MySpace is beefing up its games component through a deal being announced today with distributor Oberon Media Inc. (THR). The games section on MySpace, to be launched in January, will have hundreds of free "casual" games - everything from online puzzles to games like Bejeweled. Casual games have become a big deal because they reach a huge audience and can be easily distributed. But Doug McIntyre at 24/7 Wall St. reminds us of the bigger issue - that MySpace isn't making enough money. That can't be pleasing to Rupert Murdoch, whose News Corp. purchase of MySpace was considered such a clever move. (Murdoch says all is well.)

With over 110 million registered users, MySpace will bring in less than $750 million in 2007. That is below News Corp's forecasts from earlier this year. Yahoo! brings in almost twice that much money in a quarter. Social networks have one significant weakness. Their users are not differentiated. Getting them to do one thing or follow one trend is like herding cats. Research shows that they tend to ignore advertisers. They are exactly the kind of audience marketers ignore. It does not matter how many people MySpace has. For big advertisers, they are easier to reach somewhere else, whether it is watching TV or looking at sports scores on MSN.