AOL either to sell or close declining Bebo online site

THE BRAINCHILD of British developer Michael Birch and his Californian wife Xochi, Bebo was the only website that mattered in the playgrounds of Ireland and Britain when it hit the peak of coolness in 2007. Among 13 to 16 year olds, it was the place to be seen online, where members could blog, e-mail each other, upload videos and design quizzes – while many adults just didn’t quite get it.

But just three years and one enormous acquisition later by US giant AOL, which paid $850 million in cash to buy the site in 2008, Bebo looks likely to close – redrawing the landscape of social networking sites and handing a big chunk to Facebook. AOL, which surprised even web evangelists with the scale of its payment for Bebo, has said it can no longer fund the social networking service, which has some 12 million users, telling employees it would sell the site or close it this year.

A leaked internal memo from the AOL Ventures’ executive vice-president, John Brod, said the company – which has been undergoing extensive restructuring – had decided Bebo “was a business that has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space”.

“Social networking is a space with heavy competition, and where scale defines success,” he said, adding that a decision must be made about the future of the site by May.

Bebo was founded by Birch and his wife in 2005 and after moving to San Francisco, they successfully grew the company and the site, peaking with about 40 million monthly users globally in early 2008. It was then that Birch achieved every start-up web developer’s dream by selling to AOL for such a fortune – even more than the $580 million Rupert Murdoch’s News Corp bought MySpace for in 2005. The deal was due to a cleverly devised, strategic programme of marketing projects and high-profile media partnerships devised by the former chief executive, Joanna Shields. Also a former Google executive, Shields displayed characteristic smartness by leaving AOL 14 months after the acquisition – and last week accepted a senior role at Facebook in Europe.

Bebo has not fared well since the AOL deal.

“Bebo needed investment and engineers,” said one source close to the deal. “At one point, we had 40 engineers when Facebook had something like 2,000. You can’t produce a good product fast enough at that scale. In fact you can’t even keep the site running properly.” – (Guardian service)