AOL to Pay $850M for Social Network Bebo

AOL stepped up its bid to boost traffic and advertising opportunities worldwide as the struggling Internet company agreed Thursday to pay $850 million for the online hangout Bebo and a foothold in the growing arena of social media.Although Bebo remains in the shadow of MySpace and Facebook, it is strong in some foreign markets, including Britain. According to comScore Inc., its audience outside the United States is engaged, spending more time on average there compared with the leading rivals.AOL executives say they are planning to tap that engagement to drive traffic to AOL's other free, ad-supported Web sites, especially internationally, while leveraging AOL's instant-messaging communities, AIM and ICQ, to try to grow Bebo in the United States."This is going to be the cornerstone of our strategy to really go after the social media space," Ron Grant, AOL's president and chief operating officer, said in an interview.In a conference call with reporters, AOL Chief Executive Randy Falco called the acquisition "game-changing for AOL," a move that will power the company's strategic push into advertising.
AOL has been looking for ways to increase ad revenue to offset steep declines in dial-up Internet subscriptions. After several quarters of strong growth, AOL's advertising expansion has been slowing, putting pressure on the company's parent, Time Warner Inc., to sell the Internet unit.Falco said Time Warner's willingness to spend $850 million in cash indicated its commitment to AOL's future, though eMarketer analyst David Hallerman likened the move to renovating a home before selling it at a higher price.Company officials declined comment on recent reports that Yahoo Inc. has stepped up talks with Time Warner about buying or forming a joint venture with AOL as Yahoo tries to fend off a $40 billion-plus takeover bid from Microsoft Corp.The Bebo acquisition could make a Yahoo-AOL deal less likely by adding one more integration headache to the mix, said Roger Kay, who heads the market research firm Endpoint Technologies Associates.The deal is AOL's largest since it bought MapQuest for $1 billion in 2000 (not counting AOL's $106 billion purchase of Time Warner in 2001).San Francisco-based Bebo Inc. has about 100 employees and plans to launch in five countries this year. New York-based AOL LLC said Bebo will be "featured prominently" in AOL's international expansion.Unlike the $1 billion AOL has spent in recent years buying various advertising companies for their technology or platform, the Bebo deal essentially involves buying eyeballs.It is an acknowledgment that AOL needs outside help in fostering a vibrant community around social media, where visitors are encouraged to strengthen connections through photo-sharing tools, messaging features and personal profile pages.AOL so far has failed to leverage AIM's strong community of buddies into a full-powered social network, despite such an attempt with AIM Pages. Yahoo, Google and Microsoft also have been struggling with their homegrown efforts.Startups have been behind the most active networks online, and the Bebo acquisition serves to underscore their potential as gold mines for ad dollars.Media conglomerate News Corp. bought MySpace for $580 million in 2005, and analysts believe the company could argue the network is worth more than $15 billion today, based on what Microsoft paid for a 1.6 percent stake in Facebook Inc., MySpace's next biggest rival. That stake went for $240 million in October, implying a $15 billion market value for the company as a whole.Both MySpace and Facebook, however, have struggled to capitalize on their large audiences. Facebook drew strong criticism from its users when it unveiled its "Beacon" program for tracking and sharing information about their purchases and their activity on other Web sites.Hallerman, the eMarketer analyst, said that despite Bebo's traffic, AOL won't necessarily find lots of ad opportunities there."It's just the category," he said. "There's a disconnect between traffic and monetization."Bebo President Joanna Shields, who will stay on to run the network, said her site has successfully attracted sponsorships from major brands to run with original programming. With the targeting technologies AOL already has built and acquired, she said, Bebo should be able to extend that success to other formats such as display advertising."A lot of these (social-networking) companies are developing the types of assets AOL has assembled," Shields said in an interview.It's not clear what would happen with Bebo's existing deal with Yahoo to run display advertising. Shields said it was too early to comment because the sale to AOL wasn't expected to close for another month.Time Warner shares fell 16 cents, or 1 percent, to $14.60 in mid-afternoon trading Thursday.Source

An Internet Safety Task Force!!!

With "MySpace" getting frequent mention as the favored destination of pedophiles and sex predators, the site, in association with leading Harvard scholars, has taken the lead in creating an "Internet Safety Technical Task Force", whose mission will be to protect children and teenagers from online predators and pornography.Created by MySpace, the "Internet Safety Technical Task Force" will be headed by Harvard Law School's 'Berkman Center for Internet and Society'. Berkman Executive Director, John Palfrey, said the group will operate independently, while its recommendations will be non-binding on the members. Palfrey is aided by two Berkman scholars in this effort: namely, Danah Boyd, a University of California, Berkeley, graduate student, who is among the lead researchers on social-networking Web sites; and Dena Sacco, a former federal prosecutor in child-exploitation cases. Significantly, the "Internet Safety Technical Task Force" will see participation from the creme-da-la-creme of industry: Microsoft, Google, Yahoo!, Facebook, and MySpace; along with non-profit organizations -- especially those focused on Internet safety.In a statement, Palfrey said that the safety concerns posed by the Internet are part and parcel of the safety concerns that arise in human interactions in the physical world. These concerns are not unique to any one service or technology platform; they are shared by the companies that provide Internet services, and the individuals who use these services. MySpace said in its statement that they hope to identify the technologies and tools that will be made available industry-wide to provide a safer online experience for all Internet users. Among a whole lot of other things, the "Internet Safety Technical Task Force" will explore ways how children can avoid unwanted contact and unwanted content when using MySpace and other popular online hangouts.And while 'age verification procedures' continue to attract expert criticism, they will nevertheless form an important part of the task force's agenda. Time and again, age verification tests have come under fire for being flawed, and for giving guardians and parents a false sense of security as regards the online safety of their children. However, officials continue to use these as some form of benchmark to keep so-called adults and kids separated in the online world. The task force, it appears, is no exception to this norm. All said, MySpace, for all the notoriety it has by now acquired as hot-spot for all kinds of predators and sex pests, has actively been searching for solutions for its problems. The "Internet Safety Technical Task Force" is another such solution; incidentally, the outcome of several meetings the site had with various Attorneys General across the US -- with 50 of them adopting a 'Joint Statement on Key Principles of Social Networking Safety' at the beginning of this year.Commenting on the special task force, Hemanshu Nigam, chief security officer of MySpace, said that the Berkman Center's impressive research on the challenges and opportunities offered by the Internet makes them the ideal leader for this task force.Meanwhile, the task force plans to offer quarterly reports on its findings, and present a final version next year.Source