The media industry has now lost US$1.5 billion on investments in the social networking craze after AOL sold Bebo last week for a fraction of the price it paid for the business two years ago.
The soured investments in Bebo, MySpace and Friends Reunited underline the hazardous nature of gambling big money on Internet businesses. Ever-developing applications and a lack of customer loyalty mean social networking sites can become huge virtually overnight and then crash almost as quickly.
AOL paid US$850 million for Bebo, but after a collapse in profits and the failure to gain traction in the US, it was sold at a “fire sale” price rumored to be below US$10 million. But AOL has not been the only big media concern to get its fingers burned.
In 2005, as Rupert Murdoch began to embrace digital media, News Corp spent US$580 million on MySpace. Last year, the media group took a US$450 million impairment charge against the business. Also in 2005, the British TV company ITV paid £175 million for Friends Reunited, only to watch users abandon it as free-to-use alternatives began to appear. It sold the business for just £25 million (US$37 million) last year to DC Thomson, making a loss of £150 million.
Each site has been overshadowed by the rise of Facebook, launched in 2004. According to reports on Friday, its revenue more than doubled last year to US$800 million. It has almost half a billion users and is attracting big-name advertisers including Ford and British Airways.
“The conclusion is that barriers of entry are very low and so if someone comes along with a better idea, it is very hard to protect against that,” Enders Analysis analyst Ian Maude said. “Facebook looks like it has some momentum still; it is still growing. It is also much more appealing to a wider audience. But someone could come along with a better idea tomorrow.”
MySpace has cut hundreds of jobs and last year replaced co-founder Chris DeWolfe. His successor, Owen van Natta, lasted less than a year. But Murdoch was wily enough to sign a three-year deal with Google to sell advertising on the site that guaranteed US$900 million in revenue, if targets were met.
Maude says the two most successful businesses, Google and Facebook, have stayed independent.
“Research shows mergers and acquisitions don’t work,” he said. “If you get sucked into a corporate bureaucracy and are forced to fit in with another company’s goals and culture, it almost certainly leads to a dilution of the business.”
NO-LIMITS PARTNERSHIP: ‘The bottom line’ is that if the US were to have a conflict with China or Russia it would likely open up a second front with the other, a US senator said Beijing and Moscow could cooperate in a conflict over Taiwan, the top US intelligence chief told the US Senate this week. “We see China and Russia, for the first time, exercising together in relation to Taiwan and recognizing that this is a place where China definitely wants Russia to be working with them, and we see no reason why they wouldn’t,” US Director of National Intelligence Avril Haines told a US Senate Committee on Armed Services hearing on Thursday. US Senator Mike Rounds asked Haines about such a potential scenario. He also asked US Defense Intelligence Agency Director Lieutenant General Jeffrey Kruse
INSPIRING: Taiwan has been a model in the Asia-Pacific region with its democratic transition, free and fair elections and open society, the vice president-elect said Taiwan can play a leadership role in the Asia-Pacific region, vice president-elect Hsiao Bi-khim (蕭美琴) told a forum in Taipei yesterday, highlighting the nation’s resilience in the face of geopolitical challenges. “Not only can Taiwan help, but Taiwan can lead ... not only can Taiwan play a leadership role, but Taiwan’s leadership is important to the world,” Hsiao told the annual forum hosted by the Center for Asia-Pacific Resilience and Innovation think tank. Hsiao thanked Taiwan’s international friends for their long-term support, citing the example of US President Joe Biden last month signing into law a bill to provide aid to Taiwan,
China’s intrusive and territorial claims in the Indo-Pacific region are “illegal, coercive, aggressive and deceptive,” new US Indo-Pacific Commander Admiral Samuel Paparo said on Friday, adding that he would continue working with allies and partners to keep the area free and open. Paparo made the remarks at a change-of-command ceremony at Joint Base Pearl Harbor-Hickam in Hawaii, where he took over the command from Admiral John Aquilino. “Our world faces a complex problem set in the troubling actions of the People’s Republic of China [PRC] and its rapid buildup of forces. We must be ready to answer the PRC’s increasingly intrusive and
STATE OF THE NATION: The legislature should invite the president to deliver an address every year, the TPP said, adding that Lai should also have to answer legislators’ questions The Chinese Nationalist Party (KMT) yesterday proposed inviting president-elect William Lai (賴清德) to make a historic first state of the nation address at the legislature following his inauguration on May 20. Lai is expected to face many domestic and international challenges, and should clarify his intended policies with the public’s representatives, KMT caucus secretary-general Hung Meng-kai (洪孟楷) said when making the proposal at a meeting of the legislature’s Procedure Committee. The committee voted to add the item to the agenda for Friday, along with another similar proposal put forward by the Taiwan People’s Party (TPP). The invitation is in line with Article 15-2