Google Lands MySpace Deal

Google will pay $900 million toward revenue sharing.
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Google (GOOG) - Get Report landed a deal to sell search ads on News Corp.'s (NWS) - Get Report fast-growing MySpace Web site.

The deal, which covers most Fox Interactive Media properties, calls for Google to power search for MySpace.com and other sites.

Google will make a guaranteed minimum revenue-share payment of $900 million to Fox Interactive Media, based on Fox achieving certain traffic and other commitments. That sum would be paid over time, beginning in the first quarter of 2007 and ending in the second quarter of 2010.

The news underscores how Mountain View, Calif.-based Google isn't afraid to sacrifice short-term profits to maintain its position as the undisputed leader in Internet search.

MySpace is a prize for Google. The site's young demographic is coveted by advertisers, who have difficulty reaching this audience through more traditional media. News Corp., which bought MySpace last year, has yet to turn a profit at the site. MySpace is trying to broaden its audience base by adding content that might appeal to older users.

Google will be the exclusive provider of text-based advertising and keyword-targeted ads through its AdSense program, for inventory on Fox Interactive Media's network. Google will also have a right of first refusal on display advertising sold through third parties on Fox Interactive Media's network.

The integration is slated to begin in the fourth quarter.

"This agreement demonstrates our commitment to bring the same innovation to monetizing user-generated content that we brought to search advertising," said Google's Omid Kordestani. "We look forward to other opportunities to partner with News Corp. to the benefit of its community."

Google recently has signed toolbar-distribution deals with

Dell

(DELL) - Get Report

and

Abobe

(ADBE) - Get Report

. Toolbars allow users to conduct searches without going to a Web site. Search engines have found that people take advantage of the convenience of the feature.

Wall Street is pressuring Google to diversify its revenue base beyond search. Earlier Monday, Google announced that it was testing video advertisements with

Viacom's

(VIA) - Get Report

MTV Networks.

Market research data indicate that most Internet users don't bother with Google features outside of search.

Late Monday, Google rose $4.45 to $382.40 and News rose 32 cents to $20.08.