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May 7, 2007

Confirmed: MySpace To Acquire Photobucket For $250 Million

Michael Arrington

63 comments »

Apparently an overzealous Photobucket employee is the source of this rumor, but we’ve confirmed it with more senior people: MySpace is acquiring Photobucket for $250 million in cash. We’re hearing that there is also an earn-out for up to an additional $50 million.

Photobucket has been looking for a buyer since March, when they hired Lehman Brothers to help sell the company. They were looking for $300 million or more, but may have had few bidders other than MySpace.

The companies have been in serious acquisition discussions for the last couple of weeks - A dispute that involved Photobucket videos being blocked on MySpace led to acquisition discussions, and the block was removed.

Photobucket generated $6.3 million in revenue last year and planned on hitting $25 million or more this year. They have 40 million registered users and add another 85,000 per day.

Our first coverage of Photobucket was a year ago. They’ve raised $15 million over two rounds of financing.

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This entry was posted on Monday, May 7th, 2007 at 11:50 am and is filed under Company & Product Profiles. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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  15. Basic Thinking Blog » MySpace schnappt sich Photobucket, für 300 Mio USD?

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  16. Eric Wahlforss » Blog Archive » Breaking news: MySpace aquires Photobucket for $250M

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Comments

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  1. John / SocialNext

    May 7th, 2007 at 11:53 am

    Is this a volume / share play? MySpace already has it’s own photo / video sharing services. They’re expanding these services rapidly too.

  2. Zaid

    May 7th, 2007 at 11:54 am

    Not a bad exit. Seeing the reaction of non-myspace photobucket users will be interesting given the “love it” or “hate it” nature of myspace.

  3. Pallab

    May 7th, 2007 at 12:00 pm

    This is surprising.
    Smart tactics by myspace. They realised they were getting too much negative publicity by blocking out photobucket. So they appeared to give in and then just bought it out!

    I wanted photobucket to be acquired by some large player. And although I am not a big fan of myspace, I think this merger would work out well.

  4. Johnny 5

    May 7th, 2007 at 12:04 pm

    Web 2.0 continues to amaze.

  5. Steve S

    May 7th, 2007 at 12:05 pm

    Getting the block removed will be great for MySpace’s PR (and we know that MySpace can use all the help it can get as far as that goes). The only question now is what they plan to do with this property. They already have a pretty robust system of serving videos and photos, hopefully (for the price) they can make some good use of this new investment.

  6. Dave

    May 7th, 2007 at 12:09 pm

    10x yearly revenue is A LOT. However, I can see why myspace wants photobucket, but I still cant see it being worth THAT much.

  7. Adam benayoun

    May 7th, 2007 at 12:21 pm

    My question would be what kind of message this acquisition will transmit to other widget that are built on Myspace? Does that mean that this wont leave place to other photo services built on myspace? will we see an integration of photobucket within myspace? that might kill some of the widget market.

  8. RBA

    May 7th, 2007 at 12:25 pm

    #6/Dave: 10x revenue is a lot? No it isn’t.

  9. Andrew

    May 7th, 2007 at 12:32 pm

    Perhaps Myspace put that block on to see how much the revenue loss would be for that short period of time. Could it have been a part of the due diligence Myspace conducted?

  10. LonelyBloggers

    May 7th, 2007 at 12:32 pm

    I think this is a great match and could be very beneficial for MySpace in the long run… PhotoBucket is a well known brand in itself, so 10x is reasonable if they can actually do something with it.

  11. Jeremy

    May 7th, 2007 at 12:39 pm

    Huge news, congrats to Alex, Luke, Michael, Todd, Nick, Joslin, and everybody else on the Photobucket team.

    They are an amazing bunch, brilliant, and deserve their success.

  12. Alaska Miller

    May 7th, 2007 at 12:45 pm

    phobucket typo

  13. Ming

    May 7th, 2007 at 12:47 pm

    10x forecasted revenue not actual revenue in 2006. That’s more like 38x

  14. engaged

    May 7th, 2007 at 1:06 pm

    Thanks valleywag for breaking this!

  15. Joe Duck

    May 7th, 2007 at 1:08 pm

    Ha - valued at over 10x *planned revenues*?!

    How much revenue do you *plan* on for next year Mike?

  16. bdb

    May 7th, 2007 at 1:14 pm

    Ahh, now we know why they blocked photobucket…..it was a negotiating tactic, “Ok, you think you are worth $250M+? Let’s see what happens when we cut you out of our site.” “Oops, you are right, we’ll pay $275M”

    Nice work photobucket, too bad I will be canceling my account now.

    Picasa web, FTW!

  17. Tan The Man

    May 7th, 2007 at 1:28 pm

    good point bdb

  18. john

    May 7th, 2007 at 1:32 pm

    This is weird sounds way too high for PhotoBucket…

  19. Jay (living in First Life)

    May 7th, 2007 at 1:41 pm

    Crap aquisition. The bubble continues to grow. What a waste of money. This shows laziness and stupidity on the part of Myspace. Either you buy these guys out early and get them cheap or you cut them off and build it yourself. Photobucket without myspace is nothing. You’d think they would have at least negotiated better.

    Congrats to the Photobucket team and investors. Another empreror’s new clothes scenario here.

  20. patricia

    May 7th, 2007 at 1:48 pm

    It’s nice to see that they’ve stuck it out over the years and are exiting with something like this. I like Photobucket. I go there a few times a week. I’m never on myspace.

  21. Daniel Gardner

    May 7th, 2007 at 2:15 pm

    @19
    50m is no small drop, I agree it is a crazy price but this add’s alot of users to Fox properties, remember Murdoch owns a newspaper monopoly outside the web, you will see more of these moves to come.

    My follow-up to the original post I did on this saying Murdoch was acquiring but diluting the deal can be found here http://danielgardner.wordpress.....confirmed/

  22. Todd

    May 7th, 2007 at 2:36 pm

    I feel sorry for all the Photobucket users, you just handed ownership rights of all your pictures to Ruppert Murdock:

    “…By displaying or publishing (”posting”) any Content on or through the MySpace Services, you hereby grant to MySpace.com a limited license to use, modify, publicly perform, publicly display, reproduce, and distribute such Content solely on and through the MySpace Services.”

    Fox gets to use you pictures for any reason they want, if it makes them money, you don’t get a dime.

    Use Flickr!

  23. ELL Fashions

    May 7th, 2007 at 3:02 pm

    Glad I use Flickr. Great to see the Photobucket guys get rewarded. The backlash Myspace got was warranted in my eyes. Users spend all this time uploading photos and videos and then Myspace blocks them. This will be good for the photobucket/Myspace crowd but I dont like the idea of Fox owning everything. For some reason it doesn’t seem as bad when its Yahoo. I love Flickr btw so I am a little biased.

  24. j-dizzle

    May 7th, 2007 at 4:12 pm

    @Todd

    “…By displaying or publishing (”posting”) any Content on or through the MySpace Services, you hereby grant to MySpace.com a limited license to use, modify, publicly perform, publicly display, reproduce, and distribute such Content solely on and through the MySpace Services.”

    The way I read that it wouldn’t matter if you post on Myspace via Flickr…

  25. anoncritic

    May 7th, 2007 at 4:35 pm

    I guess this means widgets AND youtube on myspace are likely to be ending…

  26. Jay

    May 7th, 2007 at 5:30 pm

    Congrats for Photobucket to get $$ while they could.

    Let’s see what this means to other photo-sharing and slideshow companies now that MySpace has nearly cornered the market. Also, this poses some threat to all those companies dependent on Photobucket playing neutral in the social networking arena. MySpace/Fox Interactive now pulls the strings behind many deep-linked images…

  27. CrunchBack

    May 7th, 2007 at 7:46 pm

    $250m - some bloggers call that a steal. I call that too much cash for a low-margin, very expensive business that can be replicated easily.

    or perhaps I’m just jealous…

  28. SocialSplash

    May 7th, 2007 at 7:53 pm

    I think Photobucket got a better deal. $250 million is an awesome price for the site. Myspace is dump enough to buy it! I still dont understand why myspace couldnt just have a build in image hosting service.

  29. dave mcclure

    May 8th, 2007 at 1:20 am

    this feels a lot like PayPal / eBay… once the acquisition occurred, hell of a lot of beneficial integration happened rather quickly, and resulted in pretty immediate ROI (like within first 2 quarters, deal had already shown massive value). now PayPal is driving a full 25% (or more?) of overall eBay revenue, and even greater percentage of growth.

    guessing that PhotoBucket probably has a lot of good ideas for how to improve their integration into MySpace, and now that MySpace won’t be giving them the “talk to the hand” jive, they can probably do a lot of good stuff quickly.

    acquisitions of ecosystem symbiotes tend to do well, since both parties (or at least one) already understand how to work together. i would guess this one will follow that pattern.

    - dave mcclure
    http://500hats.typepad.com/

  30. Mike Abundo

    May 8th, 2007 at 2:16 am

    Another mammal chained to a dinosaur. RIP Photobucket.

  31. Joe

    May 8th, 2007 at 11:03 am

    Maybe it is a slow day for me today, but I am not getting the rationale behind this acquisition. Photobucket was very much dependent on MySpace, but not the other way around (which MySpace clearly demonstrated a week ago). Also, Photobucket was providing an awesome free storage service for MySpace. Now MySpace will have to do it in-house and paid $250M for the privilege.

    –
    We Will Create Your Very Own Domain Name - http://PowerNamer.com

  32. Mau

    May 8th, 2007 at 2:39 pm

    I wish I could create such a money.

    Who knows? Maybe one day.

    May the force be with you!

  33. PJ at Ferodynamics

    May 8th, 2007 at 6:40 pm

    Not bad for a fancy upload script.

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