iLike's $20 Million Fire Sale To MySpace

There’s been a bunch of coverage of the iLike acquisition deal over the past 24 hours including those that call this a massive blow Facebook. The primary “losers” in this supposed $20 million MySpace acquisition is iLike, who has been struggling to find a breakthrough business model. There’s also an underlying story about how the Partovi brothers and Mark Zuckerberg grew apart since the early launch of the platform.

Kara Swisher sums it up beautifully:

The Partovis – who once were close with execs at Facebook (see my party video below), particularly founder and CEO Mark Zuckerberg – placed great faith in its growth lifting all Web 2.0 boats.

It did not turn out that way, though, especially from the important financial point of view, and iLike scrambled to diversify.

This means a number of things but primarily that iLike is being sold in a fire sale and that MySpace is moving quickly to focus on their music business. While there is a fair amount of irony in MySpace owning one of the largest Facebook applications, this is not a huge blow to Facebook. With MySpace owning a large Facebook application, it highlights the true openness of the Facebook platform.

Should Facebook have made a bid for iLike? Maybe but considering that most online music sites haven’t come up with an effective business model, it would only be a distraction. While Facebook had at one point been in discussions with record label executives, nothing has appeared to materialize which may be a good thing since the only company that’s highly profitable in the online music space is iTunes.

Facebook needs to focus on building a robust platform that serves the needs of the developers. While the platform may not have served the needs of iLike, there is still a lot of room to grow and trying to build a music business at the same time doesn’t make a lot of sense. For now, the roller coaster ride for the Partovi brothers has apparently ended in MySpace’s hands.

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