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AOL Acquires Social Networking Site Bebo for $850 Million

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AOL will be acquiring the social media network Bebo for 850 million dollars. The deal comes in the aftermath of Yahoo’s reported courting for the site.

An excerpt from Mashable

Randy Falco, Chairman and CEO at AOL explains the move:

“What drew us to Bebo was its substantial and fast-growing worldwide user-base, its vision of a truly social web, and the monetization opportunities that leverage Platform-A across our combined global audience. This positions us to offer advertisers even greater reach and marketers significant insights into the desires and needs of consumers.”

This is one of the major deals to go through in the social networking space and follows on the prediction made by several industry analysts that social networking sites by themselves may not be able to generate enough revenue to sustain operations. Bebo was by no measure a struggling site, enjoying a membership of over 40 million with immense popularity among the Europeans (it is number one social network site in Ireland).

There is a lot of speculation on how the deal would perhaps make the chances of a Yahoo AOL partnership unlikely. The acquisition will boost the total network of AOL’s social media services to 80 million.

An excerpt from Associated Press

Ron Grant, AOL’s president and chief operating officer, said the deal should help AOL expand internationally and Bebo grow in the United States. He said the all-cash deal, expected to close in a month, also should give AOL an engaged audience from which it can generate additional advertising revenue.

“This is going to be the cornerstone of our strategy to really go after the social media space,” Grant said in an interview, adding that AOL would be looking to integrate Bebo with its instant-messaging communities, AIM and ICQ.

The move will enable AOL to expand revenues from its advertising services and Bebo, the third most popular social networking site in the US, will be a perfect complement to AOL’s behavior based advertising platform. While MySpace and FaceBook have had their share of trouble in effectively advertising to their vast audience, AOL would look to apply a very effective strategy to benefit here.

With Bebo, AOL is looking forward to international growth. Bebo supports the FaceBook platform and is also part of the Google inspired OpenSocial platform. The whole 80 million social graph that comes to AOL with this acquisition falls short of only MySpace’s scale.

Social networking sites have been a major attraction for internet media companies. But it is to be seen how they design the perfect advertising strategy that is acceptable to their users and gets results at the same time.

Internet Traffic Burgeoning Networks Due to Demand on Media

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Traffic on the internet has exploded with video being the media of chance that is guzzling down the information superhighway. Separate reports indicate that the traffic is set to scale skywards but the question is whether the ISPs can scale to the demand as well.

An excerpt from the discovery.org

“Innovations like YouTube, IPTV, high-definition video and mobile phone cameras are driving this new wave of data—or exaflood—of Internet and IP traffic,” said Bret Swanson, an adjunct fellow at the Discovery Institute and co-author of the report. “Many of the new online opportunities we can’t even imagine today. But these exciting applications and services will only be possible if we make large new investments in broadband fiber-optic and wireless networks.”

An excerpt from PC World

Video will drive a 21 percent compound annual growth rate in business IP traffic across WANs from 2006 to 2011, according to a forecast on global IP traffic released this week by Cisco.

That and consumer traffic, which will surpass business IP traffic in 2008, will cause overall IP traffic to almost double every two years through 2011, the Cisco report finds. Total IP traffic will nearly quintuple in the five-year period from 2006 to 2011, driven by high definition video and high speed broadband penetration, the firm says.

And at the heart of the approach being touted by the ISPs and one that has received a lot of attention is the attempt to “shape” traffic so as to differentiate on the basis of the type of application commanding the traffic. This has raised a furore from the advocates of net neutrality.

ISPs cannot be completely blamed for trying to figure out better pricing models that can bring in more revenues. Alternatives being thought of are either charging the companies that want to deliver content ( such as Google and Yahoo ) or charge customers based on data download.

The technological approach is also being tried here with several firms trying to solve the problem with approach that harnesses the advantages of P2P and caching. Essentially the technology involves channeling traffic between users rather than occupy the main network backbone of the ISPs.

While ISPs have traditionally continued to frown upon Peer to peer traffic, perhaps it may one day provide the panacea to traffic woes.

Google and the Microhoo!

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The blogs were alight last year on a similar news and it is the same this time. Microsoft announced another bid for Yahoo totaling to a staggering $44 billion ( at a premium of 62% to Yahoo’s current share price). In a conference note made public, Microsoft announced its move as:

The combination of Microsoft and Yahoo! will create a more competitive marketplace by establishing a compelling number two competitor for Internet search and online advertising. The alternative scenarios only lead to less competition on the Internet.

Yahoo’s reply to the bid was quite diplomatic:

Yahoo so far has little to say except that its board will carefully examine Microsoft’s bid – a process that “can take quite a bit of time,” according to a message posted on the Sunnyvale-based company’s Web site.

The review “will include evaluating all of the company’s strategic alternatives, including maintaining Yahoo as an independent company,” Yahoo said on its Web site.

Google’s official response to the bid was also quite alarmist:

So Microsoft’s hostile bid for Yahoo! raises troubling questions. This is about more than simply a financial transaction, one company taking over another. It’s about preserving the underlying principles of the Internet: openness and innovation.

So what to make of the things that are going to affect the internet as we know it?

Search and web applications

Google has been a clear leader in the search front with Yahoo a far second and Microsoft a third. Between them they capture close to 98% of the search advertising market. Clubbing together of Microsoft and Yahoo in this space makes for a better competitor. But that in no way poses a threat to Google. In many ways this is the best that Microsoft can do to arrest market share from Google on the search front.

On the portal side, yahoo remains the most visited site on the web and that is the front that MS seeks to capture. Also, it may be the one threat that Google is bothered about – Microsoft locking users into portals, making them an integral part to the whole Windows experience. But will that really get users away from Google ?

And to add to the mix are Yahoo’s email and other portal services.

Innovation on the web

It all comes down to the thrust to innovation that the acquisition will provide. Yahoo has little to offer when it comes to really topping Google. Microsoft has been known for its strategy of pushing its agenda by stifling innovation. Google, for all its stress on innovation has not been really tested with real competition to its services. The legal aspects to this acquisition may be a long drawn battle between MS and Google.

What the user can expect

There are several similar services between Microsoft and Yahoo and the question is whether all will continue. The initial assessment is that they have to since Microsoft can least gain from losing valuable Yahoo users ( or users of its own services). There are whole lot of avenues that emerge for advertisers with combined acquisitions made by Yahoo and Microsoft in the advertising space.

On the whole, this is the perhaps the best weapon that Microsoft wields to arrest Google’s growth. This deal will be about what Microsoft does accomplish in its quest to topple Google.

Google Files Patent to Extract Text from Images

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Image search poses a relevant technological challenge, not being mastered to the extent that text processing has been. A search engine has definite reasons to develop robust image search and image computation software for the Web is burgeoning with pictorial media.

In the light of the above developments, the recent patent filed by Google for interpreting text from images goes a long way in bringing more relevance to indexing media from the Web. Seo By the Sea mentions several of the applications that such a technology can be put too.

A logical extension from the above technology would be to expect the same on the video side. Having a roster of applications such as Google Earth, Blogs etc under their belt means that Google’s innovations have several segments of the web to focus on. Already, one of the most fascinating features with the text from image technology is the means to pin point the location of a place on Google maps from the image !

Not to forget the great advertising value such technology brings to Google. More data images translates into more relevantly targeting ads around images and also a better pitch to get marketers to be more involved with online advertising.

The research also goes to prove that there’s a lot of room for innovation on the purely technological side of the Web. Its all about the content and there’s a lot waiting to happen to make content more accessible and indexable and in the end more retrievable.

The State of Blog Search

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Blog search is an industry in a state of transition at the moment. A few years back, it appeared as though Technorati had successfully positioned itself as the dominant blog search engine among the Internet-savvy crowd.Then a growing number of smaller, sometimes more innovative options began to appear and nip at the heals of Technorati. But now those smaller blog search tools, as well as Technorati, are starting to give way before the simplicity and ubiquitousness of the master of information brokerage – Google.

The latest victim is Feedster, which has had a “We’re Changing” notice up on their frontpage for a number of weeks now with no visible signs of life. Further feeding the rumors that Feedster is a goner is the fact that its accompanying company blog has been removed.For its part, Technorati is still very much alive, but some worry that it is trying to move too far outside its original purpose.

Efforts to become more than just the best blog search and filtering service resulted in Technorati burning through its investment money with little to show for it, losing a CEO and being forced to downsize. Today Technorati still offers a decent search option, but gone are many of the result filters and other features that made it the go-to search service during the early days of blogging. I personally turn to Google (both Google BlogSearch and the main Google index) for blog search for the simple fact that it’s right there; no, check that, it’s everywhere.

Competitors cannot merely be comparable faucets of information. They have to improve on that information stream that Google increasingly controls and delivers with unmatchable speed and convenience. Sometimes I open up a browser tab for Ask.com and their blog search because the results are often less cluttered with irrelevance and spam than are Google’s, though the slight improvement in result quality is not enough to cause me to switch to Ask as my primary blog search engine.

Bloglines, which is owned by Ask, may currently offer the best alternative. Bloglines is first and foremost a personalized online RSS feed reader. Searching for blog results from among the feeds you have personally subscribed to is the best way to eliminate search result spam, and both Bloglines and Google Reader allow you to do this. However, this option precludes discovering new sources of answers to your questions. Understanding this limitation, Bloglines also allows you to search through all of the feeds subscribed to by all of its users.

The results may come from feeds you did not choose, but you know that someone did subscribe to them (you can even see how many people subscribed to each individual feed via the “preview feed” link), so the likelihood of a spam blog being indexed and showing up in the results is extremely minimal. The other benefit of Bloglines is the ability to read your feeds and conduct searches outside your own subscriptions from within the same service.

The downside of using Bloglines for blog search is that its users have indexed a far smaller percentage of the blogosphere than Google.There are several good options out there for blog search, as well as a lot of room for growth and innovative development. As on most fronts, Google appears to be leading the way at present, but future surprises can probably be expected from both Technorati and Ask/Bloglines.