In M&A, almost anything goes – MySpace & Photobucket

A few weeks back there was a little news rumpus over the fact that MySpace had disabled Photobucket photos from appearing on MySpace pages. There was much discussion on blogs about why this had happened and how MySpace was throwing its weight around but how Photobucket was one of the most popular embedded items on MySpace pages and thus MySpace should be ready for some pushback.

Well, it turns out that this show of “force” was simply part of a negotiation tactic by MySpace who yesterday acquired Photobucket in a competitive bidding situation.

As Techcrunch observes “Some would argue that they play dirty poker, but shutting Photobucket down at a crucial point in the acquisition negotiations was a brilliant move, and may have shaved hundreds of millions of dollars off of the purchase price.” Not to mention, it will have scared off some potential buyers in the race, worried about the impact on revenues and traffic this could have if implemented permanently.

Techcrunch contends that this was much better deal that YouTube was at a price of $250m on projected revenues of $25m. Or “To look at this another way, YouTube was paid about $67 per unique visitor. Photobucket got just $13.

It’s ironic that another photo sharing site, Zooomr, had been struggling to find funding. I bet they find it easier now, although there is always a huge premium for being number one in a market and one of the potential future buyers will probably now be out of the running, unless of course they bought Zooomr for its technology and founder. Likewise, Flickr will probably be kicking itself for having sold for $25m.


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