Bye-bye Bebo? AOL gives up on $850m mistake

AOL is giving up on social networking site Bebo - it will close next month if a buyer can't be found...

by
Last Updated: 14 Aug 2013

Bad news for Bebo fans this morning: the site, once one of the world’s largest social networks, may be shut down next month if its owner AOL can’t find a buyer. AOL’s Jon Brod told what’s left of Bebo’s staff (there have been lots of redundancies) that user figures had been declining in the face of stiff competition from Facebook, and that the site would need ‘significant investment’ to hold its own in the ‘competitive social networking space’. After forking out a hefty $850m for Bebo, AOL is obviously not keen to keep throwing good money after bad. So Bebo’s only hope now is to find a buyer in the next month or so. But will anyone want it?

There’s no question that Bebo has been going downhill for a while. Despite its popularity in European markets, including the UK, Bebo has failed to keep up with rivals in the US. When AOL bought it in 2008, it was the world’s third largest social network behind Facebook and MySpace, with almost 40m users a month. At the last count, this had plummeted to 12m. And we all know that volume is key for social networking sites, unless they have a niche proposition that the likes of Facebook can’t cater for (which arguably, Bebo doesn’t).

Last year Bebo also lost its CEO Joanna Shields, the highly-rated ex-Google exec credited with masterminding its early success. After a brief stint at Liz Murdoch’s Shine, Shields has just moved to Facebook – further evidence, perhaps, that the latter is the only show in town these days. 

But AOL has clearly made mistakes too. For a start, it paid over the odds for Bebo in the first place (Time Warner’s CEO Jeff Burkes even admitted as much soon after). It probably bought it too late. And insiders insist that it hasn’t put in the time or resources the site needed to remain successful. Now the best AOL can hope for is that it sells the business at a big loss (and this kind of distressed sale is hardly conducive to getting a good price). If nobody comes forward, it will just close the site altogether.

But perhaps Bebo’s (mostly teenage) users needn’t fret just yet. Yahoo’s rumoured interest in the so-hot-right-now location-based social networking site Foursquare goes to show that there are still people out there willing to snap up social networks. Maybe Bebo will get lucky again. Otherwise, it will be consigned to the history books by June…


In today's bulletin:

Brown hammers business leaders as Government forced into concessions
Daimler thinks small with big Renault/ Nissan tie-up
Bye-bye Bebo? AOL gives up on $850m mistake
Editor's blog: Unilever boss says leaders must take the long view
Will our mobile phone networks run out of airwaves?

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Upcoming Events

Subscribe

Get your essential reading delivered. Subscribe to Management Today