Hi-Media To Acquire Fotolog For $90M

Photo-blogging community Fotolog has agreed to be acquired by Paris-based interactive media company Hi-Media for about $90 million. The weighty cash and stock deal is an attempt by Hi-Media to leverage Fotolog's millions of members for the benefit of its ad network and micro-payments business.

Launched in 2002, the New York-based Fotolog "has only just begun converting its strong audience growth into revenues," according to Hi-Media CEO Cyril Zimmermann. "We think that social networks are one of the pillars of what the Internet is and will be important in the years ahead, especially when underpinned by simple mechanisms."

Fotolog, which claims some 10 million members, reaches 15 million unique monthly visitors logging more than 3.3 billion monthly page views. According to internal metrics, these users spend an average of 23 minutes on the site daily.

Fotolog's fastest-growing markets include Italy, Portugal and Spain. In Spain, Fotolog has some 2.2 million unique monthly visitors, according to comScore.

Fotolog began to monetize its audience in 2007, and expects revenues in fiscal year 2007 to reach $2.3 million. The company said it has sustained losses since January, but its revenue recently increased sharply. Its sales have increased by approximately 245% since January 2007.

Publicly traded on the Euronext stock exchange in Paris, Hi-Media exists as an online ad network, ad agency and a micro-payments provider.

Earlier this year, Fotolog teamed with AOL's Userplane subsidiary, which provides tools to power social networking, to use its chat, instant messaging and video messaging tools. The two companies said they would share ad revenues generated by the use of these products. Some 150,000 online communities--including giant MySpace--use Userplane's tools, which help it serve more than 1 billion ads monthly in its online players.

The largest photo-sharing service online, Photobucket, was sold to NewsCorp.'s MySpace for $250 million in May. Despite its popularity among MySpace users, Photobucket was on its way to becoming a formidable destination site of its own. As of May, Photobucket had around 40 million users sending links pointing back to it from 300,000 sites in addition to MySpace, and boasted more than 40% of all online photo-sharing traffic, according to Hitwise.

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