An anonymous source has confirmed that MySpace (NWS-A) has made a deal to buy Photobucket, the Internet's No. 1 photo-sharing service.
Photobucket has 40 million registered users and has been letting it be known in the last months that it was for sale at about $300 million. Final terms of the deal aren't known at this time.
What is attractive about Photobucket from a users standpoint is its simplicity of use and the ability to use their technology to post videos and photos to any Web site.
Assuming the price is in the $300 million range, Forrester Research (FORR) analyst James McQuivey said: "That's a very reasonable acquisition price. They can make that back through advertising sales without much trouble. But that's not the reason you'd buy. You do it if there is some benefit that you can't offer the market unless you combine the two services. I don't know what kind of synergies there are; whether it's driving up the attention of users or prompting people to share more with friends. The question now is how is MySpace going to use Photobucket?"
Photobucket has had a good year, as its seen its unique visitors increase by double as it grew from 9 million unique monthly visitors to 18 million during that time.
Even though the two companies have some overlap in customers, estimated between 25 to 50 percent, it would still increase MySpace users by at least 9 million uniques per month.
Evidently last month's public battle between the two was a prelude to the deal, as MySpace cut off some of the slideshows used by Photobucket customers to put on MySpace, seemingly showing how much they were dependent upon MySpace for business, and possibly using the tactic to drive the price down or keep it level.
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