Fox Buys Photobucket, Flektor

Heeding the need for endless innovation, Fox Interactive Media plans to pad MySpace and its other Web properties with two technology companies strong on consumer-generated--as well as edited, mashed up, and shared--media.

The News Corp. unit said it will buy Photobucket, the hugely popular one-stop shop for uploading digital pictures and videos, along with Flektor, a provider of Web-based tools for editing photos and videos.

Terms of the deals were not disclosed, but earlier reports said Photobucket was nearing a sale to FIM for between $300 million and $400 million."

The acquisition also comes after months of squabbling between MySpace and Photobucket over usage terms and agreements. Earlier this year, MySpace blocked Photobucket--best known for helping users post images on MySpace member pages--from doing exactly that.

While bolstering MySpace and potentially other FIM properties--including IGN Entertainment, FOXSports.com, and AmericanIdol.com--Photobucket and Flektor will remain stand-alone properties, each with its own audience and ad-supported business model.

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"Like MySpace, we'll be one of FIM's stand-alone properties with our own strategy for growth," explained Peter Foster, Photobucket's vice president of sales. "FIM is giving us the resources we need to grow and develop new products much more quickly."

Despite their popularity, social networks like MySpace have had trouble developing successful business models because of such factors as dependence on decidedly un-premium content, and users' aversion to distractions, i.e., advertising.

While the latest acquisitions don't directly address those issues, they do give users less reason to leave MySpace's environment in search of rival services.

"It might not make MySpace any more conducive to advertisers, but it does make it more likely that consumers will spend more time on the site," said Gartner Research analyst Andrew Frank.

Photobucket, which launched in 2003, presently has around 40 million users sending links pointing back to it from 300,000 sites in addition to MySpace, and boasts more than 40% of all online photo-sharing traffic, according to Hitwise. The site serves some 3 billion online images and videos daily.

Founded just last year, Flektor helps consumers turn their photo and video archives into dynamic slide shows, postcards, live interactive presentations and video mash-ups. These tools, including Photobucket's technology, are expected to help MySpace fend off mounting competition in the cut-throat worlds of social networking and digital content sharing.

"Photobucket extends our reach among personal media sharing enthusiasts and the innovative new entrant Flektor brings highly differentiated new tools to the table that will drive the next generation," said Peter Levinsohn, president, Fox Interactive Media.

As a whole, FIM's Web properties presently draw over 45 billion page views per month, according to comScore Media Metrix.

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