Recent IDC Report: Social Network Sites are Popular But Not Profitable

Despite generating a hefty media buzz, social networking sites like MySpace.com and YouTube Inc. have not yet figured out how to use that publicity to generate significant advertising revenue, according to a report released last week by IDC.
The Framingham, Mass.-based research firm predicts that while the barriers keeping companies from advertising brands on sites featuring unfiltered user-generated content may eventually be solved by some social networks, others may never be able to attract significant advertising, the report noted.
YouTube, the report suggests, could earn substantial advertising revenue if it could figure out a way to acquire premium content from distribution deals with companies like Viacom Inc., NBC and Walt Disney Co. However, the report noted that Google so far declines to pay the sums required to purchase the content.
The report did note that MySpace generated US$125 million in advertising revenue in the fourth quarter of 2006, but also added that the total amounts to only a fifth of what Microsoft Corp.'s Microsoft Online Services Business brought in during the same period.
Read full article: Pc world