing credit cards on kids?), but embraced on the site. Is MySpace's inevitable new ad push going to make the site less cool in the face of ever-growing Facebook?

Questions?  Comments?