Last Updated Aug 9, 2010 2:14 PM EDT
News Corp reported that the division which includes MySpace lost $174 million in the forth quarter, an increase of $38 million, or 27%, from the same quarter the year before. This was, "...principally due to lower search and advertising revenues at MySpace."
To make matters worse, the lucrative advertising deal which MySpace signed with Google (GOOG) is set to expire at the end of this month. Back in 2006 the search giant signed a deal for $900 million to place ads on MySpace.
News Corp COO Chase Carey admits things aren't as bright now. "A new deal is imminent and we're talking to parties," Carey said in the LA Times. "But we don't get the same deal we got before, obviously."
To bounce back, MySpace has to admit that it has lost the social networking war to Facebook. Real identity turned out to be the most powerful factor in motivating people to spend time with friends and family.
But MySpace is still the best platform for artists to share work with their fans. MySpace allows for a kind of individuality and brand-identity when designing a profile that Facebook does not, and it has always been better about giving musicians a way to share their work.
MySpace should offer all kinds of great incentives to artists to use their platform. Photographers should get hi-res storage for their images and film makers should get the chance to post videos that are longer than whatever time limit Youtube offers.
The incentives should extend offline as well. Unknown bands that build up a big following should get a chance to participate in MySpace-branded tours. Fan groups that generate a lot of activity on the site should get access to these events.
The new management team at MySpace have chosen "Discovery" as the theme around which they will relaunch the brand. Friend activity now belongs to Facebook and real time updates to Twitter. But if MySpace can firmly establish itself as the best place to discover new artists, it might have a chance to carve out a niche of its own.
Image from Flickr user crsan