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Marketplace Report: Murdoch, Google Reach Deal

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Marketplace Report: Murdoch, Google Reach Deal

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Marketplace Report: Murdoch, Google Reach Deal

Marketplace Report: Murdoch, Google Reach Deal

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On Tuesday, leading Internet search engine Google.com reached a deal with News Corporation — the giant media company owned by Rupert Murdoch — to provide Web search and advertising capabilities for MySpace.com, which was recently purchased by Murdoch. Bob Moon of Marketplace talks with Alex Chadwick about the deal.

ALEX CHADWICK, host:

Back now with DAY TO DAY. Google has a new friend at the popular social networking website myspace.com. The Internet's leading search engine is teaming up with Rupert Murdoch's News Corp., the company that owns myspace. The deal is worth at least $900 million in advertising revenue that Google guarantees to News Corp.

Joining us is MARKETPLACE's senior business correspondent Bob Moon. Bob, once again we're learning about Google making major financial deals with other big, online sites. How big is this partnership with myspace.com?

BOB MOON reporting:

Well, Alex, this is really a very big deal for the owner of myspace, and beyond that it really builds on Google's reputation as one of the major online powerhouses. Google really seems to be leading the way here in taking all kinds of free services and building them into money machines with carefully targeted advertising.

Alex, do you know myspace.com is? Are you plugged in to that at all?

CHADWICK: Well, I'm aware of it. I don't actually have a site up there yet, but a lot of people do.

(Soundbite of laughter)

MOON: Yeah, a lot of people - wildly popular as a web destination, especially for a younger audience. They flock to this site for their own personal Web pages. They put up journals and photos and favorite videos.

Well, analysts have been trying to figure out how News Corp.'s online division, Fox Interactive Media, would be able to make myspace profitable using content that's provided entirely by users. Well, they figured out there's a potential here for a goldmine. myspace claims 100 million members. By some estimates, it's become the single most visited Internet address here in the U.S.

So Google is going to be integrating its services into myspace and other Fox Interactive websites, and Google has agreed to pay Fox at least $900 million in revenue-sharing payments over the next three years. So that means this is just one transaction, and it pays for most of News Corp.'s recent Internet acquisitions. It's a big, big payoff.

CHADWICK: Bob, but this is almost a billion dollars in advertising that Google is guaranteeing over the next three years, online advertising. Are they going to make it?

MOON: Yeah, guaranteeing it, but there is a hedge involved here. It's contingent on certain minimum traffic levels that aren't being disclosed, and some analysts have questioned whether myspace is a fad and whether this site could be subject to the whims of its younger audience. They could move to a newer place to hang out.

On the other hand, though, myspace so far has just been growing and growing, and right now it really dwarfs similar sites on the Web, and it doesn't appear to be losing ground at all.

Today in the MARKETPLACE newsroom, we're taking a look at one couple's quest to persuade sex workers to quit their jobs. Alex?

CHADWICK: All right, thank you Bob. Bob Moon of Public Radio's daily business show MARKETPLACE, produced by American Public Media.

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