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12/17/2010
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Google, MySpace Renew Search Deal

Contract terms cover display and search advertising, but no longer include guaranteed payments, say reports.

Flock Browses All Your Social Connections
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Slideshow: Flock Browses All Your Social Connections
Google will continue to power MySpace search and advertising under a long-term deal that reportedly no longer includes the guaranteed payment provisions of the prior contract.

Under the worldwide agreement, Google will enable MySpace search and search advertising, and will provide additional display advertising services, the companies said.

"We're thrilled about renewing our partnership with Google. Their best-in-class technology will continue to provide our consumers with a robust search experience," said Nada Stirratt, chief revenue officer at MySpace, in a statement. "We look forward to participating in the Google Display Network and DoubleClick Ad Exchange to increase yield across our display ad inventory."

MySpace will sell display ads directly through Google's DoubleClick Ad Exchange and its display advertising network, and will join the Google Display Network, according to the Los Angeles Times.

"We're excited to deepen our partnership with one of the largest social Web properties in the world, MySpace," said Henrique de Castro, VP of global media and platforms at Google, in a statement. "We're pleased that our technology will benefit MySpace's users on its newly redesigned site, and that MySpace has chosen our display advertising solution to increase its returns."

In its original deal -- which expired in June and was extended through MySpace's redesign in October -- Google guaranteed it would pay MySpace at least $900 million over three years, in return for powering the search service and putting ads in front of the social media site's accountholders. At that time, MySpace appeared on track to continue its successful path, coming two years after News Corp acquired it for $580 million.

Yet as the site floundered, losing ground to Facebook, Google did not generate enough business to cover the $300 million annual fee, according to the Financial Times. Although neither company disclosed terms of the agreement inked on Thursday, a source close to the pact said Google will no longer pay any guaranteed minimums, the Financial Times said. Instead, both parties will split revenue from any Google search-related advertising, the newspaper said.

Where MySpace's future once looked bright, the social media site has floundered over the past few years. In 2010, the company's revenue is expected to drop to $347 million, compared with $470 million a year ago, according to eMarketer. The research firm estimates Google controls about 72% of all U.S. search marketing.

News Corp. has voiced its displeasure at MySpace's performance, and earlier this year repositioned the division as an entertainment social network, partnering with Facebook instead of attempting to compete with its one-time rival. MySpace has said it could close-down the company within 12 months, and there could be more layoffs ahead, according to All Things D.

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