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03-17-09, 05:17 PM #1
In about 15 months Myspace is going down the crapper
MySpace has 15 months left until its partnership with Google ends, and it doesn't look like Google will re-up for the business and pay MySpace substantial search fees. To this end, MySpace, which is part of News Corp's Fox Interactive Media, will have some serious cost-cutting decisions to make, according to Pali Research analyst Richard Greenfield.
"Fox Interactive Media's problem is that it significantly ramped its structure expecting continued growth," wrote Greenfield. "In fiscal Q2 (Dec) 2009, FIM revenues fell only $7 mm, yet profitability dropped $40 mm or 85%. While there was a unique IGN issue in the quarter, the need for substantial cost structure reductions is clear."
It's not so much that social networks are poor environments to display ads, as much as Google's search algorithms weren't as good as they could have been, Greenfield argued. For instance, "Myspace users that search for a person named Dan, should not see DNA testing as the sponsored link," he pointed out.
Essentially, Google "simply does not care about social search," making it "harder to conceive Google paying anywhere near their prior commitments to MySpace, especially as the inherent functionality of social networks (status updates/news feeds, internal IM, internal e-mail) is diminishing the importance of search."
03-18-09, 04:09 AM #2
Guess I'll go and delete mine now before the rush.
We are who we choose to be.
R.I.P. Arielle. 08/20/2010-09/16/2012
03-18-09, 06:42 AM #3In about 15 months MySpace is going down the crapper
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