AOL has confirmed in an SEC filing this morning that it has sold its ailing social site Bebo to digital media investors Criterion Capital Partners. Although the value of the deal was not disclosed, reports have the price tag at a mere $10 million although AOL had forked out a hefty $850 million to acquire the company in March 2008.
A Case Of Dumping
In case you wonder, yes, literally, selling below cost is called "dumping". And that is exactly what apparently took place. The Wall Street Journal was the first to report on the anticipated sale and had quoted unnamed sources familiar with the matter as saying it was "an exceptionally uninspiring number" with almost total "value destruction." TechCrunch gave out the $10 million mark, which VentureBeat confirmed to be line with what they "had heard."
Reports had the deal sealed before the transaction actually closed and VentureBeat then cited insiders as commenting that "AOL executives are livid that the news has broken and believe Criterion leaked the information."
Indeed, the story has been buzzing on the web and AOL co-founder and former CEO Steve Case is no stranger to the flow of comments, as he himself tweeted the following:
It Was Waiting To Happen
Back in April, AOL has warned that it was considering its options on Bebo. As ClickZ reported then, the company was "to complete its "review" process by the end of May" - so it's no real surprise that the news is coming out now.
The acquisition of Bebo took place when Steve Case was at the helm and AOL was still part of Time Warner. AOL's strategy then was to bet on the success of social networking but the site failed to deliver in the face of fierce competition from Facebook and Twitter. So when, in April, the company announced it was considering either shutting down or selling the unit, it acknowledged: "Social networking is a space... where scale defines success. Bebo, unfortunately, is a business that has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space. AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking."
Now What? Found Something, Look!
It seems AOL didn't linger too long on its Bebo woes. Looking at the company's corporate website, I found out that AOL last week had made a deal with Facebook via its search engine for web videos, Truveo.
See...? No pun intended but according to their Wikipedia page, "Truveo" is a "combination of the modern French verb trouver (meaning "to find") and the latin term video (meaning "I see").
It's a little ironical because if you go to Truveo's website, you won't see much as it's not exactly working and, really, all garbled up.
However, the truth that matters is that Truveo last week has released a Facebook app, that allows users to tap into its video database "of more than 500 million videos and thousands of channels" from Facebook's platform. Truveo's app also enables video sharing with friends and gives the possibility to find relevant content through friends' recommendations.
Yet, the most innovative aspect of Truveo is its new technology that "allows users to track a particular celebrity's voice in a video using the audio track." Quite something...
Truveo VP Pete Kocks commented: "We recognize that Facebook is the online equivalent of the company water cooler where people meet and share information." The term of that transaction weren't disclosed either but having found a way to generate revenues through deals with Bebo's competitor Facebook, no wonder that AOL is dumping Bebo.
Business is business. And Facebook is nothing short of a major video player and video ads carrier.
And the beat goes on...