MySpace Ad Revenues Likely in Permanent Downward Spiral

The sun appears to be setting on MySpace as the company lays off 1,150 staffers ahead of the end of a $300 million-a-year advertising deal with Google, Reuters reports. The site has half the traffic of Facebook.

More importantly, revenues and profits at MySpace are in decline, according to News Corp's most recent earnings statement. MySpace's numbers aren't broken out specifically, but the "other" category where MySpace lives inside News Corp's accounts saw revenue of $471 million last quarter, down from $725 million. News Corp's digital media offerings -- of which MySpace is a huge part -- have not been profitable in the last nine months.

If you minus out Google's $300 annual revenue, and do a little back-of-envelope math, MySpace (and its fellow brands inside Fox Interactive Media, which all have similar business models) is at best a declining product that has less than $1.6 billion in annual revenues. Sounds like a lot, but it's shared between Photobucket, Fox Sports Interactive, Rotten Tomatoes and Ask Men. And we don't know the role of IGN, which is probably fairly healthy given that layoffs there were minimal and it's actually still in hiring mode.

Clearly, no single entity is going to replace the Google ad revenue. Steve Balmer, CEO of the next obvious candidate, Microsoft, just made a speech where he said that advertising spend is permanently resetting downward and will not recover.

Worse, MySpace is just kinda not cool anymore. It increasingly makes headlines because weirdos like it.

History suggests such a site cannot be rescued. Don't believe me? Ask yourself what happened to Friendster, Tribester and, my personal favorite because it was very much like MySpace, The Globe.

Ars Technica has a more detailed account of the ax-wielding.