1/29/2006

Myspace or Big Companies Space?

So, have you logged into your myspace account today? Myspace is the ultimate networking platform for everyone these days and has reunited old friends and has lowered the single-dater’s “hook up” costs and has increased his or her benefits. Just with the click of the good ol mouse you have millions of people at your very fingertips. This invention has been a huge success to say the least, but as always when something gets too big it is target for a takeover from someone bigger. In a recent article from Newsweek it explains that AOL is looking to buy out this exciting new “internet connecter”. In this competitive world it’s exciting to see things like myspace come around, but does this creative spirit that comes along with competition hindered by big and rich companies buying them out? Or does it increase these small companies capital and take them to a whole new level?

5 comments:

Dr. Tufte said...

-1 on Tom for questionable spelling and grammar.

Hmmm. If you invented Myspace, would you want to be bought out and made rich? If the answer is yes, then there is no problem here.

One issue that comes up in the mergers and acquisitions portion of a corporate finance class is that one of the main reasons for a public offering is so that the initial insiders can get out. Whether or not they want to at the time, the proceeds from an offering make this a more viable option by turning your sweat equity into paper equity.

Blake said...

I feel that if small companies feel good about being bought out, and are satisfied with all of the terms, they will ultimately be at an advantage. I personally wouldn't worry that they would lose their creative edge. In fact I believe that they would gain enormously. With the new pool of resources that they will have acquired from a buyout, they will have the capacity to do more with their creativity, allowing them to invent a more optimal mix of products and services in the end.

bryce said...

AOL's purchase of MySpace will clearly affect the MySpace community and its creativity. The only reason AOL would make this purchase is to capitalize on this huge online community of hard to reach teenagers and young adults. AOL will have to make changes to MySpace in order to "cash-in" on its investment. If these changes don't mesh well with MySpace users it will definitely affect the creative community MySpace has created. This will lead to the defection of many of MySpace's current users. AOL has a tough road ahead in trying to keep the current feel and creativity of MySpace intact.

Boris said...

I agree with Bryce on this one. The demographic that uses myspace is not one that looks kindly upon big business. The users of myspace are all about supporting the little guy. They support indie bands, free online services, and other things that are not just out to make a buck off of them. AOL is going to have to consider these issues if they want to keep these people using myspace. It won't be long before another copy-cat comes along that might lure a big chunk of myspace users away.

rico said...

I disagree with Boris about copy-cats. I believe that even though big corporations are buying companies like this out, they will still be successful. If it is done right the first time, there is a good chance they will grow even bigger. Look at ebay. It started small and now it's huge. There are many auction copy-cats, but ebay still dominates.