MySpace reportedly may allow member ads
Social networking site is looking at ways to lift ban on sales, ads by members on their pages
NEW YORK (CNNMoney.com) -- MySpace is considering lifting a ban on commerce on the popular social networking site as a way to increase its own profits, according to a published report.
The Los Angeles Times reports that the Web site, which is owned by media conglomerate News Corp. (Charts, Fortune 500), is trying to find a way but doesn't want to jeopardize the corporate advertising that accounts for the vast majority of its profit.
"We don't want users' pages to start looking like NASCAR," MySpace CEO Chris DeWolfe told the paper.
Fox Interactive, which includes MySpace, brought in $10 million in profit on sales of $550 million in the fiscal year ended June 30, according to the report. Besides advertising sales, MySpace earns money from the sale of songs via Apple's (Charts, Fortune 500) Tunes and rival music site Snocap.
But News Corp. Chairman and CEO Rupert Murdoch said on Aug. 8 he would not be surprised to see a profit of $200 million on sales of $1 billion in the current fiscal year. To achieve that 20-fold increase in earnings, its executives are debating how to take a share of any commerce allowed on the site, the paper said.
MySpace prohibits users from sending commercial messages, advertising products, posting the address of outside web sites, and bans "any commercial endeavors" not endorsed by the company, according to the paper. But it reports that the enforcement is difficult and members have figured out ways around it.
Also forcing MySpace to re-examine its policy is privately held rival Facebook, which the paper reports has fewer restrictions on advertising and person-to-person sales.
The paper reports that one source said MySpace could be on the verge of a sweeping deal to give it tools to better monetize and monitor the commerce activities of its members. DeWolfe told the paper that if MySpace does allow peer-to-peer transactions, they will have to be "fun, safe and secure."