D'oh! More Homer Simpson on MySpace

News Corp., trying to build an even bigger Web powerhouse, appears closer to allowing Fox video to stream from MySpace users' home pages

by Steve Rosenbush

News Corp. (NWS) may soon allow members of its MySpace Web site to embed Fox TV shows and other Fox video on their home pages, marking a huge step toward generating greater revenue from the world's largest social networking site. Such a development, described by an industry executive familiar with the matter, would advance News Corp.'s steady march toward online distribution of its content.

Fox already allows MySpace members to view the network's shows streamed at a site within MySpace, www.myspace.com/fox. They can also view shows at News Corp.-owned sites such as www.direct2drive.com and www.fox.com. On Mar. 1, Fox said it would begin allowing people to view or purchase television shows from Web sites operated by Fox's TV affiliates.

An announcement could be made as early as next month, although no date has been set. The feature under consideration would be different because it would allow Fox video to be embedded on tens of millions of MySpace home pages, vastly increasing distribution. Fox Interactive Media (FIM) had 75 million unique visitors in January, 61.5 million of which came from MySpace, according to market researcher comScore Networks.

Putting Fox video on those MySpace pages could be a significant source of revenue for FIM, which is expected to generate about $500 million in sales this year. That would be enormous revenue for a standalone Internet startup. But as a division within News Corp., it's a small part of a $25 billion-plus annual revenue stream.

A spokesman for FIM, the news division that operates MySpace, declined to comment.

Pay-Per-View

By allowing MySpace users to post Fox video on their homepages, News Corp. would instantly create a huge new source of online video advertising inventory. Each time someone played a video on a MySpace page, it would create an opportunity for News Corp. to roll out an advertisement. Considering that MySpace draws more traffic than any other Web site, according to comScore, the economic opportunity could be significant. FIM had 40.4 billion page views in January, 40 billion of which came from MySpace, comScore says. The No. 2 most-visited site, Yahoo! (YHOO), had 35.6 billion page views, followed by Microsoft (MSFT) with 18 billion, Time Warner (TWX) with 16 billion, and Google (GOOG) with 13.7 billion.

Analysts see the decision to allow embedded video as a savvy mix of News Corp.'s entertainment content and enormous Web assets. Moreover, major advertisers have been clamoring for more advertising inventory, especially with such high-traffic sites as MySpace, Yahoo, AOL, and MSN. Demand for video advertising opportunities is high, supply is often tight, and prices are rising. "Video is booming. Advertisers are allocating more money to online video," says Mark Kingdon, chief executive officer of Organic, a digital marketing and advertising agency. Advertisers who want to reserve online video spots at major Web portals often must do so months in advance, says Jeff Lanctot, vice-president of media and client services at Avenue A/Razorfish, a digital marketing and advertising agency owned by aQuantive (AQNT).