February 9, 2007

Murdoch: Digital Revenue Is on the Rise


February 08, 2007
By Mike Shields/Mediaweek

NEW YORK MySpace generates close to $25 million in monthly advertising revenue and is growing by nearly 30 percent each quarter, said News Corp. chairman and CEO Rupert Murdoch.

Murdoch, speaking here today during a keynote interview at the McGraw-Hill Digital Media Summit, said that revenue from News Corp. Web properties was approaching $1 billion, and that in five years digital media should account for roughly 10 percent of the company's revenue. MySpace and other Fox Interactive Media properties, as well as Web sites for the company's newspapers and TV stations, will drive that growth, he said.

Regarding MySpace, Murdoch acknowledged the obvious. "It's grown faster than we expected," he said. "Advertising has gone from basically nothing [when we bought the company]."

Murdoch said that while MySpace was still growing its user-base rapidly, particularly internationally, its audience had expanded beyond its core younger users, many of whom are frequently turning to competitors like Facebook. "Young people go to Facebook and they stay with us. If you are a college student, you pretty much need it," he said. "We have to be very competitive."

Murdoch's competitive streak bubbled up late last year when Google announced its purchase of YouTube just after News Corp. had struck a lucrative search partnership with Google. That admittedly angered the media mogul. "I might have overreacted. But YouTube—it's not much of a community site, it's an experience," he said.

An experience that may not be suited for advertising, he added. "If you interrupt the flow [on YouTube] with commercials, users will be someplace else pretty quickly," Murdoch said.

Still, Murdoch was quick to point out that MySpace was becoming a close rival to YouTube in the online video space. "We're very clearly number two to YouTube. We deliver close to 60 or 70 percent of their traffic," he said.

Murdoch also said that MySpace was gaining a strong footing in the mobile arena. A recent deal with Cingular has resulted in the enrollment of 200,000 MySpace mobile users.

Beyond MySpace, Murdoch touted IGN's recent growth. Since the recent release of new gaming consoles like the PlayStation 3 and Nintendo Wii, "we've gone past a dull period in the gaming business," he said, adding that IGN's page views had increased by 100 percent versus the previous year.

On the TV front, Murdoch was candid in his assessment of MyNetworkTV's dismal performance this season: "We thought this would work. It hasn't worked; it's as simple as that."

Part of the new network's problem, said Murdoch, was that its primary programming (telenovelas) appealed to women, and that many of the UPN stations that MyNetwork took over had previously targeted male and minority audiences, making for a difficult transition.