Myspace Buying Photobucket

After the little spat they had last month, MySpace began blocking videos embedded on MySpace pages that originate from Photobucket, it looks like they have more than made up. Myspace is planning on buying Photobucket for $250 million, with the possibility of another $50 million on an earn out. Looks like Myspace will have no problem with their videos from now on.

Apparently an overzealous Photobucket employee is the source of this rumor, but we?ve confirmed it with more senior people: MySpace is acquiring Photobucket for $250 million in cash. We?re hearing that there is also an earn-out for up to an additional $50 million.

Photobucket has been looking for a buyer since March, when they hired Lehman Brothers to help sell the company. They were looking for $300 million or more, but may have had few bidders other than MySpace. Source: Confirmed: MySpace To Acquire Photobucket For $250 Million

Marshall Kirkpatrick says they are shooting themselves in the foot by closing their system off to outsiders, which is what they are doing still, they just bought a company to make it easier on themselves I am sure. This could be a new strategy for starting an online business…

The primary takeaway is that the recent peace found between MySpace and Photobucket was obviously not a sign that MySpace is any more open than before to third party services thriving in their ecosystem. They just bought the biggest one, bringing it in house. You have to wonder whether Photobucket’s valuation was hosed minus MySpace anyway, I suppose. They were presumably bought for both their huge user base and their innovative technology (see this TC story, for example.)

If MySpace allowed other companies to monetize their monstrous traffic, perhaps just taking a cut, then the whole market would see far more innovation than it does today or is likely to given the people and adspace hording by MySpace. Source: Thoughts on MySpace Acquisition of Photobucket

Never dull in Internet land.