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News Corp. hopes to not 'screw up' MySpace

Peter Chernin, the president and chief operating officer of MySpace parent News Corp., says company doesn't want to "Fox-ify" social networking site.

By Paul R. La Monica, CNNMoney.com editor at large

NEW YORK (CNNMoney.com) -- The president and chief operating officer of News Corp., the parent company of top social networking site MySpace as well as traditional media properties such as the Fox television network and movie studio, told investors that News Corp. plans to invest more heavily in MySpace this year but will be careful to not make changes that could alienate the site's users.

Peter Chernin, speaking at Citigroup's annual entertainment, media and telecommunications conference in Las Vegas, said that MySpace should remain popular as long as News Corp. (Charts) doesn't meddle too much with how the site looks and is run.

"Our job is to continue to do a couple of things. One, is to not screw it up, not make it restrictive or look to Fox-ify it," Chernin said. "Beyond that you have to continue to give users new tools. You don't shove it down their throat but you do offer them new ones and see what they like."

Chernin said that what makes the site work so well is that users aren't forced to use MySpace services if they don't want to on their pages. To that end, even though MySpace has its own online video and photo-sharing services, Chernin said that it would be a mistake to not let users post links on MySpace sites to competing sites, such as Google (Charts)-owned YouTube for videos or Yahoo! (Charts)-owned Flickr for photo sharing.

Investors have been excited about the prospects for MySpace, which News Corp. acquired in 2005 for $580 million, as online advertising spending is expected to increase strongly in 2007 and beyond. As such, last year, MySpace struck a multi-year online ad-revenue sharing agreement with Google. Google will be the exclusive provider of contextual ads on MySpace and MySpace is expected to receive a minimum of $900 million over three years as a result of the deal.

Chernin added during his comments that MySpace also will look to expand more aggressively in international markets this year. "We want to be not just the dominant social networking site in the U.S. but also globally," he said.

Turning to the topic of online video advertising, Chernin said that online video has the potential to be the biggest positive story for media companies in 2007. But he was quick to point out that, despite all the hype about user-generated video, he did not believe advertisers would embrace this medium.

"Many big advertisers are not advertising on YouTube yet. One, they're not sure about the content and there is no scarcity value. If you put an ad on a minute- long clip of someone falling off a skateboard, people can find that somewhere else. With user-generated videos there is little way to monetize the content," he said.

Instead, Chernin said that he believed more and more marketers would look to shift more and more of their ad dollars from traditional forms of media like television to copyrighted versions of TV shows and other videos that appear online.