Smart negotiations OR headaches with widget economics...

Not really mobile but rather noteworthy and juicy, so here goes: According to TechCrunch, MySpace pockets Photobucket, the web's #1 photo site (ahead of Flickr) for some $250m + earn-outs. Photobucket has 40m users, much more than YouTube had when they were acquired by Google. Therefore, TechCrunch contends that MySpace made a killing. So far interesting but not really out of the ordinary. Now, here comes then:

There have been consistent rumours that MySpace briefly flexed its muscles when in later stages of negotiations with Photobucket. In short: it shut the Photobucket links on its sites down (see here). All this was about, well, $$$: MySpace would not benefit from ads that are embedded on Photobucket's widgets. This constitutes a violation of MySpace's terms (rather understandable). So: Shutdown! ... A brief reminder on just how much Photobucket depended on MySpace's platform in order to sustain its user based and value. The site generated lots of traffic for Photobucket-hosted content: according to the Photobucket co-founder and CEO, Alex Welch, quoted in the above posting, 50%+ of all MySpace pages contain Photobucket content... They were between a rock and a hard place as the position of widget makers and their "hosts" is uneasy at best (see the interesting post of Andrew Chen here).

In any case, at that price, it was certainly a deal that looks much healthier than YouTube did ($13 vs. $67 per user) - the numbers again are as per TechCrunch - and I would applaud MySpace on some nifty piece of negotiating! Given the whole interdependancy in the widget world, it was probably a proper win-win, too. Halleluja!


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