Not only does it make sense for MySpace's largely younger user base, who are usually heavy mobile phone users, but it makes sense for MySpace as well. With the site's advertising revenues being relatively puny compared to its user base and site traffic, the wireless move offers a chance to increase user stickiness, as well as boost advertising, movie, and music sales, as subscribers might want to stream the content to their phones.
While MySpace was mentioned as for sale recently, News Corp. CEO Rupert Murdoch has been exploring quite a few avenues for the Net giant, including offering the site in China. The big push could be seen as trying to pretty up the site for potential acquirers or simply to close the revenue gap between the site and Internet biggies like Yahoo!
And that's the problem with MySpace. Despite being one of the world's most popular sites, its revenue model is still relatively undeveloped. The site is part of the Fox Interactive Media (FIM) unit, which includes News Corp.'s other online properties, and the unit is expected to generate $500 million in sales in the company's current fiscal year -- small potatoes, really, when compared to Google's expected $7.2 billion in revenues this year. I've said before that I feel that the real value in MySpace is its data-mining capabilities -- it could take friends' recommendations and, knowing you'd be predisposed to purchasing that product, place the relevant ads in front of you. To date, I haven't seen MySpace really take advantage of the vast quantity of valuable data it has on its users.
Investors would be Foolish to remember that, for all the hype and billion-dollar valuations, MySpace has yet to deliver financially in any type of material fashion. Sure, it is expected to, especially with the recent Google search deal, but reality can be disappointing. The reality so far is that the site's 50 million users have proven extremely difficult to monetize effectively. News Corp. shareholders should hope that Mr. Murdoch has a few more tricks up his sleeve.
More MySpace Foolishness:
Yahoo! is a Motley Fool Stock Advisor pick. To see what other companies David and Tom Gardner have recommended to investors since 2002, take the newsletter for a 30-day free trial.
Fool contributor Stephen Ellis does not own shares in any companies mentioned. You can view the stocks he owns and check out his 99th-percentile ranking in Motley Fool CAPS, the Fool's new stock-rating community. The Motley Fool has a disclosure policy.
More from The Motley Fool
Why 2017 Was a Year to Remember for The Walt Disney Company
In the future, Disney investors will look back on 2017 as a year of game-changing importance.
Why Did Twenty-First Century Fox, Inc. Gain 25% in 2017?
The company made a major change toward the end of the year.
The Most Important Thing Fox Will Bring to Walt Disney in a Merger
It’s all about intellectual property.