Well, well, well. Looks like all that sabre-rattling some weeks ago had nothing to do with MySpace wanting to wall in its users after all, but everything to do with acquisition negotiations. Valleywag has the details, with the rest of the usual suspects quivering with bloggerific anticipation, but it looks like Rupert Murdoch’s MySpace has acquired Photobucket for a rumoured $300 million $250 million, which is a staggering 50 40+ multiples above earnings ($6 million and change last year, apparently).
Hey — if I was a widget maker, I’d be celebrating!
Although to be honest, as Valleywag, points out, Photobucket is one of (if not *the* largest) widget makers, as it serves up umpteen bajillion photos and videos per day. And in that way, as Mat Ingram says, it makes sense.
But, having said that, its clear that for start ups and VC’s alike, Rupert Murdoch has now joined the ranks of Yahoo and Google as behemoths who are looking to acquire, rather than create, new ventures to compliment their own.
MySpace, if memory serves correctly, however, will be the first to offer such a giant pay day to a widget company. Which is great, because other than the M&A route, I have a hard time seeing what kind of successful “business model” any widget company has.
It seems like there a few patterns emerging, however. With the release of API’s here and there, startups that focus exclusively on mashing up or integrating content can look to one of three futures:
1. competing with the parent company: Parent company says “hey, that’s a great idea”, and starts its people on a similar competing product. Case in point: Google Maps.
2. getting sued: if the startup finds that its violating the terms of the API. Check out Statsaholic (although it sounds like the story is really turning into a case of the above).
3. getting bought out: with 2) legal wranglings being a part of the negotiation process.
I suppose there is a fourth, which involves becoming a company in its own right, finding a business model that pulls in more than what goes out, and /or possibly going the IPO route.
Nah.
Too “1.0″-ish. ;)
8 Comments
Good post Tony. I’d say this is probably a good move on the part of MySpace. My only question is why absorb for such a huge cost rather than just compete. I know MySpace isn’t the only use for Photobucket, but it has got to be (one of?) the largest, and neither the tech nor business model is overly complicated. Why doesn’t MySpace just create an in-house version and restrict users to that? Just something that occurred to me.
On a separate note, you’re an awesome writer. There are plenty of decent writers on the net, but few whose words themselves are fun to read despite the context. Keep it up.
What did MySpace not create before this? They have a photo section, they have videos (if I remember well, I rarely visit MySpace). But they have never allowed external usage.
With the acquisition of Photobucket, they don’t only obtain another web property with a very low ROI and CPM, but they also broaden their web wide influence if they maintain the character of Photobucket. They could even become a YouTube competitor.
On the other side, Murdoch has always been a M&A master, this is no new behavior from him.
It was all charade? It makes sense though, MySpace users have been using photobucket since, since photobucket.
The internet has really reached the monopoly stage wherein giants keep on gobbling up the littles ones.
Adam,
Thanks for the kind words. If nothing else, I try and entertain myself. I’m glad if others find it entertaining as well. ;)
Cheers
t @ dji
Franky,
They’re also acquiring *users* plain and simple. They already have some kind of service like this already, but its clear its not really about the technology, is it?
Cheers
t @ dji
Jhay,
Either that, or the cost of acquisitions
According to this new TC article they have bought few new users. But they have bought lots of traffic towards LiveJournal, Xanga, Blogger and many other networks. ;-)
I guess I see it as essentially buying eyeballs.. Photobucket gives Rupert yet another time to scar my eyeballs with his message du jour.(unique page impressions)
It also might be a valuable sales tool to validate some of the stats that the advertisers throw around. I would assume each one of those pics throws a nice little “ping” each time its viewed by a new unique user.
Another angle might be email accounts….maybe the overlap wasn’t quite as overwhelming when looking at users associated email accounts.