BEBOAOL–Brilliant Stroke or Going for Broke
Published by David Evans on March 24th, 2008
Filed Under:
Digital Media, Ad-Supported, software platforms, Social Networks
Troubled online giant AOL just swallowed also-ran social networking site Bebo for close to $900 million. Given the volatility of the online ecosystem these days you have to give AOL credit for placing such as huge bet on a social networking site that mainly the Brits seem to love, and to Bebo for taking the money rather than sitting around hoping for Facebook valuations. Here’s my point on volatility.
Google has lost around $80 billion in valuation in the last few months—about 40% of its value since just late last year. Yahoo has plummeted too. Meanwhile, Facebook’s early efforts to make money off of advertising—the only source it really has to monetize its network—have created more heat, it seems, than dollars.
AOL’s move may be smart because maybe picking the winners and losers in Web 2.0 is a bit like figuring out who’s going to win the presidency this year. For the last several months the story has been that yesterday’s sure-thing is today’s also-ran. Facebook looks like it is going to trounce MySpace but it wasn’t that long ago that MySpace was the new media darling. Maybe integrating Bebo into AOL Instant Messanger will help Bebo go viral and catch some fire, and maybe integrating Bebo into the otherwise staid AOL will give it some pizzaz in the new social community age.
I wish I could say for sure. The one thing I am sure about is that there is a limit to the number of broad scale social networking schemes that will get traction and survive. It is just too time consuming to maintain multiple social networks. There is perhaps some future to having niche social communities that bring together like minded people to exchange specific information (for one example, visit Living Conversations, a social network for breast cancer survivors organized by MPD President, Karen Webster). But just as we have observed in the search space around the world, size does matter and that world has shrunk from 6 or 8 to 2 or 3. Maybe BEBOAOL will be one of the 3 of a nifty niche player.
What do you think? AOL and Bebo – brilliant stroke or going for broke?
In the business world, AOL is both an irrelevance and old-fashioned; to the point where if I get an email from an AOL account, I think ‘dinosaur’! For the young and trendy (at least in the UK) AOL is also a million miles from cool. Therefore, without any clear synergistic benefits or business rationale for the combine, the only explanation is DESPERATION on the half of AOL. And the fact that Times Warner has allowed AOL to spend $0.9bn on the acquisition shows how worried they are that AOL no longer has any value.