Tuesday, July 19

Rupert pays $770m for... uhh... spotty hotties?

Hold the frickin' presses, this kind of story only comes along once a year. News Corp has announced it has acquired IntermixMedia, and according to this ABC News story it's all so Rupert Murdoch can get his hands on the hotties at www.myspace.com

"What's that? Hotties?", you say? Yes, hotties. MySpace is mostly an online community where young people come together to flirt with each other in the more overt way of young people these days.

Intermixmedia claims its whole network gets 16m US unique eyeball pairs a month, so that values these horny kids at about $48 per. Way back in when Yahoo! acquired a similar online community play - GeoCities - for similar reasons (reach, audience, online community) it paid about $4.67 billion for an audience of 19 million unique users a month. But this was at the peak of the Internet boom (we all remember how crazy valuations were back then, right?) and crucially, Yahoo! paid for GeoCities in stock, not cash!

Now consider that GeoCities was making real ad revenue at the time. The ABC story claims MySpace attracts about 8% of the total online ad market in the US, which I'm certain is complete nonsense unless we're counting ad impressions instead of ad revenue. I've been using MySpace to promote my band Karma County for about six months now and every single ad position I've seen in the network has been taken by the one advertiser, and a third-tier, small-brand, low-CPA advertiser too, if appearances are anything to go by.

Now consider the demogs of the audiences on offer. GeoCities was (still would be) unusual in that its audience was an unusually diverse set of demographics - everyone from grandparents to teens - doing all kinds of professional, personal and hobby-related stuff. MySpace is really just an 18-24 audience, with more pimples than disposable income, which makes more sense if you're a youth brand like Disney, but News Corp? OK, it owns Fox, which is a youth network, but does extending Fox's online reach really merit a billion dollar acquisition and the integration costs that follow?

If it were me, I'd be learning from the GeoCities lesson, which was that all the audience and all the revenue dried up as Yahoo! tried to bring it into the fold. The more Yahoo! tried to introduce GeoCities customers to the rest of the Y! network, the more they left in droves.

If I were Fox, I'd leave this new acquisition completely alone for five years and see if it can make its own way in the world. Start to integrate it with the rest of News too soon, and those spotty hotties, so leery of marketers trying to push brands in their face, will all leave to join some other free-to-register online flirting community, leaving Rupert holding little more than a receipt for $770m and a very clear idea of whether he's hot or not!

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