MySpace chases YouTube

MySpace has decided that having the world's largest social network is not enough -- even with the $900 million ad deal with Google Inc. (NASDAQ: GOOG) and 110 million users a month. So, the News Corp's (NYSE: NWS) operation is going to launch a new business called MySpace TV. According to The New York Times, the product will make it easier to create and share videos.

The new business faces two challenges. First, it is not clear that YouTube has figured out how to make money, and it is by far the largest video sharing web property. Posting of premium videos has caused problems with firms like Viacom (NYSE: VIA), and the huge majority of the clips on YouTube are home-grown and therefore of no interest to advertisers.

In addition to the problems of integrating large amounts of premium content, MySpace may find the video space a bit crowded. Grouper, JumpCut, Revver, MotionBox and Dabble are among dozens of sites vying for the audience being driven by the online video movement.

Tough crowd.

Douglas A. McIntyre is a partner at 24/7 Wall St.