Murdoch hopes to fend off Facebook with open-source MySpace

Rupert Murdoch, head of media conglomerate News Corp (NYSE: NWS) has decided to open up the software platform underlying his huge social network, MySpace. According to Reuters, "It will allow outside developers further access to its service to counter the growth of smaller rival Facebook." Most internet audience measurement services show that Facebook has been closing the gap with MySpace.

Murdoch also tempered expectations for huge revenue growth at his social network. "At the same time, Murdoch signaled lower expectations for MySpace revenue in the company's 2008 fiscal year ending in June, suggesting it may not reach a previous forecast of over $800 million," Reuters adds.

MySpace still has about twice as many registered users as its rival, 110 million to Facebook's 47 million. But, both numbers are mind-bending.

Perhaps the most important piece of information from Murdoch is an admission that getting advertising revenue from social networks is very, very difficult. MySpace will yield less than $200 million a quarter, while also-ran search engine and portal Yahoo! (NASDAQ: YHOO) is bringing in about seven times that number.

Social networks may drive traffic, but they don't drive dollars.

Douglas A. McIntyre is an editor at 247wallst.com