MySpace/Photobucket: User Overlap Is Nearly 100%
NewsCorp plans to pay half as much for Photobucket as they did for MySpace. Photobucket is going for $300 million with the earnout (a steal compared to Google/YouTube), and MySpace was acquired for $580 million, back in 2005.
Context & Ripple Effects
Photobucket's dependence on MySpace had already been in focus in an examination of whether the photo host could survive without MySpace. The planned News Corp purchase, first reported a day earlier as Photobucket moving to MySpace, turns that dependence into common ownership.
First-order effects
- News Corp would place MySpace and the Photobucket service used by its audience under one parent, reducing the platform's reliance on an outside media-hosting partner.
- Photobucket's $300 million planned price establishes a far lower transaction benchmark than the Google/YouTube comparison cited in the coverage.
Second-order effects
- MySpace gains greater control over a service central to its users' sharing behavior, while Photobucket loses the independence that had made its MySpace relationship a strategic vulnerability.
- Google/YouTube becomes the prominent reference point for buyers and sellers assessing whether audience overlap and distribution dependence justify major user-generated-media acquisitions.
Third-order effects
- If social platforms continue buying services their users already rely on, media hosting and social distribution are likely to consolidate within the same corporate groups rather than remain separate partners.
The trend: Social-network owners are moving to internalize the media services that underpin user engagement, making distribution overlap a driver of acquisition strategy.