This past holiday weekend my colleague Doug McIntyre gave support to a blog I wrote in May 2007 when he posted Google (GOOG): The Failure Of YouTube. In my rant I gave a detailed analysis outlining how Google had overpaid for YouTube by a fantastic amount.

In the story Doug quotes projections that 2008 revenue generated by Google might gross $200 million from YouTube. That's revenue, not profit. A 20% profit would be $40 million if that was possible. In the article I wrote: How can I say Google overpaid for YouTube? I stated the case in plain English why the YouTube investment would have to earn $300 million (net, not gross) minimum, in its first year not to be dillutive.

They missed the target by a mile. They will continue to miss the target and I do not expect it to ever justify the cost. Just because Google has lots of cash slushing around does not mean they have money to waste.

Have you checked News Corp.'s (NYSE: NWS) stock price lately? It's pretty close to the 52-week low. Last Thursday, before the Fourth of July holiday began, News Corp.'s shares closed at $14.76. The 52-week low is $14.58, and the 52-week high is $24.95. As can be seen, it's had quite a fall. And what about competitor Viacom (NYSE: VIA)? The company's stock closed on Thursday with a price of $29.70. That was, in fact, the 52-week low. The 52-week high for Viacom is $44.95. Again, a pretty big dive.

Is it time to enter these two names? From a valuation perspective, considering their growth prospects, the stock prices do make one pause for consideration. They seem cheaper than colleagues Disney (NYSE: DIS) and Time Warner (NYSE: TWX) from certain angles, although the latter two media businesses do have higher dividend yields. But with the big decline in the stock prices, traders certainly have to be looking at them as perhaps candidates for a bounce-back in the second half of the year, especially if the oil situation improves.

I think that's the big problem here. With oil and financials acting in negative ways for the economy, the entire market is one huge growling bear in a bad mood. And that has made me very reticent about initiating a trading position in either News Corp. or Viacom, though I really, really am interested in doing so. I think value trades like this might very well simply be tests of patience at this point. I sense that both these stocks will be higher by the end of the year, but so what? These stocks will probably merely move along with the rest of the major averages, and that movement could be in the downward direction. And News Corp. has been having issues with MySpace.

I recently saw a presentation from Dan Nye, who is the CEO of LinkedIn. Of course, all the metrics were spiking. Then again, LinkedIn is the place for professionals to connect.

So, this week the firm has snagged $53 million in venture capital. The investors include Bain Capital Ventures, Sequoia Capital, Greylock Partners, and Bessemer Ventures. As a sign of their optimism, the valuation of the investment came to around $1 billion.

While Facebook and MySpace get lots of buzz, I think LinkedIn is a more interesting play. Basically, the company is leveraging user-generated content to build an immensely valuable database. For example, if an advertiser wants to target someone located in California that is interested in Linux systems, you will definitely get some hits. This is critically important. After all, many other social networks have a tough time monetizing things.

I read an interesting article over at CNBC about News Corp.'s (NYSE: NWS) MySpace asset. It seems that the social-networking site wants to do something about the fact that it won't succeed in booking $1 billion in net sales before the conclusion of the conglomerate's fiscal year. MySpace will undergo an aesthetic overhaul to make the site more appealing. As it is now, many users might find the site too busy and not so friendly in terms of navigation. The changes will take place over time, beginning this week and concluding in the fall.

The question on my mind now is, did News Corp. really need MySpace? Sure, the site has a heck of a lot of registered users, well over 100 million worldwide, but now people are wondering how effectively these users can be exploited in terms of generating economic value. The article mentioned the disappointing results so far from an advertising deal made with Google (NASDAQ: GOOG) back in 2006, one which had a $900 million figure attached to it.

The problem here for News Corp. is that users are fickle and may eventually find another MySpace in the future (obviously, Facebook is an example of how social networking continues to evolve and how any big brand in this arena can be challenged at any time). That wouldn't be good for long-term growth. Another problem cited is the fact that active MySpace users just want to socialize with their friends and/or network; they don't care about the ads. There's a lot of truth to this claim, and it's a huge issue going forward.

Warner Music Group (NYSE: WMG) has asked CBS Corporation's (NYSE: CBS) free on-demand music streaming service Last.fm to remove the label's music from the site "in an apparent dispute over compensation rates." Billboard reports that CBS is "currently negotiating a new agreement with Warner Music Group and are working hard to built the most comprehensive music service on the Web." Music from Universal Music Group, Sony BMG Music Entertainment, EMI Group, and various independent labels remains on Last.fm, and the site's Internet radio service still offers songs from WMG artists.

CBS purchased British-based Last.fm a year ago for $280 million, and WMG was the first major label to sign with Last.fm in February 2007. According to Billboard, WMG had continued to keep music with Last.fm "on a month-to-month basis" after the original deal lapsed. Unlike paid subscription-based services, Last.fm and other free services offer consumers music without charge, and are ad-supported. News Corp.'s (NYSE: NWS) MySpace will soon be starting it's own similar service, which will tap into the social networking site's large user base.

Billboard also reports that WMG had grown "disenchanted with Last.fm's compensation rates" after comparing the rates to other services like the forthcoming MySpace Music. In addition, WMG "owns equity stakes in MySpace Music" and "has been frustrated by Last.fm's failure to proceed with its plans to launch a music subscription service." Paid subscription services have been being pushed by the music labels over other sites and stores like Apple Inc.'s (NASDAQ: AAPL) iTunes Store because they offer better profits for the labels. Mobile phone services have started to tap into this very service, offering consumers music and players on new phones developed for that very purpose.

For some time there has been an uneasy feeling that Web 2.0 companies were having trouble making money. A number of the companies are private and not much is said about how their financials work. Digg.com does not issue quarterly statements.

But some of the new age companies like MySpace, which was bought by News Corp (NYSE: NWS) and YouTube, which was bought by Google (NASDAQ: GOOG), have enough of their financials available for Wall Street to get an idea of what is going on.

Based on comments from Google and News Corp, their huge Web 2.0 sites are not big money-makers. MySpace does well under $1 billion in annual revenue. Its smaller rival, Facebook, was recently valued at $15 billion. That number now looks very high.

According to the FT, "The shortage of revenue among social networks, blogs and other "social media" sites that put user-generated content and communications at their core has persisted despite more than four years of experimentation aimed at turning such sites into money-makers."

Facebook, YouTube and MySpace may draw tens of millions of visitors each month, but they can't make a dime. Marketers are not interested in amateur video and postings from people who spend 20 hours a day on PCs and are afraid to leave their homes.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 newsletter.

It's pretty rare that a victory in a $230 million lawsuit is only a moral victory, but Myspace, which is owned by News Corp. (NYSE: NWS), has won just such a case.

The company sued Sanford Wallace and Walter Rines for spamming the social networking site's users with phishing schemes and links to websites offering merchandise for sale or paid advertising. A federal judge in Los Angeles ruled in favor of MySpace after the con-men failed to show up for a hearing.

Why are the damages so high? CAN-SPAM, a 2003 law, entitled providers to $100 in damages for every spam message sent -- and the amount triples when the spam is sent "willfully and knowingly."

Perhaps this will send a message to would-be spammers that they shouldn't mess with MySpace. But the spammers are nowhere to be found, and it's hard to imagine that they have anything like $230 million to pay the judgment, or even the $4.7 million in attorneys fees that the judge awarded MySpace.

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.

While I won't claim the title of Most Hip Person on the planet, I do have a fair bit of "new media" credibility. And I think it should be instructive that I've finally embraced (or at least given a friendly pat on the back to) Facebook, whereas News Corp.'s (NYSE: NWS) MySpace continues to horrify. Where Facebook pokes, MySpace cackles wickedly; where Facebook exposes me to unwelcome questions from first grade classmates, MySpace exposes your children to unwelcome advances from questionable adults. Facebook is silly; MySpace is spooky.

The two social networking sites sprung up at about the same time, but focused on vastly different niches. Facebook was originally meant to monopolize electronically on the popularity of the "Freshman Facebook," a publication put together by most colleges displaying the faces of the new students and immediately hoarded by upperclassman hoping to find their one true love (at least for tonight). Why not bring the desirability of fresh faces to a much wider audience? At first the network was limited to college students, but soon the barely legal founder was pitching his product at a bigger market. And then my boss asked me to join and the rest is writing on my wall.

MySpace, on the other hand, was initially marketed to indie bands (although it wasn't meant to be a niche, its developers were active in the LA music scene and thought that would be a great way to attract other users) as a way to spread the musical love and relieve struggling artists of the need to sink money into building a website. The concept was a virtuous circle -- musicians attract fans, fans attract musicians, and so on forever.

Now musicians are still on MySpace, and college students are still on Facebook, but while Facebook seems to have (if not transcended at least) risen above its origins to attract "networks" and "groups" whose affinity ranges from a common employer to a favorite politician or social cause; MySpace has sputtered, devolving ever more into awful allegations and truths. Pedophiles are reported to find victims through their MySpace pages, and the site is notorious for cyberbullying (scary!). On the other hand, there is a big kerfuffle over Scrabble on Facebook (silly!).

I reluctantly set up an account on FaceBook several months ago, and now it's moderately interesting as a way to reconnect with friends from 1st grade, and occasionally peek in on the lives of my college and business school classmates. It occasionally bugs me with its "pokes" and "candy corn" (what the heck?) but it's not riddled with often obscene and sometimes frightening content, as is MySpace; the space that's not mine, at all.

Vote in our poll for MySpace or Facebook as your preferred brand, and let us know in the comments why you love it.

Yahoo! (NASDAQ: YHOO) shares traded at $29.70 after hours Friday as it appeared that a buyout deal from Microsoft (NASDAQ: MSFT) was likely. Now that Microsoft has walked away after offering $33, where does the Yahoo! stock price go?

Probably to about $22. Here are the reasons why:

1. Yahoo! traded at $19 the week before the offer.

2. Yahoo!'s earnings for Q1 were only modest. So were its forecasts. No one on Wall Street believes the company's aggressive three-year projections. This actually puts some downward pressure on the stock.

3. Microsoft may come back. Their new offer, probably several weeks off, if they make one, will almost certainly be below its initial $31 price point because Yahoo!'s shares will have fallen. A new MSFT offer will probably be in the $25 to $27 dollar range. This should give the stock some support.

4. Yahoo! could outsource some of its search functions to Google (NASDAQ: GOOG) and potentially save hundreds of million of dollars in personnel. Google does a better job of making money from search ads, so a transaction with the search company could also improve revenue. This should help keep Yahoo!'s share price from collapsing. There is a chance the the federal government would view a deal between the two largest search companies as anti-competitive.

5. There is still a chance the Yahoo! could do a transaction with News Corp (NYSE: NWS) for MySpace or Time Warner (NYSE: TWX) for AOL. It is tough to handicap what this would do to the Yahoo! shares.

Look for the Yahoo stock to settle at $22 in the next week.

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

MAJOR PAPERS:

• In an effort to refocus on coffee, the Wall Street Journal reported that Starbucks Corporation (NASDAQ: SBUX) will attempt overhaul its entertainment business.
• Private equity players Apax Partners and Kohlberg Kravis Roberts, along with Lehman Brothers Holdings Inc (NYSE: LEH) in a supporting role, are looking to form a consortium to examine a bid for the insurance assets of The Royal Bank of Scotland Group Plc (NYSE: RBS), the Financial Times reported.

OTHER PAPERS:

• Yahoo! Inc (NASDAQ: YHOO) is going to let outside developers create applications across its network of sites, the New York Times contended. The search engine is also going to combine its online services under the social profile concept in an attempt to allow its users to replicate the social experience that social networks like News Corporation's (NYSE: NWS) MySpace and Facebook have made so popular.

WEB SITES:

• Research In Motion Limited (NASDAQ: RIMM) will reportedly delay the launch of its new hotly anticipated 3G BlackBerry phone, Fortune reported, which the company is developing for AT&T Inc (NYSE: T). The phone, originally supposed to be launched in June, may not be released until as late as August, inside sources said.

News Corp. (NYSE: NWS) has not had its fill of the revenue failure of MySpace in the U.S., so it wants to try to address that problem overseas.

According to The Wall Street Journal, "Every single market we're going [into], we're seeing significant growth in revenues across the board," said Travis Katz, senior vice president in charge of MySpace's international business.

Maybe the MySpace model of trying to sell advertising to marketers who want to reach social network users who have no interest in looking at ads will not be such a failure outside the U.S.

MySpace might actually be doing worse, but in late 2006, Google (NASDAQ: GOOG) signed at three-year deal making it the exclusive search engine for the social network and guaranteeing News Corp. $900 million in shared ad revenue. Without that, it is safe to say that MySpace's revenue would be quite a bit lower.

And the web wars continue. Viacom (NYSE: VIA) issued a press release yesterday touting the success of its various Internet destinations. According to traffic numbers the release cited from comScore Media Metrics, the MTV Networks Music Group achieved an increase of well over 18% in terms of average monthly unique visitors during the first quarter of 2008 versus the year-ago period.

But what is really newsworthy about the release is that management of MTV Networks, a division of Viacom, clearly wanted to rub its success in the face of its competitors. The release highlighted prominantly the fact that Yahoo! (Nasdaq: YHOO) Music's average monthly unique visitors saw a decline of well over 11% during the same period. News Corp.'s (NYSE: NWS) MySpace Music's number dropped 8%.

Viacom houses several major web brands -- MTV.com, VH1.com, Rockband.com, etc. And Sumner Redstone et al have made it clear in the past that a major part of the conglomerate's growth strategy is, and will continue to be, exploitation of the synergy between the web brands and the complementary broadcast brands -- each entity will feed eyeballs to the corresponding entity. Whenever you watch a Viacom platform -- for example, the reality shows on VH1 on Sunday nights -- you'll always see a plug for the companion Internet site. (All media companies do this, though, so it isn't unique to Viacom.)

By no means should any shareholder take this data to mean that Viacom is now king of the 'net. No, the media conglomerate isn't there yet. MySpace and Yahoo! are still immensely powerful in their own rights (like that even needed to be said).

But investors may well want to note that Viacom is keeping up efforts to broaden its presence on the web. So long as the company constantly changes its strategies as the tastes -- and keeps up with the attention spans of the target demographic -- then it will have a fighting chance to remain relevant in Web 2.0, 3.0, 4.0 or whatever version we're in.

As aggressive as Viacom has been regarding building a web strategy, it can certainly get more aggressive. The press release offers up several examples of exclusive online content that served as drivers for the Q1 ratings -- the exclusive premiere of a Mariah Carey single, for example. Continue experimenting, Viacom. Try to think outside the box. The web is a tough battleground, and it will take all the innovative genes in your corporate DNA to beat the big guys of cyberspace.

Disclosure: I don't own shares in any of the companies mentioned here; positions can change at any time.

Due to the attempts to buy or build a partnership with Yahoo! (NASDAQ:YHOO) investors can no longer keep track of the players without a score card. Overnight, word get out that Time Warner (NYSE:TWX) was talking to Yahoo! about putting AOL into a new, combined company. Then The New York Times reported that News Corp (NYSE:NWS) is in talks with Microsoft (NYSE:MSFT) about putting MySpace, MSN, and Yahoo! together.

The News Corp deal is by far the more complex. It puts together a social network, the MSN web portal, and Yahoo!, the No.2 search company. Managing such a far-flung collection of businesses would represent a significant logistical and marketing problem. However, it could drive a higher price for Yahoo!. Microsoft would gain control of the largest display advertising network in the world, would have the largest number of unique visitors controlled by any company, and rank closer to Google (NASDAQ:GOOG) in search. Having the MySpace social network might actually cause a set of troubles because operators of these businesses are finding it hard to discover ways to get large advertisers to use them. As collections of people who cannot be broken into simple categories they have been vexing to marketers.

It is very hard to determine how any of these new marriages creates more value that the $31 that Microsoft has offered for Yahoo!. At this point, at least, the value of another combination is ephemeral. The potential benefits are in the future and, therefore, are difficult to judge.

Shareholders of Yahoo! may have to decide if they want to elect for a bright dream of the future or cash on the table.

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

Fox Interactive Media, the internet arm of News Corp. (NYSE: NWS), is reorganizing due to a shortfall in revenue. According to TechCrunch, "The company, under President Peter Levinsohn, will miss their revenue target of $1 billion for the current fiscal year ending June." The miss could be as much as $100 million. Several of the top sales and marketing people at the unit will be moved or replaced.

The news indicates how hard it is to make money on social networks like News Corp's MySpace and photo-sharing property Photobucket. Unlike portal sites, social networks are a patchwork of content created by users and are hard to break into content categories like financial, autos, or music the way that advertisers like to target their messages.

The revenue miss also begs the question of whether the other large social network, Facebook, is worth anywhere near the $15 billion valuation it was given recently in a round of fund-raising.

Social networks may simply be good for users but awful for marketers.

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

With the popularity of Facebook, bebo and MySpace, companies are trying to find ways to leverage social networking. However, it can be expensive to build out a strong platform.

Well, things are getting easier; that is, Ringside Networks has launched an open source server to build social networks (it's in the beta mode).

True, there are other systems on the market. However, in the case with Ringside, it allows for seamless integration with other sites, such as Facebook. In other words, it will help companies migrate users to their own platform.

What's more, Ringside allows companies to keep their own branding and the look-and-feel of their own websites.

Oh, and some of the co-founders of Ringside -- Bob Bickel, Rich Friedman and Mark Lugert -- were instrumental in the development of JBoss, which turned out to be one of the most successful open source projects in tech history.

To get some perspective on this, I talked to David DePaolo, who operates WorkCompCentral.com. He has known about Ringside for some time. His take: "It makes sense that someone would start this up as they have with other technologies, and just in time. As technology progresses, we find that it is not all about the technology and patents, it's the application of that technology to a specific market."

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.