Google Buys MySpace Ads for $900m

Google will pay at least $900 million in shared revenue to become the exclusive search provider for popular online site MySpace.com and other Fox Web sites. The deal is a big positive for News Corp, as it now has nearly recouped the $1.2 billion spent last year to acquire both the social networking site and gaming site IGN.

The agreement covers most of News Corp's Web properties. Also included is popular movie review site Rottentomatoes.com, Gamespy.com, fox.com, americanidol.com, and others. It does not include the Fox Sports Web sites, as Fox already has a deal with Google competitor MSN.

In addition to the search deal, Google will also become the exclusive text-based ad provider on Fox Web sites. The search giant will additionally have first rights to sell display ads that are sold through third-parties. Integration of Google functionality is expected to begin in the fourth quarter of this year.

"This is an exciting time in our history as a forward thinking media company and this is just the first of many steps we plan to take with Google," News Corp chief operating officer and president Peter Chernin said in a statement. "We look forward to expanding our relationship into many new areas over years to come."

Under the terms of the deal, payments would be made over a period beginning in the first quarter of 2007 and ending in the second quarter of 2010. The payments will be based on the Fox properties achieving a set goal for traffic and fulfilling other commitments.

With the search functionality, MySpace users would be able to perform Web searches without leaving the site. This will result in users staying on the site longer, executives say.

"This looks like a win-win for both companies," JupiterResearch analyst David Card said. "This has got to hurt at Yahoo and Microsoft. Especially Microsoft, who still hasn't established its marketplace."