Google, News Corp. ink search, ad deal

updated 11:17 a.m. ET Aug. 8, 2006

NEW YORK - Google Inc. reached a deal Monday with the owner of MySpace.com to pay at least $900 million in shared advertising revenue and become the exclusive search provider for the popular online hangout.

The deal, which marries the Internet's leading search engine with the top social-networking site, means News Corp. will have essentially paid off the bulk of the $1.2 billion it spent last year to acquire both MySpace and the online video-game company IGN Entertainment Inc.

Under the multiyear deal, News Corp.'s Fox Interactive Media unit will add Google search boxes to MySpace and other sites, likely by the end of the year, and Google will provide search results and keyword ads targeted to people's search terms. Google will also get first rights to sell any display ads not sold by Fox directly.

Because the primary reason people leave MySpace now is to conduct searches on Google, according to Fox executives, letting MySpace users enter such queries directly on the site allows it to retain visitors longer and thus boost its advertising potential.

But just as importantly for Google, the deal lets the search company benefit from queries at MySpace instead of seeing those ad dollars go to rivals Yahoo Inc. or Microsoft Corp.'s MSN.

Google's payments, which are contingent upon Fox achieving certain traffic and other milestones that Google expects Fox to exceed, are expected to start in early 2007 and run through the second quarter of 2010.

Driven largely by word of mouth, MySpace has rapidly risen to become the second-busiest site in the United States, behind Yahoo, according to comScore Media Metrix. It has about 100 million registered users, about 90 percent in the United States.

"We think it's important that we move Google to where the users are, and the users are moving to user-generated content and particularly the sites of Fox Interactive," Google Chief Executive Eric Schmidt told analysts and reporters.

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