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Is There Money in MySpace?

It's official. MySpace is the most popular stop for members having lots of time on their hands. But who cares that the social-networking behemoth is so popular if it isn't making any money?

Not only is MySpace America's most popular social-networking site, having earned 79.9 percent of the market in June according to a Hitwise study released this week, but it is also America's most popular Web site, representing 4.46 percent of all Internet traffic.

But some in the industry are saying even such popularity is not enough to make social-networking sites viable business models.

Steve Mansfield, CEO of social search engine PreFound.com, has been watching MySpace and the rest of the social-networking market.

"Rupert Murdoch is apparently pounding his fist on the desk over at MySpace, saying 'How can we turn these hundred million people into more money?'" he told internetnews.com.

He said Murdoch's MySpace problem starts with banner advertising, which is the only type of ad the site runs on member profiles.

"That is the least profitable way to advertise as a Web site. You're not able to charge a whole lot of money."

Banner ads don't make a Web site as much money as a sponsored link on a search results page.

Sponsored links lead directly to a business's Web site, whereas banner advertisers are only supposed to make an "impression" on a visitor.

Compounding the problem is the fact that MySpace doesn't even get the lucrative blue-chip brand advertisers to buy those banner ads despite the fact that its member demographic is the young and malleable crowd after which marketers lust.

But blue chippers stay away for a good reason. And it's embodied in the profile of MySpace member Forbidden. Her page is the sort of user-generated content that keeps meticulous brand managers awake at night because of its unbridled nature.

Let's just say you're not going to find a Ford ad next to her comments section anytime soon.

Beyond banner ads

So how does MySpace get away from banner ads and into the real money? The way Google did, Mansfield said.

The same way, he added, Google assures advertisers they will be placed in a precise context of their choosing (and not next to the raucous comments on Forbidden's page). The same way Google ties the ads they sell more closely to an advertiser's bottom line.

MySpace should monetize by selling sponsored search results, Mansfield said.

Of course that means MySpace would have to start offering Web search, but then there is the question of whether social networks can come up with any kind of competitive search product.

This is where the "social" in social search comes in.

What is social search, again?

Social search is best defined by its differences from the algorithmic search found on sites such as Google, Yahoo and MSN.

Instead of sending computer crawlers out across the Internet to catalog the content of every page, social search engines build their database of Web pages by having members tag them with searchable keywords.

A user could tag an article about New York Mets starting pitcher Tom Glavine with terms such as "Mets," "New York," "MLB," Baseball," "Tom Glavine," or "Best team in baseball." The site would then be added to the search engine's catalogue of Web pages.

Then, when another member searches for "Mets" and "Tom Glavine," the page would likely appear as one of the results among the many other pages tagged by other users with the same keywords.

Algorithmic search would instead rifle through the search engine's database of Web sites to find those that actually had the words "Tom Glavine" and "Mets" on the page itself.

It's worked for Google so far. But Mansfield says social search can do more.

Social search is handy for users because sometimes what a Web site is about isn't on the page.

A tagging enthusiast at Harvard likes to point out that the terms "detective," "novel" and "1930s" aren't always found in 1930s detective novels.

Social searchers' results also tend to be useful because someone had to bother to recommend, or tag, the pages included in the returns.

The more members out there tagging and searching, the larger the database of Web sites to search, the more likely search results will be relevant and useful.

So the appeal for Mansfield in powering his search engine with a social network such as MySpace is obvious.

Suddenly he would be able to offer searchers relevant and useful results, a commodity Google has proven to be valuable.

But what's in it for MySpace?

Sponsored links and demographic data

Mansfield said you can sell social search to a social network by using the profile information of the hundred million people in MySpace to weight a search.

"Since we know who you are, we know where you live, we know how old you are, and we know what your interests are, we can give you a hyper-relevant search based on all that information."

Social network owners can show members addicted to their service contextually related sponsored links next to "hyper-relevant" search results.

The rest would be history. And perhaps Mr. Murdoch would be able to give his desk a rest. The money's already there in your social network, Rupert. You just have to search for it.