MySpace/Photobucket: User Overlap Is Nearly 100%

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1. Dan
   

   May 7th, 2007 at 10:51 pm

   You point out that: As a point of comparison, the overlap between Google and YouTube was even greater according to Comscore. At the time of the acquisition in October 2006, 80% of YouTube’s users also visited Google regularly.

   But, how many of Google’s visitors visited YouTube?

2. Michael Arrington
   

   May 7th, 2007 at 10:56 pm

   Dan - the rest of the YouTube visitors.

   To expand on the data, Comscore said 23.4 million visitors came to YouTube in October 2006 (strictly speaking, we should be looking at data from a month or two earlier, but this is what we have). 18.7 million of them visited Google as well.

   So, 18.7 million of Google’s 106 million visitors that month visited YouTube.

3. haha
   

   May 7th, 2007 at 11:15 pm

   I think they are buying them as as strategic move. Photobucket has an enormous amount of content - and the “little test” that Myspace conducted when they blocked PhotoBucket wasnt only to make PhotoBucket realise how much they rely on Myspace - but vice-versa as well.

   I think MySpace crapped themselves when they realised that nearly all their users, use Photobucket to store and show their content. When they blocked videos - I would have imagined there was an absolute Insance lash-back and MySpace crapped their dacks.

   I think they got acquired because MySpace were freaked out what would have happened if PhotoBucket pulled the pin on them ??

4. Denis Kolesnichenko
   

   May 7th, 2007 at 11:19 pm

   The point is that the actual overlap between MySpace/Photobucket should be irrelevant because the buy is paying for extra page-views and a *trusted* service with an exceptionally good-working business model, rather than for unique visitors.

   However, if they mess with photobucket’s team or try to put it to a subdomain (something like photobucket.myspace.com etc.) they might skew things up for no good.

5. Jeremy
   

   May 7th, 2007 at 11:22 pm

   What about the obvious play here? Video streaming is the next big revenue stream that Google is going to tap into. The YouTube guys are saying this all the time — having more access to video streams certainly will work in the favor of MySpace when it comes time to cut a video preroller deal with Google.

6. Mike B
   

   May 7th, 2007 at 11:31 pm

   Google/Youtube user overlap is next to meaningless. I bet you can overlap Google with any other internet site/service and find 90%+ user overlap. Google actually bought a destination site with a huge and growing audience when they bought YouTube whereas MySpace is just buying an expensive file server that people only used due to the inadequacy of MySpace software..

7. Steve S
   

   May 7th, 2007 at 11:56 pm

   What they purchased was the ability to patch holes in their file sharing offering. They also ended the entire controversy between PhotoBucket and MySpace. For a company like News Corp, the cost of admission wasn’t that bad at all.

8. Vib
   

   May 8th, 2007 at 12:05 am

   Perhaps Photobucket is simply a more profitable model, and the acquisition, rather than being a move to bring Photobucket users to MySpace, is to bring MySpace users to Photobucket where the advertising works better. If they can’t get them clicking at one place, maybe they can at the other.

9. RBA
   

   May 8th, 2007 at 12:06 am

   Agreee with #6 Mike B. I don’t know many people who don’t use Google at all - and I’m not talking only geeks/2.0 crowd here - a friend of mine who doesn’t know much about computers (as you’re about to see) believed Google was “the first step” to get on the net, like you couldn’t go anywhere without visiting google.com first!!

   Heck even my 4 years old uses it!! And I introduced Yahoo! to her first, but the Google logo catched her attention a lot more, what can I do

10. sean percival
    

    May 8th, 2007 at 12:07 am

    Can’t beat em? Buy em!

11. ted
    

    May 8th, 2007 at 12:28 am

    This is not a steal compared to youtube, and the insistence that it is only points to a desire to keep the market frothy.

12. Stever
    

    May 8th, 2007 at 12:31 am

    Overlap, smoverlap.

    On a massive traffic website the paying advertisers want eyeballs (there is no such thing as relevancy targeting on a myspace), and if your 1 set of eyeballs gets to see the same ad more than once, even better. Branding requires a continuous pounding of a message into a persons head before it really sinks in.

    News Corp could care less about the overlap. The advertisers on Myspace and/or photobucket could care less about overlap.

13. Adi Crazy
    

    May 8th, 2007 at 12:41 am

    Agree with Sean, Buy ‘em - Buy ‘em - Buy ‘em!!!

14. Daniel Gardner
    

    May 8th, 2007 at 1:37 am

    I don’t think it is about what users they get it is what they can do with these users.

    By controlling the majority of the content on the site they can more tightly integrate with MySpace therefore making users apprehensive to move to other social networking sites due to a lack of integration with the images they already have stored at PhotoBucket.

    Also it allows for the potential monetization of content (images/videos) hosted on other sites, possibly even advertising MySpace on competitors sites!

    If I was MySpace I would make it so embedded images on sites are restricted to a certain size and if someone wanted a larger image they have to click and are shown the full sized image with advertising at the top of the page (or if they don’t want to restrict them make it easy for them to do this by making the same kind of embedding you get on YouTube videos so users would do this on there own accord).

15. Steve M.
    

    May 8th, 2007 at 6:10 am

    As others have pointed out, there were a number of good and justifiable reasons for the acquisition…

    …but even for this one reason alone it was well worth doing: competitive blocking/insurance.

16. soxiam
    

    May 8th, 2007 at 6:16 am

    It’s an interesting point to consider but ultimately I do not think boost in membership growth was a main driving force behind this acquisition. For growing social network with desire to be acquired some day… sure. But for MySpace? Not likely. I think, beyond revenue potentials, it was mostly about MySpace wanting to gain stakes in line-in and line-out of their business.

17. C.G.
    

    May 8th, 2007 at 7:35 am

    MySpace can enhance the Photobucket API to give it an advantage over other sites. With that, they can drive future MySpace users to it and get subscription revenue that way. It could be a “if you can’t beat them, buy them” thing but it makes good sense to build a revenue stream that way. If it is only $167 a user, it could take only a few months to break even on the deal… it sounds like a great move to me.

18. vijay
    

    May 8th, 2007 at 7:56 am

    Photobucket is a hugely successful. I am wondering if the myspace people wont buy them and some one else buy them what will happen to the firm. Whether its a higher price or a lower price its good for the pb to sell it to myspace or get lost. Isnt this clear, whether the people love photbucket bcos of myspace or myspace bcos of photobucket.

19. datter
    

    May 8th, 2007 at 8:11 am

    If the Myspace corporate owners hadn’t bought Photobucket, someone else would have… and given the overlap in users, they simply couldn’t risk having a possibly antagonistic third party make that purchase and force Myspace to block what is their users most favored means of hosting photos.

    The corporate entity behind Myspace bought Photobucket to prevent others from doing the same. That’s all.

20. Joe Duck
    

    May 8th, 2007 at 8:22 am

    $250,000,000 for visitors that Myspace already had. I’m skeptical of Photobucket’s visitor stats as “apples to oranges” when compared to Myspace. If PB users are mostly parking pix for use elsewhere those unique visitors are of little value to PB’s bottom line.

21. Doug
    

    May 8th, 2007 at 8:26 am

    There’s no question this was a good acquisition. The question is weather or not it was a good price to pay. If they’re not paying for new users, then why pay such a high premium? They didn’t have enough cash flow to warrent such a high premium. Paying $167/new user is a LOT of money, particularly since we have no metric for the customer lifetime value. So how much is a new customer really worth to MySpace? How much would Photobucket have increased this lifetime value? For some reason, I don’t think the average MySpace user clicks on $167 worth of ads in addition to what they’re doing now. But…I guess all the attention is worth the money too.

22. pallet jack
    

    May 8th, 2007 at 8:29 am

    Myspace / kinda had a monopoly onthat one -

    - They bought it - for their price …

    - if anyone else bought it / its gets blocked again

23. AhmedF
    

    May 8th, 2007 at 8:31 am

    I think a better Google comparison would be Google Video and YouTube, not all of Google.

24. Chris
    

    May 8th, 2007 at 9:03 am

    Photobucket is very popular with bloggers as well, I think these users will be a nice addition to the news corp stable.

25. Don Dodge
    

    May 8th, 2007 at 10:19 am

    Mike, This was excatly my point in my earlier post “I’ll trade two of my $50K cats for your $100K dog”. http://dondodge.typepad.com/th.....my_tw.html

    See this quote “At some point the end user of all these free services is the same user and they can’t be monetized any further no matter how many new services are added. Advertisers will eventually figure this out. Ad rates will drop. Revenues will drop…and stock prices will drop. It is all about the stock price.”

    On the price paid…”triple the acquisition price to get to the revenues needed, every year, starting today, to break even…not to earn back your investment, or pay the opportunity cost…just to break even. It is a tall order for free services layered on top of other free services.”

    Free services layered on other free services…to the same users…is not a winning proposition.

    Don Dodge

26. Shannon Clark
    

    May 8th, 2007 at 2:58 pm

    I think Don is missing a major point about how advertising works.

    Repetition. Repetition. Repetition. and oh yeah, Repetition.

    i.e. if your ad only gets one impression on a person - you have only that one shot at getting their interest and whatever the next step it (a click through on a text add in a paid search for example)

    However if you want to shift longer term behaviors - say beverage preferences, car brand loyalty, choice of where to go on vacation, airline/hotel/car rental chain etc - then you need to show to that user a much richer and ongoing message - and in most (successful) cases show overlap between your message and that individual’s self-perception.

    So if you can offer an advertiser more places where the SAME audience is splitting their time and attention - so that a given advertiser can show overlap with their target users’ passions - the value to that advertiser is much higher.

    It is also important to think both in terms of current users (and retaining them over time) and of future new users. A site such as MySpace is in part designed to be refreshed with new users as new teenagers/college students get online and grow up. Likely some portion of people who were using mySpace when younger may shift to newer tools/communities over time - but by targeting a youth market mySpace will always have new users entering.

    Offering a richer set of tools - and related - venues for advertisers is attractive.

    If I were advising mySpace/Photobucket I would also encourage them NOT to kill off services to other networks. Photobucket (and likely many related competitors and services) may be early examples of cross-network services which succeed in helping weave together the networks of the future - and of retaining customers for one network, even as those customers may shift some (even most) of their attention to a newer service.

    i.e. if you use Photobucket to store your media - sharing it initially on mySpace - you are unlikely to move it even if your friends and you shift your focus to a new site - IF that site also allows you to keep your content and use it from Photobucket. Thus mySpace could continue to generate revenues even as some users might migrate to other places online.

    Shannon

27. catherine
    

    May 8th, 2007 at 4:56 pm

    Why _wouldn’t_ you go for the site with the most overlap? If someone else bought Photobucket, and offered PBucket users better integration with a different myspacey-type site, MySpace could lose its users.