MySpace's "Work In Progress": Losing Money, Traffic, Blowing Google Guarantees

• By Peter Kafka
• On 6:03 pm EST, Wednesday November 4, 2009

Did Rupert Murdoch wait way too long to fix MySpace? It’s easy to get that impression from the News Corp. earnings call today.

The takeaway: The site is losing traffic and money, and no longer expects to get all of the $900 million it once counted on from a Google search deal. Also, it really doesn’t know what to expect of the property going forward, except that it’s a work in progress.

So: Either Digital media boss Jon Miller, MySpace CEO Owen Van Natta and the rest of the new team brought in this year to fix the site have an impossible task — or expectations are now so low that even modest improvement will look like a huge victory.

Details from the earnings call, which I covered live this afternoon:

• Revenue was down 26% at Miller’s Digital Media Group (MySpace and a handful of other sites).
• That’s in part because conventional ad revenues are down, and in part because search ad revenue was down.
• But isn’t Google (GOOG) supposed to be paying $900 million over 3 years in paid search deal? Yes – but only if  News Corp. (NWS) hits certain traffic/query guarantees, which isn’t happening any more, says Murdoch.
• How much is MySpace going to fall short? This question occasions much confusion on the call. “I don’t know. But it will be a real figure,” Murdoch says. Then he throws out a $300 million figure. His lieutenants then suggest that it’s closer to 10%, or $90 million. I’ve since checked with News Corp. PR, which says the figure is “in the 100 [million] zone for the year”.
• So what’s the plan to fix all of that? “It’s a work in progress,” News Corp. officials say over and over during the call. Chase Carey, Murdoch’s new number two, uses the phrase at least three times in one answer.
• Any other color on overhaul plans? Nothing you haven’t heard before: The company will is trying to become an entertainment portal instead of a social network. Carey: “We’re not trying to beat Facebook. We’re not trying to beat Twitter.”