Did Google get hosed on its MySpace search deal?

Fox Interactive gets 27 percent of its revenue from an ad deal between Google and MySpace forged in August 2006. Meanwhile, Google executives complain about how hard it is to monetize social networking traffic. Funny how deals that looked like pure genius a few months ago can backfire.

Here's the score: Rupert Murdoch: $900 million, the guaranteed revenue Google promised MySpace through 2010. Google: Something north of zero but probably below expectations.

That's the big takeaway from the compare and contrast between the conference calls of Google and News Corp., the owner of Fox Interactive and MySpace.

News Corp. COO Peter Chernin summed up the state of affairs very well on the company's fiscal second quarter earnings conference call:

Clearly our revenue from Google is guaranteed, so that's not a particular issue for us. Secondly, the assumptions on which that deal were made always suggested that Google expected the deal to reach break-even towards the latter part of the three-year period and for the deal to function as a loss leader during the early period. So I think their performance is no surprise.

Chernin added that MySpace, which launched a developer network on Tuesday, is working with Google to improve monetization and the search giant is an important partner. "We'd like to see them improve their results, but it is important to note that deal, from their own modeling and certainly what they told us, they expected it to reach break-even towards the end of the deal, not right at the beginning," said Chernin.

Now let's contrast those comments with Google's.

On Google's fourth quarter earnings call, Google's Sergey Brin said about social networking inventory: "We have an incredible amount of this inventory," said Brin, president of technology. "I don't think we have the killer best way to monetize social networks yet. We have had a lot of experiments (and some disappointments)."

Google wasn't naming names, but it's pretty clear that MySpace is a big piece of the monetization puzzle. Here's what's really going on: Officially, Google modeled the MySpace deal to pay off down toward the end of the partnership, but it had expected to exceed expectations. Now that the MySpace deal isn't overdelivering you get comments that reveal a little frustration from Google management.

The lopsided nature of the MySpace-Google deal even prompted Merrill Lynch analyst Jessica Reif Cohen to ask if there's any way Google could back out of the deal. Chernin's one word response: "No."

Meanwhile, back at the MySpace ranch things are just swell.

News Corp. CFO David DeVoe said:

FIM's total revenue in the quarter of $233 million was up 87% from the same quarter a year ago. This is primarily due to search and advertising revenue growth at MySpace. Of the total FIM revenue, $62 million was from our search deal with Google. Ad revenues of FIM increased 43% versus last year and 31% from the first quarter. Operating profit for FIM was $47 million, as compared to a loss of $11 million in the same quarter a year ago. So the growth -- profit growth, rather, reflects the revenue increases and lower management retention amortization, and it's offset by our continued investment in the cost base and expansion of this high growth business.

Chernin also added that advertisers are starting to get MySpace and the company's targeting of enthusiasts and other niches.

Bottom line: Advertisers are seeing a lot of value in MySpace. That value just isn't flowing to Google yet.