Valleywag
When customers aren't customers
Myspace's acquisition of Photobucket, reported here this morning, may make strategic sense, because so many users use both the social network to publish blogs and keep up with friends, and the photo sharing service to store and display pictures. But one thing the deal is not, despite the burblings of over-enthusiastic analysts, is cheap. Forrester Research's James McQuivey tells CNET that Myspace is "sure to get its money back." Photobucket, with only $6m in revenues in 2006 and high bandwidth costs from serving so many photos, is barely profitable at best. And the new customers, for each of which the News Corporation unit paid only $35, according to McQuivey, aren't customers; they're users, expensive users, most of whom currently cost Photobucket money.
4:23 PM on Mon May 7 2007
By Nick Denton
3,098 views
