CNET Divests Webshots: A Dose of Reality For Social Media

Ironically, on the day after Microsoft (MSFT) invests $240M in Facebook, CNET (CNET) announces that it was divesting Webshots by selling the asset they bought for $70M to American Greetings (AM) for $45M, and hiring former Maxim executive Stephen Colvin to develop more lifestyle and entertainment programming.

Yes, that’s my interpretation, but it’s not wrong. It shows a couple of things: to win and remain relevant in social networking and social media, you need scale and market dominance. To quote Jack Welch, you need to be #1 or #2. This is readily apparent in the social networking sphere where pretty much everyone other than MySpace (NWS) and Facebook are fast becoming roadkill… and it is starting to show in social media, too, where large pageview numbers do not convert to ad dollars.

Clearly, social media and networking have changed the rules of engagement for good, but once the hype subsides, clearly neither represent what advertisers want, and since advertising is what underwrites web development, then that matters to your business. The examples are numerous:

• Reddit, sold for relatively small sum to CondeNet,
• Newsvine? Ditto to MSNBC.
• The unloading of Webshots for less than it paid just a few years ago is just one more dose of cold water on an formerly hot market. But, by luring Colvin to spearhead its lifestyle and entertainment programming, clearly CNET is getting the message from advertisers, and reacting.