Google agreed to give MySpace $900m over three years and that deal will run it’s course in July of next year. When it is renewed, Techcrunch has speculated that the new value maybe $75m/year (vs $300m/year now).

Long time readers of this blog know that one area that has perplexed me and shown ‘bubble’ signs is the ad-repping deals for sites like MySpace, Facebook and Digg. I called them Madonna deals in 2007, named after the deal Madonna signed with LiveNation where the latter chased PR with financially destructive results.

Now, let’s look around for other Madonna deals in the online advertising space. Where might they be? Oh, there you are Facebook. Microsoft signed an advertising agreement to rep US inventory in 2006 with Facebook and expanded that agreement when it invested in the company in 2007. The advertising deal runs through to 2011.

What does that mean? Well Facebook has grown so astoundingly that Microsoft’s ad deal may actually make sense in a world of crashing CPMs. But likely it does not and when it comes time to re-negotiate next year it will be temporary headache on Facebook’s journey to stardom. Make no mistake though, they’ll miss the $50-100m yearly ad revenue guarantee post-2011.

Facebook has two years to discard the dream of brand advertising and instead try to mint money with automated bottom-feeding affiliate ads, enabling payments for games and applications and more promisingly (IMHO) plugging its data into external sites to drive merchandising algorithms.

- The price of paper goes up over time creating a ticking time bomb (7-10% CAGR)

- Circulation has been in decline for decades. Because of the above point, firms must raise their prices causing more decline in circulation

- To make up for circulation declines, firms raised CPMs so that they could still grow revenue. In a scarce world where many had monopoly-like positions, this worked. Now there are so many substitutes. At some point, advertisers push back on price increases.

- To be very clear: print advertising ‘works’. It always has. People respond to print ads on a direct response basis, people react to ads on a brand basis. But as the price of advertising (CPM) goes up, the break even point for an advertiser’s investment rapidly approaches. Forget about advertisers thinking about things on a comparative basis. If a print advertiser, particularly a direct response one (e.g. Yellow Pages), is earning a great ROI they don’t care if they can get more efficient spending elsewhere (They should but they don’t. The power of momentum and inherent human laziness). But when they don’t get a ROI (Loss on Investment? LOI?), they stop and they pull out.

Witness the printed classifieds. Leaving aside the outstandingly obvious point that the Internet is a better and more efficient medium, constant price increases for the printed product at some point tipped the scales of profit to loss and there was a mass exodus (now declines of 40%+ year over year).

The IT trade media is a great example of the evolution. IT’s core audience migrated their behaviors online before any other. The printed publications are now in a shambles. Events support a lot of businesses, including online ones. Ziff Davis looks like it might even bring down a private equity investor (Willis Stein) because the firm concentrated so much of its funds into the one investment.

Who cares about IT media? No one really except the people running IT media companies. But a lot more people care about IT journalism. And what’s happened to that in the past five years?

Today is a great example of things we never saw in the phone book sized Red Herrings and The Standards of the late nineties:

David Greiner of Campaign Monitor has written an incredibly detailed post about his firm’s recent foray into display advertising. It catalogues the conversion rates of various landing pages and creatives the company tested as well as various publishers they bought ads on.

Closer to home for me, Matthew Corgan, President of HotPads.com, gave an excellent overview of his firm’s transition onto Amazon’s AWS platform, the costs associated with it and the pros and cons of each decision along the way.

The two pieces are quite simply superb. Compare that to some fawning BusinessWeek/Forbes/Fortune cover story of a pasty white guy CEO in his sixties wearing a hard hat with a shit eater grin telling everyone how “he did it all” as head of a 100,000 employee construction company by doing something insanely generic like “focusing on the customer”. No fucking comparison.

In my opinion, journalism has won with the Internet and the destruction of the scarcity of publishing tools. I have no doubt there are less ‘journalists’ who are paid a salary to do what they do as a primary occupation.

Now, that assessment includes the very real consideration that there are two sides to journalism: The negative and the positive. You are not going to get Richard Parsons blogging on how he destroys value. Or a play by play of the epic fuck-up of AOL. But because there is now so much diversity on the positive, folks need to be incredibly transparent and well-written to stand out and everyone wins.

Because the positive side has progressed so far with superb in the trenches accounts of business and technology, it’s far outweighed the fair reporting of business disasters (we still have the WSJ for that).