AOL buys British with Bebo (and pursuing trivia)

Greetings, friend. Here's IT Blogwatch: in which AOL moves to acquire a big social networking site. Not to mention what is, for many geeks, the worst part of trivial pursuit...

Maybe it's because Jeremy Kirk's a Londoner:

AOL will buy Bebo, a social networking site popular in the U.K., for $850 million in cash, the companies said today. AOL, which is owned by Time Warner, said it sees opportunities to make money from advertising on Bebo, which has about 40 million unique users worldwide. AOL is the latest of the major online players to grab a piece of the social networking pie. Microsoft is working with Facebook to deliver advertisements, and media giant News Corp. owns MySpace, the most widely used social networking site. The acquisition comes as AOL moves to revamp its business model in the hopes of becoming less of an ISP and more of a media and content company ... In the U.S., Bebo ranks third behind MySpace and Facebook, but it is first in New Zealand and Ireland and is widely used in the U.K. more

Saul Hansell calls it, AOL's "$850 Million Rescue Plan for AIM":

The deal keys on instant messaging, which is closely related to social networking as a method of communication among young (and not so young) people. As AOL has searched for a growth strategy over the last decade, one of the biggest puzzles has been what to do about the AIM system, which allows anyone on any computer to send instant messages, whether they were paying AOL customers or not. Even as AOL’s access service declined, AIM remained the preeminent IM system in the United States, fending off competition from Microsoft, Yahoo, and later, Google. more

Alex Ion adds a valence electron: [You're fired -Ed.]

A few weeks ago everyone speculated on AOL partnering with Yahoo, so I guess heading to Bebo, they’re probably not interested. Still, I don’t think negotiations are closed if we count Yahoo’s interest for social media networks and Microsoft’s interest for Yahoo. I’m really interested to see how’s Google going to move on the chess board, because things are starting to complicate day after day. more

Bena Roberts saw it coming, she says:

I have been speaking to bebo regularly and it was clear that a sale was in the pipeline since February. But on the mobile side, bebo are fully behind the m.bebo.com offer. I initially thought that perhaps AOL would kill bebo on the mobile side and would integrate it into the AIM and message style of social network. That is also an idea – but over the past few months AOL has been following a European mobile strategy. AOL has an MVNO in Germany and this would be a great place for the vendor to start offering complete bebo youth services to the youth market. Moreover, AOL is also working on its own search for mobile and has started indexing content. By owning bebo and indexing bebo for user generated mobile content – there might be a possibility for “real” mobile youth voice, data and online services. more

But Mike Masnick thinks AOL is four years late:

As social networks like Friendster and then MySpace first came to prominence in the 2003/2004 time frame, we wondered why the big players (AOL/Yahoo/Microsoft) in the instant messaging space didn't recognize that those instant messaging networks were better social networks than the networks. Whereas most social networks had little to do once you connected, most people used instant messaging to communicate all the time. Those instant messaging systems already knew who all your "friends" were, and it shouldn't be that hard to then take that information and convert it into a more standard social network, with instant messaging features built right in. Yet, nothing really happened ... Now, it appears that AOL has finally woken up and realized this possibility. more

Om Malik gets answers from AOL COO Ron Grant:

Three things attracted us — it is utilitarian and has a high level of engagement, its rich media aspect, and their ability to understand marketing and engagement marketing ... Bebo is going to be a cornerstone of our global expansion ... We have been getting tremendous support from Time Warner to build long-term value for this company ... [but] Bebo is open, and we can work with everyone ... I can’t really speculate on additional acquisitions, but we will be aggressive. more

Live from St. Albans, it's Roger Kondrat:

What I find surprising is how little AOL managed to pay for Bebo because if one just considers ’scale’ and this will double the size of AOLs audience then AOLs ad-network should see a dramatic improvement. By the way this doesn’t even remotely consider the fact that Bebo’s users are the most active of all Social Media networks ... in the US the purchase of Bebo will mean AOL will infact have the largest active user-base which means the largest Ad-network. Looking at the world and Europe where Bebo had an early strong presence in the UK but now is the only one of the Big 3 to have a clear strategy for the rest of Europe, my impression from this is that there is a good chance Bebo will grow dramatically outside the US/UK markets and possibly with AOL in the US/UK zones too. more

And finally...

Buffer overflow:

Other Computerworld bloggers:

Richi Jennings is an independent analyst/adviser/consultant, specializing in blogging, email, and spam. A 20 year, cross-functional IT veteran, he is also an analyst at Ferris Research. You too can pretend to be Richi's friend on Facebook, or just use boring old email: blogwatch@richi.co.uk.

Previously in IT Blogwatch:

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