Social Networks are like celebrities - there is always a pretty young thing just waiting to be discovered. If you follow that logic, then MySpace is like Celine Dion, good for political parodies, but kinda low on the hipness scale. In comparison, the post-API Facebook is like Norah Jones - classic, cool and very still on the way up. So instead of swapping 25%+ of their company for MySpace, Yahoo might be better off making a run at Facebook.
As HipMojo suggests, “Yahoo! should make a run at Facebook, if they’re willing to value MySpace at anything north of $6B, let alone $12B!”
However, looking at the news today, it is a win win for Murdoch.
From Rupert Murdoch’s perspective, this is not such a bad trade. He can swap MySpace for 25% of one of the top destinations on the web, and thereby decide the fate of that company. Murdoch is such a trader - he either finds a bargain or finds a buyer to pay top dollars for a commodity that he thinks is going to decline in value. DirecTV comes to mind.
He is merely capitalizing on the confusion at Yahoo, betting that someone makes a panic-decision. This game of Corporate Chicken Little, might end up getting him more shekels from Google, who at this point must be thinking we-gotta-stop-the-crazy-old-fox.
From Yahoo’s perspective, a deal would help the company expand its advertising platform, give more inventory. Of course, a close relationship with a media company wouldn’t hurt in terms of grabbing content and more such stuff. Anyway, the deal would basically put an end to Yahoo trying to behave like a search company, and finally embrace its inner media giant.
PS: Since all the talk is based on a report in Murdoch-owned Times of London, and on an unnamed source, this is just idle chatter.
16 comments so far
11:50 AM PT
Ok, is it just me — or does the concept of paying 1/3rd of your total US market cap on a single company seem risky?
$12B for Myspace, when Yahoo’s market cap in the US is only $37B (http://finance.yahoo.com/q/ks?s=YHOO) and it’s already the #1 destination on the web for many areas according to Alexa? How much “more #1″ does one need to be that they’re willing to risk one-third of their valuation on it.
Perhaps there are some other historic examples of spending that much of one’s company on a single acquisition that have fared well — but I can only think of one example from my past. PSINet’s acquisition of Metamor Worldwide for $2bn back in 2000. At the time PSI’s us market cap was $6bn. And we all know what ended up happening to PSINet…
http://dc.internet.com/news/article.php/325401
If they buy it, I’d short Yahoo!
12:03 PM PT
Norah Jones. Good call. Amy Winehouse might be even more apt.
and just for fun, how about…
MySpace: Maroon 5
Orkut: CSS
Bebo: Artic Monkeys
LinkedIn: Traveling Wilburys
12:11 PM PT
It’s a bad idea for Yahoo to buy MySpace. It’s dirty with spam and porn and all manner of scum. Not the whole thing, but enough to make Yahoo a huge lawsuit target (Google+YouTube)
I think Yahoo needs to create a dark clone of Facebook and populate it’s “apps” with Yahoo Widgets. They’d have to aggressively filter out the scum users though.
12:35 PM PT
I agree that Yahoo would be better off with the Facebook platform…Yahoo needs a platform, especially one that is clean and well lighted, which has always been one of Yahoo’s design and user experience themes…
DF
1:26 PM PT
Yeah, you probably made Fred Wilson have a hernia by praising Norah Jones. He’s a very cool person, he tells everyone.
1:26 PM PT
“Norah Jones - classic, cool and very still on the way up”
you’ve just shown how out of touch you really are.
1:44 PM PT
oh, the valley, and its chroniclers.
norah jones is not classic, or cool, or on the way up.
but maybe facebook really is like norah jones: sold as “classic,” but really just rehashing the familiar; “cool,” but really just contrived and corporate (don’t let m. zuckerberg sell you otherwise).
2:09 PM PT
AOL / Time Warner anyone :)
2:18 PM PT
josef and second josef comment,
see you must be of the younger set. not exactly the 40-something that I am. from my perspective norah jones is cool. especially if you listen to adult contemporary music where ms. dion made a name and fortune.
now if i came up with some cooler newer artist like rihana, you would call me a poser. somedays - especially the ones i have a hang over, i can’t win, so I am conceding the argument in favor of your hipness. ;-)
but points taken.
3:25 PM PT
Wouldn’t you figure that most people will eventually “outgrow” their social networking profile? And, won’t the next generation look to differentiate themselves, as they do with fashion and music? And, if no one spends their life on a social network, and new people join new networks, what is the lifespan of a Myspace or Facebook?
5:10 PM PT
The problem with all SN companies is that the barriers to entry are so low. Murdoch is right to think about cashing in Myspace for something better. Panama might not fix the search, but it will improve Y!’s ability to monetise. Take Myspace, throw in Panama and behavioural tatgeting and you have something interesting. Facebook still looks like a better bet tho’. How smart does Zuckerberg’s decision to turn down Semel last year look now?
5:39 PM PT
as a guy is his early 30s and as a musician in a band in SF, I will stand behind Om on this one. Noah is cool, classic and on the way up. with a voice like that, you can’t help but dig her music.
she is even differentiated, like facebook, in her decision to go against conventional pop music wisdom and go with blue note records and compose her own songs on her latest album.
plus she’s ravi shankar’s daughter ;)
7:20 PM PT
norah jones so wonderful lovely brilliant artist. just love her music…
7:57 PM PT
the public is very naive…and that includes so called web 2.0 hipsters.
yang is not going to actually do this deal.
he’s testing the waters and showing that he isn’t a wimp. these ‘talks’ are very neccesary in order for him to gain the cedibility that wall street wants.
it does make for good a good stroy or two and gives fodder to bloggers. nothing more.
6:55 AM PT
Hey Om…
Heard you on NPR Marketplace yesterday commenting on this story.
Cool…I guess :-)
10:01 AM PT
Noah Jones peaked years ago. I am not bagging on her talent, and she does hang with the likes of Bright Eyes and M.Ward.
She’s just a poor example of something in the zeitgeist, which Om is using as an analogy to Facebook (THE online zeitgeist, per this discussion).
Rihana’s mainstream, not hip.
I know plenty of 50+ year olds who use the internet and discover new music to stay as ‘hip’- as me. (not my words, I gave up being cool years ago). Look at how often Fred Wilson goes out while I stay home, and he is 20 years older than me, an has a family.
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