Net Effect: MySpace continues to pay off
News Corp. site at heart of FIM growth despite Facebook gainsNEW YORK -- When Rupert Murdoch's News Corp. acquired MySpace nearly two years ago, the social networking site's explosive user growth made many competitors envious.
Now that it has grown up more, and Facebook has become the latest networking darling, some industry observers have wondered whether MySpace's audience gains have peeked and how that would affect its overall financial picture.
The latest audience data shows that it continues to expand faster than most top competitors except for Facebook in a sign that there is more upside for the social networking heavyweight. News Corp. brass and Wall Street folks said MySpace has managed to boost its advertising rates and thereby profitability, making it less dependent on big future audience growth.
In July, MySpace's unique audience stood at 61.3 million, up 33% year-over-year, with time spent per person up 36% to two hours, 51 minutes and five seconds.
Facebook saw its unique audience rise 129% to 19.5 million, a clear second, but time spent was up only 7% to slightly more than an hour.
"Unique audience" data includes anyone who went to a site or used a Web application during the month at least once. Additional visits from that person are not counted again.
News Corp. this month earned Wall Street raves, saying that its Fox Interactive Media unit would exceed $1 billion in revenue in the recently started new fiscal year, with the key MySpace juggernaut set to pitch in more than $800 million. This should boost FIM's operating profit from $10 million in the latest year to more than $200 million, management said.
"MySpace is making headway in both monetization and demand by advertisers," Banc of America Securities analyst Jonathan Jacoby said in a recent report, pointing out that AOL and Yahoo management have mentioned increasing ad competition from social networking sites.
Echoed Goldman Sachs analyst Anthony Noto: "MySpace traffic continues robust trends, and fiscal fourth-quarter operating results point to strong progress in improving monetization to normalized levels."
Noto said slower traffic growth at MySpace is no real concern as long as its profitability keeps improving. "The fiscal-year 2008 growth story for FIM is less reliant on a continuation of fiscal 2007's traffic growth than it is on continuing to right-size its monetization," he argued, pointing out that if the site grows revenue per thousand page views to $1.50, its traffic only needs to edge up 25% in the new fiscal year to hit the company's growth guidance.
All chart data provided by Nielsen/NetRatings NetView