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:
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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.