Web 2.0 peak? MySpace sells for $580 million

Updated

MySpace, of Los Angeles, has long been considered the hottest of the new generation of social networking companies. The New York Times reports:

The News Corporation, making one of its largest bets on the Internet, announced today that it is paying $580 million in cash to acquire Intermix Media Inc., a Los Angeles-based company whose chief asset is MySpace.com, a Web site that is enjoying surging popularity with young audiences.

Could this represent the peak of the current Web 2.0 wave?

Update: Well, the answer to our question seems to be a resounding “no,” judging from comments. There are a few saying things look pretty heated, but as Jeremey Zawodny suggests in comment below, this may not be a problem with Web 2.0 per se.

Also, here are the winning Silicon Valley investors in the deal, as outlined by VentureWire (sub required):

Both VantagePoint and Redpoint invested about the same in Intermix, but VantagePoint came in about a year before Redpoint so its stake is worth far more. VantagePoint invested about $10 million in the fall of 2003 and owned 22.4% of the company, meaning the firm will receive about $130 million in the deal with News Corp. Redpoint purchased Intermix’s shares for about $10.5 million with investments in December and February, giving it a stake of less than 5%, according to partner Geoff Yang. That would give Redpoint less than $29 million.

Redpoint also has a 25% stake in fast-growing MySpace after a $4 million investment placed only about seven months ago. Intermix owns 53% of MySpace but as part of the News Corp. deal agreed to acquire the remaining 47% for $69 million, said David Krawitz, a PR rep for Intermix. So Redpoint will get a little more than $17 million while founders, management and employees – which own the other 22% in MySpace – will take in nearly $52 million (see correction below)

CORRECTION: VentureWire has since corrected its math: Redpoint will likely get somewhere around $36 million on the sale of its 25% stake in MySpace, while founders, management and employees – which own the other 22% in MySpace – will take nearly $32 million.

Update: See Techdirt on Intermix’s adware offerings.

Update: More juicy details on how VantagePoint and Redpoint profited, especially how VantagePoint apparently caught Sony asleep at the wheel: Bill Burnham’s post.