That was the verdict from Richard Rosenblatt, chairman-CEO of Demand Media and former CEO of Intermix, whose assets included MySpace, at last week's PaidContent.org EconSM conference in Beverly Hills.
Not too low
The conference focused on the deals and business of social media, and one topic hanging over the event was consolidation in the space, which still is dominated by venture-funded startups, not major media players. Mr. Rosenblatt addressed the growing valuation of companies in the area and said he did not believe he sold too low when it was sold to News Corp. in 2005 for $580 million.
"MySpace was in an interesting stage of its development [when News Corp. acquired it]," he said. "It had a different type of capital structure and we weren't able to make the type of investments for the infrastructure. Ultimately if we hadn't sold to News Corp., MySpace wouldn't be around today."
He said he believes social networks such as Facebook and Bebo could survive today on their own, thanks to the way advertisers have embraced the space. It's just a question of whether they can survive "the ups and downs," he said.
How much would you overpay?
Rafat Ali, editor and publisher of PaidContent.org, put former MTV Networks Global Digital Officer Jason Hirschhorn (now president of entertainment at Sling Media) on the spot when he asked if he would have bought Facebook or Bebo if he were at MTV now.
"The future of media's not about telling but creating a platform for your audience to tell," Mr. Hirschhorn said. "What it comes down to is about price. Would I overpay for it? Yes. How much would I overpay for it? I don't know."
There was a lot of talk about the challenges and opportunities around integrating startups into major media companies and the need to preserve startup DNA. The hands-off approach News Corp. took to the MySpace integration was held up as the gold standard.
"I'm sure Chad Hurley is the defender of the community inside YouTube saying, 'Please don't slap the Nascar-ification of ads in front of my users' eyes or they're going to go somewhere else,'" said Quincy Smith, a former Allen & Co. executive who now leads interactive group at CBS. He said a challenge for him is convincing young companies that CBS values their entrepreneurial nature and won't stifle it. CBS has had four investments since November and "we should have another two on the way," Mr. Smith said, emphasizing his desire to purchase something with big online reach.
"Look for CBS to get in the game, like Fox, iVillage," he said. "You should expect us to make a statement there and you should expect that sooner rather than later." He also suggested it would be natural to see CBS invest in new content companies.
Of course, making major dollars in social media has not been slow to come, in big part, said those in attendance, because it's still so new there's no recipe for advertising and few metrics to support the investment.
Social media, said Tariq Krim, co-CEO and founder of NetVibes, the popular French blogging platform, is about monetizing attention. "You're addressing a group of people connecting through a passion," he said. Added Bebo co-founder and CEO Michael Birch: "Engagement is still a tougher sell than just focusing on display advertising."
Rishad Tobaccowala, CEO of Publicis Groupe's Denuo, said the big mistake is using the word "advertising" in this space. The single most important lesson in marketing is to understand your consumer. "Social media is the best way to think about marketing, but it's not necessarily about advertising," he said. He suggested marketers can provide editing and recalled a conversation he had with humorist ZeFrank, who said, "We're living in a world of crapacopia and brands can be very good about eliminating crapacopia."
Amid heady valuations for social-media companies, Mr. Toboccowala offered a reality check: "One single show in prime time has more impressions than the top six shows on YouTube. ... If we go tell clients something that's not mathematically true, they'll say you're a bunch of idiots and we'll have 2000 and 2001 again." Search has been such a booming online business because it scales, he pointed out, and added: "The rest is really hard work."