News Corp becoming more cautious on outlook for Myspace

News Corp reported it’s results yesterday and is becoming more cautious on the outlook for Myspace. The results statement was a mix of good and bad news for the world’s leading socnet.

First the bad news (all the following data and more can be found on Silicon Alley Insider).

Revenues at Fox Interactive Media (FIM) of which Myspace is the largest part were 10% down quarter on quarter to $210m. The reasons given by News Corp COO Peter Chernin were summarised by Silicon Alley Insider:

there are specific challenges [with social media] 1) Tons of inventory. Lack of scarcity creates a liquidity challenge. Working on bringing big brands aboard. 2) People who are visiting social networks there for different reasons, different uses. Figuring out how to target. 3) What’s the value of a “friend”? Trying to figure out new metrics to communicate with marketers.

There is nothing new here, but it is noteworthy that News Corp is now saying these things out loud and actively tempering expectations for Myspace.

Revenues are obviously the most important indicator, but there were some nuggets of good news, including their report that revenue per unique (display + search) is up 49% over the year before.

There was also good news for Myspace fans with regard to market share – they take 54% of US socnet ad dollars and are twice the size of Facebook in the US as measured by users (73m v 36m).

Putting this into context the interesting question is what this means for the value of social media generally and the need for revolution in the online advertising world (e.g. via VRM or recommendations as per RunToShop a startup I met here in Finland for the first time this morning).

For me it is pretty clear now that Myspace is a big, valuable and growing media property, but that it still has it’s challenges. That is good news for established socnets and online ad businesses, but maybe the lesson for online advertising is that we need evolution rather than revolution.