"Social media has a supply and demand problem" says ZDNet's Larry Dignan

Well it looks like News Corp. and Google didn’t do their homework when they bought MySpace (News Corp.) and YouTube (Google)

New Media Trends – Yesterday, in OPA’s Intelligence Report, they had a story on how they are struggling to meet their revenue goals after acquiring the two social media empires in recent years.

According to the article, MySpace was snatched up by News Corp. and “trumpeted at being valued at $6 billion or more, yet the unit will fall short of its $1 billion revenue goal by 10%.“

News Corp. COO Peter Chernin gave three reasons why even their revenues have decreased by $23 million in sequential quarters:

1) a surplus of page views and inventory
2) new methods are required to do ads on social networks
3) it’s hard to quantify the value of a “friend” on a social network

“Social media has a supply and demand problem. Some so-called friends may be worthless so we’ll never monetize everything.” ZDNet’s Larry Dignan wrote as an interpretation of Chernin’s response.

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Chernin was also noted in this article saying that Fox Interactive Media (the sector of News Corp. that oversees Internet business operations) “is nearly a billion dollar revenue business; a business that is not even three years old. And to give you some comparisons, it took Google five years to hit a billion dollars; it took Yahoo eight years and we’ll get there in a little over three years”.

Google on the other hand is having trouble with getting advertisers to agree with some of the racy content on YouTube. However, as we’ve noticed, they’ve already started to roll out AdSense in the space surrounding YouTube videos.

For example: