Social-networking site locks up photo-sharing site’s 40 million users.
Social-networking behemoth MySpace has agreed to acquire photo-sharing giant Photobucket for as much as $300 million, according to a source familiar with the deal.
Final details were still being ironed out, but MySpace has agreed to pay $250 million for Photobucket, plus as much as $50 million more if certain performance targets are met, the source said.
The deal represents a tidy return for the four-year-old startup’s most recent investors. Trinity Ventures led a $10.5 million second round in May 2006. Should MySpace wind up paying $300 million, Trinity and other second round investors were expected to see a return of about three to four times their investment.
“In less than a year—that is pretty good,” said the source familiar with the deal.
Photobucket was seen as a significant score for MySpace because the photo site is compelling as both a widget on the social-networking site and a website destination with loads of traffic.
The photo site boasts 40 million users, according to the company’s web site. That has given Photobucket about 40 percent of the U.S. photo-sharing website traffic based on number of visits, according to analytics firm Hitwise. Yahoo Photos was a very distant second, with less than 6 percent of the market, while Slide and Flickr each had less 5 percent.
The acquisition was also somewhat of a defensive move for MySpace. Snapping up the photo site will enable it to stem the flood of users leaving MySpace to visit Photobucket. Almost 59 percent of Photobucket’s traffic came from MySpace’s community of users, according to Hitwise.
The deal could leave photo-sharing startup rivals RockYou and Slide out in the cold if MySpace decides to offer better support for Photobucket at the expense of other photo-sharing sites.