MySpace still a winner even as Facebook gains

By Georg Szalai

NEW YORK (Hollywood Reporter) - When Rupert Murdoch's News Corp. acquired MySpace nearly two years ago for a relative steal at $580 million, the social networking site's explosive user growth made many competitors envious.

Now that closely held rival Facebook has become the latest networking darling, some industry observers have wondered whether MySpace's audience gains have peaked and how that would affect its overall financial picture.

The latest audience data show that it continues to expand faster than most top competitors except for Facebook, in a sign that there is more upside for the social networking heavyweight. News Corp. brass and Wall Street folks said MySpace has managed to boost its advertising rates and thereby profitability, making it less dependent on big future audience growth.

In July, MySpace's unique audience stood at 61.3 million, up 33% year-over-year, with time spent per person up 36% to two hours, 51 minutes and five seconds.

Facebook saw its unique audience rise 129% to 19.5 million, a clear No. 2, but time spent was up only 7% to slightly more than an hour.

"Unique audience" data include anyone who went to a site or used a Web application during the month at least once. Additional visits from that person are not counted again.

News Corp. this month earned Wall Street raves, saying that its Fox Interactive Media unit would exceed $1 billion in revenue in the recently started new fiscal year, with MySpace pitching in more than $800 million. This should boost FIM's operating profit from $10 million in the latest year to more than $200 million, management said.

"MySpace is making headway in both monetization and demand by advertisers," Banc of America Securities analyst Jonathan Jacoby said in a recent report, pointing out that AOL and Yahoo management have mentioned increasing ad competition from social networking sites.