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MySpace has missed its financial targets, showing that social networking is struggling to earn its keep - even as part of Rupert Murdoch's globe-spanning media empire.

News Corp said yesterday that the site will fall short of its annual revenue target of $1bn by 10 per cent. Third quarter revenues actually fell to $210m from $233m in the preceding three months.

News Corp chief operating officer Peter Chernin didn't blame the economy, however. He pointed the finger for missing the "very aggressive targets" at social networking itself.

Chernin told analysts and investors: "It's still difficult to quantify the economic value of a friend in the social networking space."

Searching for positives, he played cheerleader against Facebook, trumpeting MySpace's larger user base, and that its users spend more time on the site. Chernin said: "We're incredibly optimistic about the future of social media and our role in shaping it."

Bald men and combs leap to mind, but the Web 2.0 groupthink has convinced itself that MySpace lags behind Facebook, following the latter's decision to open up to outside developers first.

What News Corp has in MySpace is an endless supply of page impressions. Despite the magical life-affirming properties of social networking, the laws of supply and demand still apply, and so those pages are worth little more to advertisers than the web's bottomless midden of spam blogs. News Corp bought MySpace for $580m in 2005.

The big hope for the site is its "hyper-targeting" system, which sells the interests users list in their profile to advertisers. Many social networking cheerleaders see this type of business as their own AdWords goldmine, while failing to appreciate that a general ongoing interest in "sports" is nowhere near as valuable to marketeers as a Google search on a particular day for "Adidas football boots".

About a third of MySpace revenues come from a guaranteed three year deal with Google, signed in 2006. The search giant has already started complaining that it's not seeing a decent return on its end of the tie-up, however.

Few Murdoch watchers would be surprised if he offloaded MySpace in the not too distant future. Rolling it into a larger web business such as Yahoo! would allow it to function as the page impression farm all social networks look set to become.

Meanwhile, it's been reported that Microsoft is looking at buying Facebook. Again. ®

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