Struggling MySpace loses guaranteed income ad deal with Google

In 2007 News Corporation’s MySpace signed a highly lucrative deal with Google in which Google guaranteed MySpace $300m a year for three years in return for powering its search service and selling ads on the site (non-exclusively).

But that has come to an end and sources in the US claim that the new deal between the two (terms of which are undisclosed) is simply a revenue-sharing exercise with no guarantees.

Researcher eMarketer reckons that Google lost money on the three-year guarantee with MySpace revenue continuing to tumble, down from $470m in 2009 to $347m in 2010.

If that sounds rather dire, it is. MySpace now says it’s not trying to compete with Facebook any more, rather it is positioning itself as an ‘online hub for music and entertainment.’ Which is Yahoo territory, sort of.

Under the new deal Google will try to use its DoubleClick system to boost MySpace revenues and introduce more display advertising products.

But the likeliest outcome for MySpace is still a sale, if someone can be persuaded to offer a face-saving price. Facebook? Twitter?

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