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Web 2.0 peak? MySpace sells for $580 million


myspace.gifMySpace, of Los Angeles, has long been considered the hottest of the new generation of social networking companies. The New York Times reports:

The News Corporation, making one of its largest bets on the Internet, announced today that it is paying $580 million in cash to acquire Intermix Media Inc., a Los Angeles-based company whose chief asset is MySpace.com, a Web site that is enjoying surging popularity with young audiences.

Could this represent the peak of the current Web 2.0 wave?

Update: Well, the answer to our question seems to be a resounding "no," judging from comments. There are a few saying things look pretty heated, but as Jeremey Zawodny suggests in comment below, this may not be a problem with Web 2.0 per se.

Also, here are the winning Silicon Valley investors in the deal, as outlined by VentureWire (sub required):

Both VantagePoint and Redpoint invested about the same in Intermix, but VantagePoint came in about a year before Redpoint so its stake is worth far more. VantagePoint invested about $10 million in the fall of 2003 and owned 22.4% of the company, meaning the firm will receive about $130 million in the deal with News Corp. Redpoint purchased Intermix's shares for about $10.5 million with investments in December and February, giving it a stake of less than 5%, according to partner Geoff Yang. That would give Redpoint less than $29 million.

Redpoint also has a 25% stake in fast-growing MySpace after a $4 million investment placed only about seven months ago. Intermix owns 53% of MySpace but as part of the News Corp. deal agreed to acquire the remaining 47% for $69 million, said David Krawitz, a PR rep for Intermix. So Redpoint will get a little more than $17 million while founders, management and employees - which own the other 22% in MySpace - will take in nearly $52 million (see correction below)

CORRECTION: VentureWire has since corrected its math: Redpoint will likely get somewhere around $36 million on the sale of its 25% stake in MySpace, while founders, management and employees - which own the other 22% in MySpace - will take nearly $32 million.

Update: See Techdirt on Intermix's adware offerings.

Update: More juicy details on how VantagePoint and Redpoint profited, especially how VantagePoint apparently caught Sony asleep at the wheel: Bill Burnham's post.


Think about when Yahoo! bought Geocities back in 1998.

Was that the peak of the Web 1.0 wave?

Or was it the start of something more spectacular?

Adam Rifkin on July 18, 2005 3:06 PM
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Joyce is right:


What's this have to do with Web 2.0, anyway? It looks like acquiring a big user base to me.

Jeremy Zawodny on July 18, 2005 4:38 PM
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okay, so we're clearly in the midst of an audience acquisition boomlet. One interested aspect going forward will be to observe the integration/ongoing success with properties that:

A) *could* have been created by mass media (Choice Media, the shopping comparison engines)


B) those that gained popularity at least partially because they weren't owner by mass media (Neopets?, MySpace)

hunter on July 18, 2005 6:11 PM
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Neopets.com is a perfect example of an excellent site concept going to the dogs after it was "mainstreamed". My daughter is angry because the firewall blocks her from being able to play the site now, due to its heavy use of spyware. In 2002, one of the site founders had made a big deal about the fact that they were able to support their business model using marketing on less than 1 percent of page views. Now, every page view is saturated, and most sections attempt to download fresh spyware (the standard package, AdClick, ValueClick, DoubleClick).

Regarding MySpace, however, not being a user, I won't be personally affected, and I am seriously impressed that what was basically a garage start up has achieved its exit strategy quite nicely, especially considering that it really is just Geocities version 2. 9 figures is a healthy way to say goodbye to your pet web project.

DubiousChrisJ on July 20, 2005 1:12 PM
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Joyce is technically correct that 'Web 2.0' was originally used to refer to businesses with accessible web service / API offerings (popularized at Battelle's Web 2.0 conference last year & also at various other O'Reilly events in the past 2 years), however i also think it's become public parlance to refer to the latest wave of Internet companies as 'Web 2.0' startups, regardless of technical underpinnings and open/closed APIs.

one can quibble over the verbal short-hand, but i think these days the more granular definition has become blurred. in another 6-12 months, most people who think about 'web 2.0' won't know the original technical distinction, just the temporal one.

Dave McClure on July 21, 2005 4:05 AM
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Im a big MySpace fan and I hope that they don't mess it up. Hey Tom, whatcha gonna do with all the money? LOL

Pure Hoodia on July 21, 2005 3:02 PM
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its a shame too, because tom is the biggest fag on there!

peter on July 24, 2005 6:16 PM
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I dont want to read this bullshit anymore

Semen Prostyakov on July 27, 2005 5:22 PM
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