News Corp acquisition of Intermix / MySpace
A lot has been made of News Corp's acquisition of MySpace. Most of the early buzz has focused on the cost of the acquisition and whether it means that News Corp has failed in its attempts to garner its own traffic. In my view, that's silly. News Corp has acquired a strong player in an emerging market offering traffic with great demographics. Yes, they paid a strong premium - $580M, but they have acquired some strong properties. MySpace has more than 18 million users today, the type of critical mass needed in a social networking property. It's not like a search engine; there are high switching costs for a social networking site. Just ask the millions of parents who wanted to drop AOL but couldn't because their kids were using AOL for IM.
I think that the social networking space will continue to be interesting in the next few years. I'm sure that Reid Hoffman and his colleagues at LinkedIn are keeping a close eye. While their business model (services, rather than ads) and market (business users, not teenagers) are quite different, I think that this helps validate the social networking space. Whether it's for dating, sharing information or brokering business deals, leveraging technology to expand your social network seems to have some staying power.
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