The owner of LiveJournal, a blogging and social-networking site, agreed yesterday to sell the company to SUP, a Russian online media company, in the latest example of deal-making in the social-networking sector.
Financial terms of SUP’s deal with Six Apart, which owns LiveJournal, were not disclosed.
As part of the deal, SUP will create an American management company, LiveJournal Inc., to manage the social network’s operations. SUP will also form an advisory board that includes Brad Fitzpatrick, LiveJournal’s founder who now works for Google.
Though its biggest user base is the United States, LiveJournal has become exceedingly popular in Russia, finding about 28 percent of its audience there. Last year, SUP struck a licensing deal with Six Apart to manage LiveJournal.ru, the site’s Russian component.
Ever since the News Corporation bought MySpace in 2005 for $580 million and saw its value skyrocket along with the site’s popularity, media companies have seen social-networking as a field ripe for the picking, nytimes.com reports.
Selling LiveJournal marks the first gutsy move by Six Apart CEO Chris Alden, who replaced Barak Berkowitz in September. Alden's Valley claim to fame was starting Red Herring in the 1990s. The experience taught him some hard lessons about raising too much money and getting big for big's sake.
Had Red Herring not become so dependent on venture money, adding reporters by the week and hiring a big-name management staff, Alden believes that the magazine would still be in business and worth half a billion dollars—and that TechCrunch, the site run by Michael Arrington that cover much of the same editorial ground but more profitably, wouldn't exist. (He's probably right.)
Alden will apply those hard-learned lessons to his mission of making big business out of the company begun in October, 2001, by husband-and-wife team Ben and Mena Trott.
At Six Apart, Alden previously ran the group responsible for Movable Type, a blogging tool for developers and businesses, breathing new life into the company's flagship product. He'll need to play a comparable role on a larger scale now.
It's a tall order, considering the question marks surrounding the business relevance of blogging in a consumer Web arena dominated by social networking. Alden is not seduced by the sexier Web 2.0 trend of social networking. In fact, he considers blogging one of the earliest incarnations of the community-is-king ethos that imbibes Web 2.0. But he acknowledges that blogging has fallen prey to the hype cycle—what happens to any trend that gets overhyped, then nudged aside when it doesn't change the world fast enough.
Consider what happened to e-commerce around the time of the Internet bust earlier this decade. And Amazon is still going strong and the percentage of holiday shopping moving online is expected to rise yet again this year.
Alden will get some assistance proving his theory, starting with the proceeds of the LiveJournal sale. More important is the resulting streamlined focus. Six Apart had gotten bogged down managing multiple products, BusinessWeek reports.