MySpace is close to acquiring popular social music service iLike, we’ve confirmed with multiple sources. The deal, which should close this week, will be MySpace’s first acquisition since new CEO Owen Van Natta took control of the company in April 2009. The price is “around $20 million.”
iLike, which launched in late 2006, is a social music recommendation service that now has more than 50 million registered users. It tracks what you listen to and like and gives you recommendations on new music based on that data as well as what your friends are listening to. It is the top music application on Facebook, Bebo, Hi5 and just about every other social network other than MySpace, which has MySpace Music.
iLike also hosts band pages which are second in popularity only to MySpace Music. By acquiring iLike, MySpace solidifies their already leading position as the most popular online identity for bands. Last week iLike also launched their own music download store.
Details are still flying in, but at first blush the deal is particularly interesting for two reasons.
First, simply because iLike is so deeply integrated into the Facebook experience. Nearly 10 million Facebook users use the iLike application every month. And iLike has also been a key part of Facebook’s ongoing struggles with what-to-do-about-music. MySpace is now going to own this.
Second, it’s MySpace, not the MySpace Music joint venture with the music labels, that is acquiring iLike. We’ll have more to say on this shortly. We’re hearing that a key driver of the deal is the iLike team, particularly founders Ali Partovi, Hadi Partovi and Nat Brown, and the underlying technology.
Competitor Last.fm was acquired by CBS in 2007 for $280 million. June 2009 Comscore stats show Last.fm with 12.9 million monthly unique visitors. iLike had just 3 million monthly unique visitors, but that doesn’t take into account the massive usage of the service on social networks.
The company has raised a total of $16.5 million from the founders, Scott Banister, Bob Pittman, Vinod Khosla and Ticketmaster to date. But their last round of funding was in 2006, where Ticketmaster put the bulk of the capital in via a third round of financing that valued the company at a whopping $53.2 million.
In Q4 2008 Ticketmaster wrote down a number of their venture investments, including a $5.8 million charge for iLike. Internally, they valued that $13.3 million investment at just $7.5 million. Last month we reported that iLike was considering a new round of financing that would cash TicketMaster out of the company.
Neither MySpace nor iLike would comment on this story.
Update: More thoughts on the deal here.
I bet the iLike people are dancing a little jig right now.
Tony Hsieh (Zappos)
John Katzman (Loopt)
Hadi Partovi (iLike)
Unless you are Harvard Class of 95, you will not get acquired.
nothing to dance to when they got $16.5m in funding and are selling for $20m
its an imitable product.
There’s a couple of factors that may make $20 million an livable number.
a) at $20 million Ticketmaster probably gets exactly 100% of it’s original investment returned b) in order for Ticketmaster to get more than that, the company would probably have to sell for $52.1 million or more
c) the high pricing on the Series B along with the age of the company (more of the option pool granted and vested), would mean even greater dilution to Ticketmaster (with an option repricing)
d) Founder(s) that put cash in the Series A basically gets their money back and also gets to see their company continue [not the worst thing that could happen in this environment]
e) There’s no traditional VCs in the deal, per se, so no need wtihold consent on the basis of satisfying a cash-on-cash multiple/objective.
Just some thoughts.
Hmm… if they received $16.5m in funding and are selling for $20m, it looks like a firesale.
You sure thats right mike ? It’s not $200 million is it ? $20 mil for this service after raising $16.5 ? The investors would be spewing with that return given 50 million registered users plus probably at least 5x that traffic on social networks ?
I agree with Tom. 20 million- although a big number- seems really low considering the 16.5 million in funding.
Probably cause their losing money hand over fist.
remember when myspace turned off project-playlist? whats to stop fadbook from doing the same thing to iLike?
Because comparatively Project Playlist wasn’t as ingrained in MySpace as iLike is in Facebook. This is a great deal for MySpace if it is true.
$20m for 50 million users and $16.5m of funding? Seems rather low to me, compared to most of the other acquisitions that are posted here.
Not getting this deal at all. Why would they announce the store last week and all of a sudden announce this week that they are selling for under their previous valuation? Perhaps there were multiple bidders in place and they were just trying to jack up the price.
This seems like an attempt to sneak into Facebook…
iLike the news !!!
MySpace is ready to back in mainstream again, one after one good news about MySpace will make it promising again. ILikes app on Facebook is rocking.
HELLAAAAAAAAAA weird!!!
Sure you got it right?
Keep an eye on this new multi-media search engine launching soon.Heard about it and it looks promising.
It will be connected to all mobile networks worldwide(source of revenue) and partnering up with the biggest brands known to mankind,interms of revenue this will be the biggest on the net.Can’t wait to see how this turns out.See demo site below:
http://www.yaffflezone.com
wow the new locator guy – stop with the spam ffs
Spam Fail
What the HELL?
$20 million?
LMAO!
$20 million for 50 million+ users… Such a joke.
I doubt I’d be selling for that price – And I’m a 16 year old whose life goal is to become exceedingly rich.
Even worse, their visitor numbers are still growing at a good rate.
I agree – very low. Break-even. This is an obvious move by MySpace to cripple any chance of FB taking the music industry. Or (cough cough) make up for their MySpace music fluke which sucks.
I have a theory that out of pride – zuck will make a counter move sometime soon.
you’re an idiot. read the article again.
“iLike also hosts band pages which are *second in popularity only to MySpace Music*. By acquiring iLike, MySpace solidifies their *already leading position* as the most popular online identity for bands.”
myspace music is significantly larger and more profitable than iLike. how in the hell is this “making up for myspace music”?
i have a theory… you’re a 15 yr old jackass talking out of your rear end. go back to gym class and stay off the intarwebz
keep dreaming, kid. Unlike previous generations where the new has a higher standard of living than the former, we’re going to see each generation have to work progressive harder than the last to achieve the same standard of living.
first thing you should learn is why this is a good deal. Myspace needs to turn around the loser perception starting by focusing on the strength it has left. Sticking their thumb into FB’s eye and give ole Zuck a heartburn is a bonus.
@lex
I think the kid said exceedingly rich, not work for someone else and become exceedingly rich. while what you say is true about each generation to a certain degree (we also, by the way, have more stuff too), your conclusion is more based on a person working for someone else, not being an entrepreneur.
so entrepreneurs don’t have to work?
Is it 200 Millions or 20 Millions. For 16.5M Investment, selling at 20M would not be very profitable.
I can’t believe wouldnt have thrown down a lot more than 20m for them. Odd…
I am also very disappointed at the valuation of the company.
Firesale!!!
$20m for a popular service???
In that case I worth around $100m.
scratching my head at the valuation. unless there is a giant carveout for the founders, there is no way they would agree to this. and, why would the VCs settle for their money back? with 50m users I’m sure they’d rather roll the dice. are you sure there isn’t a 0 missing?
The price sounds way too cheap and I doubt that this is true.
But, if this is true… It’s a great sign. Myspace is finally opening up to the idea of making money outside their own walled garden, which is the only thing that I think will save them.
It was companies like iLike that created MySpace’s downfall by helping move people to Facebook, it’s fitting that MySpace should have to buy them to dig themselves out of the hole they are in.
Now… If they buy Zynga, Slide and Rockyou, MySpace can be the biggest social player once again.
But that’s just the cost of “doing it wrong” the first time.
Good luck buying Zynga, given the amount of cash they’re making every month.
Totally agree, Don. Though I think MySpace is dead and cannot be saved.
Probably right on that one.
Remember when the news on TC was that MySpace was “blocking” widgets, not “buying” them?
very exiciting to see life at myspac ventures.
they should think bigger and look for a start up that could “social rolodex” the internet. they need strategic niche multichannel social offerings to expand their user base.
Seriously? Did you leave out a zero?
This has to be 200 million…..
Why would ilike founders and investors sell at this price?
That can’t be right, iLike reaches over 30 million people and 6 million on the actual ilike.com domain according to Quantcast Directly Measured stats:
http://www.quan...t.com/ilike.com
I always thought facebook would aquire them due to their massive popularity on facebook.
$20 million dollars can buy you 50+ million registered users these days ‘eh.
The price is right, the users is what you have wrong! To believe that they have 50M “active” users would be insane. There dumping it to move on. Not good for all who invested.
Agreed – definitely a firesale. If they were valued at $53.2 M for their last round then this was the trade-off from doing a major down round.
i think i’m with tom. once facebook moved app developers to the app ghetto, it pretty much killed anyone’s ability to get traction inside the app. letting your business rely so much on one third party entity is suicide.
Good news!
If the valuation is low, its because the reality of the non-business-model business is coming home to roost. The purpose of a business is to make money, not grow big.
Sounds like owen is falling back into the craptastic myspace groove again. Saddens me that he’s not innovating. Myspace is sinking fast fast fast.
I wish someone else could buy iLike. May be facebook or someone else. MySpace is too cluttered and a crappy network. Is there someone simple, can buy this. And that too this price seems to be dirt cheap. It is bad that iLike did not atleast respects its number of users. They let the users down. Increase the price iLike.
im calling bs on either 1.) this whole article or 2.) the price.
I could see a joint venture/partial ownership with $20 mill changing hands, but no way iLike is going for $20 mill.
we’ll see.
I suspect that we’ll hear more accurate sale numbers as they close. 20M does sound low.
I think mySpace should be applauded for embracing the niche that has been defined for them. So many times we see companies trying to diversify to the point of becoming anything to anyone (FB? Google?), it’s refreshing to see that mySpace seems to acknowledge that the 15 minutes is over, and it’s time to champion the base.
At $20m, this is a failure. MySpace seems an unlikely buyer of what is essentially Facebook Music.
companies myspace has acquired in the past did not work out well. Hopefully this time it’s different.
Mike,
EveryBlock was acquired today by MSNBC. Can you dig up a story for us?
http://blog.eve...17/acquisition/
Price aside… I think for MySpace, this is great, and it’s exactly where I think they need to focus right now: music. MySpace can stay relevant if they focus there.
This is a great deal for MySpace because iLike understands how to make integrated product that caters directly to fan’s personal taste. Plus it get’s MySpace deeply integrated into Facebook. Facebook should have purchased them a long time ago but they went back and forth on a decision to get into the music space.
I certainly understand why Facebook ultimately decided to stay away from the music industry. The deals are oppressive and truth be told, the labels need Facebook more than Facebook needs them. So until the labels create sustainable deals, what’s the point.
In regards to iLike, how were they currently making money? Certainly not on their download store. I worked at an online music company with a download store and if you are not iTunes, you are not making serious money from music.
Being valued at $53m in 2006 doesn’t mean anything anymore. It’s all about profitability and I can’t imagine that even with the download store, iLike is close to that goal. At the end of the day, no one is going to make huge dollars from this deal but at least Ali and crew can say that they were able to sell their company in tough economic times. I certainly commend them on that accomplishment.
sometimes an acquisition is not so much about money as it is about taking out a competitor. MySpace seemed to have bought photobucket for a similar reason.
I always felt that the Photobucket acquisition was a shady move on Fox Interactive Media’s part. MySpace did filter all photobucket links shortly before the acquisition (with the excuse that Photobucket was advertising.) It’s business, but it was still shady.
You are really onto something, though, about this being a compesition. Michael even points out:
“iLike also hosts band pages which are second in popularity only to MySpace Music.”
So, who’s on third?
This is a weird acquisition since it really just looks like they are buying the user base. The application does very little that is interesting and that last.fm doesn’t do better.
I believe $20M valuation for iLike is still too much. What I don’t understand is how Myspace and Facebook are going to work together with iLike being integrated with Facebook. From Myspace’s perspective their only bet for revival is the Music industry, and they want to give it their best shot.
If you think $20m is too much, you are an idiot.
20 millions is actually too much. All they can come up with was the music challenge game.
I believe that Ilike made that game in a weekend.
The huge user base is actually mostly driven by facebook. When FB introduced its fB API, if you write your own facebook app, you would get 20 million users instantly. This was how Ilike boosted its customer base from 1 million to 8 million at the time. i think the mafia game is more popular, shouldn’t the mafia game company also claims 50 million user base?
Honestly Ilike doesn’t have any unique features that MySpace can benefit from besides it wanted to cut loose FB. But online music is a very crowded space; there are a lot of competitors out there. Ilike had a good deal. If the recession continues, ILike may go broke and sell for 1$ in BK court.
this seems like a very distressed sale at a price where no one makes money so I’d be careful not to heap too much praise on Tony Hsieh (Zappos) this time. He doesn’t need any more praise anyhow.
I think this could be a good deal for both.
not financially for investors if the data reported is accurate.
iLike is selling at a loss. Are you sure it’s not $200 Million?
Likeville.com
it seems that iLike couldnt settle on a good monetization model despite their strong usage numbers, and the mgmt team finally got tired of it. why else would they sell at a significantly lesser valuation than their last round of funding?
This seems like an awesome deal for myspace, looks like the new team in place there is serious about turning things around.
It would be smart for MySpace to acquire iLike. Anything that puts MySpace’s focus on music is good for the company, it is the only place where Facebook isn’t innovating.
Great deal for MySpace… Bad deal for iLike… Raw deal for Facebook…
Believable? I don’t think so.
However… Leaving a major part of the social spectrum such as music to third parties is asking for them to be bought out and destroyed by your competitor.
Anyone play monopoly?
OMG this seems like a desperate move by Myspace to keep up with the new trends in social media. Myspace is dead and everyone knows it lol. Keep those layoffs coming guys.
MySpace going with second best again. This investment will go nowhere.
The problem with iLike on Facebook is that you have to select individual songs you ‘iLike’. Compare this to Last.fm (which has an application on Facebook) that is automatically ’scrobbled’ from my player.
just amazes me how many crackheads around here thinks online music company are worth 9 or 10 digits. iLike is lucky to get what they got.
quoted from businessinsider today:
–
iLike will only get $13.5 million in cash from its sale to MySpace, of which $8 million will likely go to one of its backers, Ticketmaster, AllThingsD’s Kara Swisher reports. Another $6 million is earmarked as a 2.5 year earnout for key employees, including the company’s twin brother cofounders, Ali and Hadi Partovi, she says.
I am sure they are talking – MySpace can be the music service provider and FB can be the social network. Smart deal. They could have never have gotten together though, without new challenger Twitter to turn their sights on.
if the MySpace/iLike deal is formalized i wonder how Facebook would treat the app on its site?