AOL has finally decided to do something about the Bebo service, which most have long since written off. They plan to sell or just shut the site down by the end of May. The social media and social networking landscape has become very competitive. Even MySpace had to eventually concede victory to Facebook as a strictly social networking site. AOL has found that it will be entirely too costly to invest in Bebo’s success. In a memo to employees, AOL Ventures EVP Jon Brod said:
The strategy we set in May 2009 leverages our core strengths and scale in quality content, premium advertising and consumer applications, positioning us for the next phase of growth of the Internet. As we evaluate our portfolio of brands against our strategy, it is clear that social networking is a space with heavy competition, and where scale defines success. Bebo, unfortunately, is a business that has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space. AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking.
AOL is committed to working quickly to determine if there are any interested parties for Bebo and the company’s current expectation is to complete our strategic evaluation by the end of May 2010.
AOL, as part of Time Warner, bought Bebo in 2008 for $850 million. While it remains one of the top social networks in the UK, it never took off in the United states except among young girls. It seems then president of Bebo, Joanna Shields, sold AOL on the whole social media thing. They brought Shields on to run one of their divisions which eventually bought SocialThing.
It seemed that AOL might have been on the right track with their social media strategy. They used SocialThing to enhance the Bebo service and it looked like it could have been interesting as a social aggregator, taking some cues from FriendFeed. A change in company structure brought new management and a new vision as AOL split from Time Warner and they brought in a new CEO. Shields left the company shortly thereafter. With no driving force behind their social media efforts, Bebo has sat idle while it’s executives were hired away and other jobs were cut entirely.
With abysmal unique visitors, there is no way Bebo will get sold for anything close to the $850 million AOL bought it for. Interestingly enough, AOL’s stocks went up after the announcement that they would be getting rid of Bebo, jumping up almost 4 percent.