BubbleWatch Alert: #001

posted 30 May 2007

Probably part of an ongoing series. This just in via Mochaholic (via his twitter, actually).

CBS buys Last.fm for $250M, after Yahoo! refused to pay more than $30M for it 11 months ago (according to ValleyWag -- again, I have no inside information about Y! acquisitions). That's an 8-fold increase in value in a year.

This is a pretty stupid deal, but it's easy to see the motivations. CBS is absolutely nowhere with new media, so they needed an acquisition to keep up with News Corp et al. Last.fm have hit the wall of all single-purpose, advertising-supported websites, and needed to become part of a larger network with deeper pockets in order to gain more exposure and continue to grow.

That doesn't mean it makes sense though. CBS is not a music company, and has no experience in growing web properties or leveraging new media. Last.fm could have found a much more suitable buyer if they'd swallowed their pride and accepted a lower price. Stupid and, if CBS fucks things up on the site as seems likely, sad.