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MySpace eyes follow-on for Google ad deal

Parent News Corp. is talking to Google, Microsoft, and Yahoo about a new search ad deal to replace its current one with Google, says The Wall Street Journal.

MySpace screenshot
Screenshot by Lance Whitney/CNET

As MySpace's search advertising deal with Google nears its expiration next month, parent News Corp. is reportedly trying to cut a new ad deal with Google, Microsoft, or Yahoo, according to a story in Tuesday's Wall Street Journal (subscription required).

Citing sources familiar with the matter, the Journal, which is also owned by News Corp., said that under MySpace's current deal, Google had agreed to kick in $900 million in guaranteed payments for the right to sell ads on MySpace and other, smaller News Corp. sites. But traffic at MySpace has been much lower than what Google expected or what was outlined in the contract.

News Corp. is now looking to set up a new advertising partnership with one of the three major players in the search ad business. But it's unlikely to get the kind of terms or money that it captured through its existing deal with Google, said The Wall Street Journal, citing people close to News Corp.

In 2006, Google beat out Microsoft and Yahoo to win the coveted deal to sell ad space on MySpace. As part of the deal, Google promised to pay out the $900 million over three years as long as MySpace generated a certain amount of traffic. At the time, those terms seemed viable. The social network, acquired by News Corp. in 2005 for $650 million, was at its peak, bringing in huge numbers of visitors and generating healthy revenue.

But in a landscape soon to be dominated by Facebook, MySpace began to struggle as its traffic fell and its ad revenue started to shrink. By 2008, Google was already expressing disappointment over its advertising deals with social networks such as MySpace.

At a summit last October, News Corp. chief digital officer Jonathan Miller said that MySpace just "kind of stopped" at the same time it faced competition in the form of Facebook and Twitter. The network also has been beset by a series of management shakeups, causing concern over exactly who's at the helm.

MySpace co-founder Chris DeWolfe gave up the reins in April 2009 to be replaced by Owen Van Natta, the former chief operating officer of Facebook. Van Natta himself resigned less than a year later and was replaced by Chief Operating Officer Mike Jones and Chief Product Officer Jason Hirschhorn, who served as co-presidents. Then last month, Hirschorn announced that he would be leaving his post, putting Jones solely in charge.

Following a 30 percent cut in staff and a $450 million charge taken by News Corp. to write down its value, MySpace is trying to reinvent itself.

The network is targeting the under-35 crowd, giving them a place to find music, videos, and games, and connect with people who have similar interests, notes the Journal. MySpace is also touting new features that let people more easily keep their personal information private, a dig against the recent privacy complaints hurled at Facebook.