D'oh! More Homer Simpson on MySpace

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News Corp., which has a unique combination of Internet and media assets, enjoys an excellent position to exploit the growing demand for online video advertising. Other companies such as Time Warner, Viacom (VIA), and Disney (DIS) have deep reserves of content, but none can match MySpace's presence on the Web. And the other large-traffic Internet sites, like Yahoo and Google, lack News Corp.'s vast library of content, which includes popular programs such as 24, The Simpsons, Family Guy, and American Idol.

MySpace remains one of the great growth engines on the Web, confounding predictions that its early success would be destroyed by a major media conglomerate. News Corp. acquired the company for $580 million in 2005 (see BusinessWeek.com, 7/19/05, "News Corp.'s Place in MySpace"). Its unique monthly audience of 61.5 million was up 73% from January, 2006, according to comScore.

MySpace is growing faster than other sites of comparable scale. As of January, MySpace was the sixth-largest site on the Web, measured in terms of users. The leader, Yahoo, had 129 million unique users, but its audience grew only 2%. Time Warner grew 1% to 117 million. Microsoft declined 1% to 115 million. Google grew 21% to 113.4 million, and its YouTube unit grew more than 1,000% to 30.4 million. The No. 5 user site, eBay (EBAY), grew 16% to 80.7 million.

Vast Distribution

Sensing their power, News Corp. and other big media companies are moving more aggressively to wrest power from pure Internet players such as Google and Yahoo. News Corp. struck a marketing agreement with Google last year in a deal that will guarantee it $900 million in revenue. Google turned around a few months later and bought YouTube, which competes with MySpace video (see BusinessWeek.com, 10/16/06, "YouTube vs. MySpace?"). Since then, MySpace has made some waves by forcing YouTube and other companies that use its infrastructure to remove videos that violate copyright laws (see BusinessWeek.com, 10/16/06, "News Corp Beefs Up MySpace Video"). "Big media companies are exercising their muscle pretty significantly," Kingdon says.

News Corp.'s decision to distribute its ads on MySpace home pages reflects a broader trend in media. Until now, much online content has been distributed through major destinations and portals. They won't go away, but in the future, content will increasingly be distributed across large groups, such as user communities or business syndicates. "We are entering an era in which distribution will trump destination," Lanctot says. "By that, I mean media owners in due time will not rely on a single destination site but on broad distribution across many sites."

By using their TV affiliates and online customers to distribute content, big media companies like News Corp. may soon wield a valuable tool as they battle Internet giants such as Google.

Rosenbush is a senior writer for BusinessWeek.com in New York.