TheGarage Tech Blog

News Corp’s MySpace Google deal at risk. So, how much is your Internet traffic worth?

Google agreed in 2006 to pay News Corp $900m for the exclusive right to provide search advertising to the once-thriving site over three years if MySpace could guarantee a minimum volume of traffic.

A guaranteed minimum amount of traffic sounds like a guaranteed minimum amount of ad revenue for Google. No wonder Google is doing so well if they can consistently cut sweetheart deals like that.

Here is what Rupert needs to do if he wants to bring MySpace back to a competitive if not dominant position: Let the people creating the content share in ad revenue. The way it is now, users make the content and MySpace and Google make a fortune from people looking at it.

Content is king on the Internet. Want to improve your traffic, improve your content. Since users create the content at MySpace, it becomes essential to attract users who can consistently generate quality pop content. Even if you have to pay to get them.

A simple setup based on traffic should do it. Here is a sample:

# hits/mo     Stipend
1000          $5
10000         $50
100000         $750

MySpace could also give users the option of selling lucrative local ad blocks in addition to using pluggable ads from whatever provider they want. As with all things, free people being fairly compensated for their work is the best way to build a strong and enduring enterprise. Fall away from free enterprise principles in exchange for the easier softer way and you always get the same things: decay and tyranny, illustrated appropriately here by the MySpace Google deal.

Google is the only game in town because they have made it easy for content aggregators to make a gjillion dollars. With a little innovation and work the ad monopoly can be wrenched from Google’s iron grasp. The we’ll see how dedicated to ‘do no evil’ they are.

From FT.com, News Corp’s Rupert Murdoch on paid content:

“We intend to charge for all our news websites,” Mr Murdoch said.

“If we’re successful, we’ll be followed by all media,” he added, predicting “significant revenues” from charging for differentiated news online.

He warned that “the big competition will be coming from the BBC,” which offers online news for free, but said: “Our policy is to win.”

Mr Murdoch said News Corp was highly unlikely to develop its own electronic reader, but took aim at Amazon’s Kindle device by praising the rival Sony Reader.

He insisted that News Corp would retain a direct relationship with its subscribers to its content via e-readers, information that Amazon has refused to hand over.

Chase Carey, who recently returned to News Corp as chief operating officer, said the online charging policy would extend to cable networks such as Fox News.

Just because the current advertising model is in a slump doesn’t mean charging for content is the way to go. That would be like raising taxes during a recession.

Mark this as an example where the decision of one powerful, but misguided individual can wreck a billion dollar company.