Now, MySpace wants revenues

When the News Corporation added MySpace to its portfolio nearly three years ago, it expected that if its base of 16 million users kept growing—and each user kept adding friends, sharing photos and swapping flirty messages —the advertising dollars would roll in.

The social networking site has grown—to 118 million worldwide users —and the flirtations have not stopped. But the cash is not coming in as quickly as the company had hoped.

In the fiscal year that ends in two weeks, the News Corporation unit that encompasses MySpace will miss its $1 billion revenue target. When the News Corporation announced the projected shortfall in April, several analysts downgraded the company, sending shares down 5 per cent.

With an eye toward monetisation, MySpace is being redesigned beginning Wednesday with a new home page, which will be less cluttered and more hospitable to advertising. (The home page will also feature a “splash page” for an ad about the new Batman movie, “The Dark Knight.”) The redesign, to be done by early fall, will include a new navigation bar, search tool and video player.

The redesign is intended to address a problem of social networking sites, which is that many user pages have the aesthetic appeal of a 14-year-old’s high-school locker. But there are still many questions left about the advertising value of social networks.

In the last few months, the bloom has come off social networking’s rose. MySpace and its chief competitors, Facebook and Bebo, all have ambitious plans for making money but not enough proof that the plans are working.

“The jury’s still out on MySpace’s ability to monetise,” said Michael Nathanson, analyst at Sanford C Bernstein & Company.

The sites seem desirable to advertisers based on the traffic they receive. MySpace has an American audience of 73 million, and Facebook counts 36 million, according to comScore. (Worldwide, Facebook tied MySpace for the first time in April, averaging about 115 million users for each site.) Users spend hours on the sites.

But because MySpace commands a majority of all the money spent on social networking, it is viewed as a bellwether for the growing industry.

On a conference call last month, Peter Chernin, president and chief operating officer for the News Corporation, toned down the grandiose expectations for social networking advertising and acknowledged that selling spots on personal profile and group pages is not easy.

Social networking represents an “entirely new form of Internet activity,” Chernin said.