Google, MySpace sign $900 million deal

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.

Google's payments, which are based on 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 Inc., 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.

MySpace offers a mix of features — message boards, games, Web journals — designed to keep its youth-oriented visitors clicking on its advertising-supported pages. Users stay connected by adding others as "friends" and expand their networks by meeting friends of their friends.

Allowing MySpace users to conduct Google searches directly on the site allows it to retain visitors longer and thus boost its advertising potential. Google will also power MySpace's in-house search, making friends and groups easier to find, said Ross Levinsohn, president of Fox Interactive Media.

Besides MySpace, the deal covers most of Fox's other sites, including IGN, AmericanIdol.com, Fox.com and Rotten Tomatoes. Fox Sports is not included because News Corp. already has a deal with Microsoft Corp.'s MSN.

News Corp. executives said they had discussions with some of Google's rivals, which they refused to name, and considered building their own search engine, but quickly concluded that Google was the best partner because the two companies shared similar consumer-centric goals. Negotiators worked nearly round the clock over the past five days.