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Google To Pay $900M To Provide Search For MySpace.com

Under the deal, Google would be the exclusive provider of text-based advertising and keyword-targeted ads on the Fox Interactive Media network.
Google Inc. on Monday agreed to pay News Corp. $900 million over three years to provide search and distribute advertising on the popular social network MySpace.com and the rest of the media company's Fox online network.

Under the agreement, Google, based in Mountain View, Calif., would be the exclusive provider of text-based advertising and keyword-targeted ads on the Fox Interactive Media network. It would also have the right of first refusal on display advertising sold through third parties.

In return, Google would make guaranteed minimum revenue share payments to News Corp. of $900 million over a period beginning in the first quarter of next year to the end of the second quarter in 2010. The payments would be based on Fox achieving certain traffic and other commitments.

The integration of Google services across Fox Interactive properties, including MySpace.com, is set to begin in the fourth quarter of this year. The deal was expected to be the first of many between the two companies.

"This is an exciting time in our history as a forward thinking media company and this is just the first of many steps we plan to take with Google," Peter Chernin, president and chief operating officer of News Corp., said in a statement. "We look forward to expanding our relationship into many new areas over years to come."

MySpace.com, which is a favorite of teens and young adults, is the largest social-networking site with more than 51 million unique visitors in May, according to ComScore Networks. Social-networking in general is a growing phenomenon on the Web that's not expected to wane anytime soon.

The challenge, however, is to find a way to make money through advertising, without alienating users, experts say. In addition, content posted by users of sites like MySpace.com tend to be edgy and controversial, which could make it difficult to attract mainstream advertisers.

Google, however, appeared confident that it would be successful in the unique site of fickle teens and young adults.

"We believe that our innovative technologies will be of real benefit to Fox Interactive Media's growing number of users," Eric Schmidt, chief executive for Google, said in a statement. "MySpace.com is a widely acknowledged leader in user-generated content and incorporating search and advertising furthers our mission of making the world's information universally accessible and useful."

The potential for reaching a growing advertising market is huge. The top 10 social-networking sites in April attracted nearly half of all Web users, according to Nielsen/NetRatings.

The deal is not the first time Google has paid big money for guaranteed access to an online network. The search engine in December agreed to pay $1 billion for a stake in AOL, and to form an online advertising partnership with the portal. The agreement expanded Google's reach as a Web advertising platform, and gave it access to AOL content, particularly its video services.

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