Online Media Cultist

It hit home for me this morning – not enormously revelatory of course to anyone paying attention – that we’re in the midst of a great and sweeping period of mergers and acquisitions right now in the tech and Internet space. We’re probably in something like the “latter web 2.0 days” of the Internet’s evolution, a time where big players are swallowing littler ones in an effort to grab market share, where the companies who produced the best ideas and services and were lucky enough to grab eyeballs and users and customers along the way are now setting themselves up for the long haul, and the sad shakeout of those companies who didn’t make it will continue to play out as spaces continue to become better defined.

Just taking a look at the news this morning, we see that Microsoft announced the acquisition of Rapt, a company involved with online advertising technology. Technology companies are now advertising companies, and Google, Microsoft, Yahoo, and so on have been gobbling up companies and technology left-and-right for the last year or two now in an effort to gain an edge.

We also see Microsoft still trying to strategize its way toward a merger with Yahoo. The argument goes that Microsoft + Yahoo > Google. We’ll see how that goes.

Moving on, we see AOL making great strides to propel itself back into the elite tech companies pantheon. Just this week the acquisition of Bebo was announced, and now rumors say that the acquisition of “out of the box” social networking platform Kickapps could be next.

As the economy overall remains jittery, I think we’ll see this overall trend continue. Soon enough though new-fangled semantic web services will appear, social networking will evolve to its next phase, online video advertising models and companies will mature, website traffic metrics will improve, and overall Internet usage will shift.

And then we’ll be in a new place, and it’ll be fascinating to see how it all plays out then as well.

AOL is furiously trying to break the bounds of its decaying empire, and it just might succeed in doing that.

But the price, my friends, is high. AOL announced that it will acquire social networking site Bebo for $850 million. Bebo is one of those social networks usually placed in the “middle tier.” It’s no MySpace or Facebook, but is strong and global and is among the most popular social networking communities in the UK, Ireland, and New Zealand. It also claims to be #3 in the U.S.

Rupert Murdoch, of course, was ridiculed several years ago for purchasing MySpace for $500 million, a seemingly outrageous sum at the time. But MySpace was and in fact still is the dominant player in the space so today the deal looks to be a relative bargain that will bring Murdoch and company great fortune.

AOL for its part will place its future in the hands of its AIM instant messenger, the dominant product in its space and, now, Bebo as well.

Interesting quotage:

TechCrunch: “AOL is clearly putting a massive effort into transforming the company from a dial up broadband provider into a company that has the competitive fire. The opening of AIM, mentioned above, is just one indication. The company has been releasing genuinely innovative new products and has also made a number of smaller strategic acquisitions over the last year or so.”

GigaOM: “AOL is talking some gobbledygook about marrying AIM, ICQ with a real social network. Whatever!”

Mashable: “As big as this news is by itself, the question that arises is: what does this mean for the Microsoft-Yahoo-Google-AOL love rectangle?”

paidContent: “VC firm Balderton Capital will reap about $140 million - nine times what it invested in Bebo less than two years ago - by selling its 15.7 stake in the social net to AOL.”

peHUB: “Bebo had been in the market for new funding to support acquisitions, particularly in the contextual and behavioral search markets. But that ended once acquisition offers began coming in. No comment on earlier reports that Yahoo was an interested suitor (which is now 0-for-2 on such efforts).”

It turns out that the hype about Facebook this year ain’t just hype. In the UK, Facebook has surpassed reigning global social networking champ MySpace for the first time, with a whopping 541% increase in audience since December 2006 (MySpace rose a relatively sedate 20% during the same period). Meanwhile, Bebo, a company you don’t hear about a lot in the US, moved to take a strong third in Britain.

And over on the other side of the planet, Friendster – a site often thought of as an also ran in webby American circles – is seeking to expand its presence in South and Southeast Asia. Friendster is launching its first non-English version in Chinese. According to TechCrunch, close to 90% of its monthly unique visitors already come from Asia, so it makes perfect sense that they would target their a new potential audience of teeming web savvy millions.

So while MySpace is still massively popular in the United States and other nations (but not so much in social networking-crazy Brazil, where Orkut is champ!) the social networking game is anything but static.

With hundreds of start-ups looking to grab audience, and a global marketplace that allows competitors to find regional footholds, MySpace may not be the ubiquitous name for social networking for that much longer stateside.

Facebook is certainly the social networking darling of 2007. Any thoughts on what 2008 may have in store?

A new Ipsos Insight study called The Face of the Web finds that the United States ranks fifth when it comes to the percentage of adults who have visited a social networking website.

South Korea, Brazil, China, and Mexico all have a higher percentage of adults who have visited a social networking site at least once within a thirty-day period. And when you consider the massive populations of Brazil and China, that’s a lot of people getting their profiling and friending and all the rest of it on.

And while MySpace may still be dominant in the US, other parts of the world have different tastes. Facebook is at least on a par with MySpace in the UK, with Bebo making a strong going of it as well. Friendster, exiled after MySpace usurped its power several years ago, still reigns supreme in parts of Southeast Asia. And Cyworld, kind of a social MMO (massive multiplayer online game), is the darling of South Korea.

ars technica notes that Brian Cruikshank, an exec at Ipsos, contends that it’s possible that the massive popularity of social networking websites may have an affect “on other online and offline entertainment behaviors that ultimately compete for a share of the consumer’s disposable time.”

This line of thinking ties into a conversation that has been ongoing since late last week on Deep Jive Interests and a number of other sites. It kicked off when Robert Scoble asserted that top bloggers are losing traffic because of the popularity of sites such as Facebook.

My counter-argument ran thus:

In my view the blogosphere and social networking worlds have very different cultures and people who fill them up. So it’s not a zero sum game i.e. the popularity of Facebook (and hasn’t MySpace had a billion registered users for several years already? How did Facebook reinvent the wheel?) does in no way deflate the popularity of the blogosphere or any “A List” bloggers in the process.

Now, if you want to argue that some bloggers are losing audience due to some notion of “more choice than ever before” (more quality bloggers, more web communities, more high quality content, etc. etc.) that’s something I’d be interested in hearing out.

That said, there’s no doubt that online social networking is having a massive impact on how people around the world are communicating. And hundreds of start-ups are trying to cash in on various niches of the social networking world – from horses to moms to honoring the deceased to college sports and everything in between.

MySpace, while still by far the most popular social networking site in all the humanoid galaxies, may be starting to peak out in terms of traffic and usage. In the UK, at the least, MySpace overall traffic dropped in May while traffic to second-tier powerhouses Bebo and Facebook increased.

Interestingly, average time spent on Facebook and Bebo (152 and 143) dwarfed time spent on MySpace (96).

Momentum is certainly with Facebook stateside as well, as its new Platform – which allows Facebookers to easily add custom made for Facebook widgets – is seeing great success.

Maybe MySpace should think about its users and keeping them happy, rather than dialing up huge new contracts for its founders?