The MySpace social media network’s traffic has dropped so much that it will fail to satisfy a minimum traffic level crucial to parent company News Corp’s three-year $900 million advertising deal with Google, inked in 2006, that made Google the exclusive search advertiser on MySpace — then the world’s most popular social network.

News Corp. executives bandied about three different estimates of how much of the Google’s $900 million MySpace will not take in, due to the shortfall, but a consensus emerged that the penalty will be in the neighborhood of $100 million. As the Financial Times points out, this Google ad deal covered News Corp.’s estimated $580 million purchase of MySpace. The site’s failure to provide the deal’s minimum traffic level is bad news for News Corp., which otherwise reported a generally positive outlook due to its movie studio and cable channels, which currently generate 85 percent of the company’s revenue. MySpace knows as much as anyone that its traffic is dwindling as users continue their migration to Facebook and Twitter to do their social networking. Rupert Murdoch’s new second-in-command at News Corp., Chase Carey, essentially admitted defeat in the social networking arena: “We’re not trying to beat Facebook. We’re not trying to beat Twitter.” Rather than compete against those social networking heavyweights, MySpace intends to double down on what has always been a core strength: the millions of artist pages on the site, which dwarfs the catalog of other music services, because it includes so many unsigned (and, for that matter, signed) bands. MySpace’s new strategy, already known before the earnings call, will be to realign the site as an entertainment destination rather than a place where people keep up with friends and family.


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