20th Apr 2012 10:29am | By Editor
The news that Facebook had acquired retro picture sharing app Instagram last week for a billion dollars, was greeted with incredulity in most corners of the tech world.
What did Facebook get for their £790,000 layout? Well, they got a company which has doesn’t generate a penny of revenue, 13 staff, and a mobile phone app with about 30 million users.
Tech journalist Om Malik suggested Facebook bought Instagram because the app had managed to make photo sharing an emotional experience, something Facebook he suggested had failed to do.
“Or maybe Zuckerberg just wanted to be the guy who was offering the cool $1 billion,” said The Verge editor Josh Topolsky said in his Washington Post column.
And whilst it’ll be some time yet before we find out whether Facebook’s splurge on Instagram was a shrewd move or not, it didn’t take long for many to evoke the spectres of misguided mergers past.
But Facebook will have some way to go to beat some of the catasrophic web acquisitions of the last twenty years.
If you think a billion dollars seems like a lot to spend on a picture sharing website, we’ve got some surprises in store for you.
Yahoo buys Broadcast.com for US$5.9 billion
Sure, in 2012, a billion dollars is a lot of money, right? But think how much $5.9 billion was in 1999? (Well, it was about $8.1 billion in today’s money). Well that’s how much Yahoo! spent on Broadcast.com, an internet radio site launched in 1995.
The company originally set out to sell shortwave radio devices that would allow spectators within a live sports venue to hear the broadcast commentary. But the company moved into internet radio, purchasing the rights to broadcast in several US cities. The site gained popularity with college sports commentaries and moved into broadcasting political events, before the company was floated in 1998. It set a one-day market record after its shares rose almost 250% from its opening price in one day.
Over 100 employees became millionaires overnight, and the companies founds Mark Cuban and Todd Wagner became billionaires. Yahoo! bought the company in 1999, renamed it Yahoo! Broadcast Solutions - using the site’s functionality to power its multimedia offerings.
Mark Cuban remains in the world’s top 500 richest people and is credited with the biggest ever single online purchase after he bought a Gulfstream jet for $40 million.
Excite buys BlueMountain.com for US$780 million
Ever heard of BlueMountain.com? No, us neither. Well, it’s an e-card website, and it was bought in 1999 for $780 million by Excite, that’s about $1 billion in today’s money.
Back in the late nineties, as the dot-com bubble was nearing its height, Blue Mountain was the 14th most popular website on the web. In fact, only Amazon and eBay made more money than Blue Mountain online in 1999.
Sadly, the e-card market collapsed faster than an lazily whisked souffle, and the site was sold again 2001 to American Greetings for just $35 million.
Blue Mountain is still going, so if you want someone to know you care enough about them to send them a novelty email, but not quite enough to shell out £1.20 on a piece of shiny card, then you know where to go.
News Corp buys Myspace for US$580 million
When Rupert Murdoch’s NewsCorp bought Myspace for $580 million in 2005, many people thought it was a shrewd move by the Aussie media mogul.
Fairly few commentators predicted the way in which Facebook would go on to level all-comers in the social network arena.
Founded in 2003 Myspace was the web’s most popular social network until it was overtaken by Facebook in 2008. In 2006 it even had more US web-traffic than Google.
However, a string of redesigns, a lack of innovation and the rise of Facebook saw its user base crumble from 95 million to less than 30 million.
The site was bought in June 2011 by Specific Media and Justin Timberlake for about $35 million, while Facebook, originally a pesky MySpace competitor is now valued at $65 billion.
Image via Getty