MySpace Math
The New York Times had an excellent and thoughtful analysis of MySpace and social networks in general.
In the comical back and forth betweek Fox Interactive (the owners) and the founders of MySpace came this financial gem: “AT MySpace, the first challenge is to raise advertising rates. Because its supply of pages so greatly outstrips demand from advertisers, it has offered deep discounts. Indeed, the average rate paid for advertising is a bit over a dime for 1,000 impressions, Mr. Levinsohn said, far lower than rates at major competitors. “If we can raise that by 10 cents, think of the upside,” he said.”
In the article it also cites comScore numbers that say that MySpace generated 28.8 billion pages in March 2006.
Now 28.8 billion is 28,800,000,000 pages or 28,800,8000 blocks of 1000 pages. If you times 28,800,800 by 10 cents you get about $3m ($2.88m to be precise).
The estimate is agressive because it assumes MySpace is selling an ad on each of its pages, which the article highlights has been a challenge, even in a world with Google AdSense.
But the estimate is conservative because MySpace’s page views are certainly more than the comScore estimate, which is US only and not only that, tends to always be on the low side.
Anyway, net-net, let’s say $3m / mo. MySpace’s user growth has been absolutely amazing and nothing like the web has ever seen but still, I’d love to see the assumptions behind Richard Greenfield’s quote:
“The company will have revenue of about $200 million this year, estimated Richard Greenfield of Pali Capital, a brokerage firm in New York.”
Without a wide-spread monetization effort, and continuing astronomical usage growth $200m will be hard to hit. If they can double or triple their effective CPMs by year end, perhaps they will be able to.
Still a fascinating example of “supermarket media” low-cost, low-value inventory at scale.
