Community and Content - the Latest Tech Boom

It has been an active week in the tech world. First, Microsoft announced that it would buy out the professional network site LinkedIn for US$ 26 bn. Then Twitter announced its investment into the music hosting and community side SoundCloud. These two deals are not only a sign that the M&A activity in tech are gaining momentum again, but that online communities become a valuable addition for brands and blue chips.
Both targets have been struggling lately. LinkedIn has become a very broad platform, was late in various feature developments, and ridden by security breaches. SoundCloud actually announced it would go out of business if it were not to find more money from investors. Both targets were by far not cashflow positive.

Microsoft paid US$ 245 per active user of LinkedIn. The deal values LinkedIn at US$ 28.2 bn. It is Microsoft’s biggest acquisition to date – three times bigger than its acquisition of Skype in 2011 or the mobile phone business of Nokia in 2013. For Microsoft it is an opportunity to provide software for users of the LinkedIn platform.

The reported valuation of SoundCloud for the Twitter investment is US$ 700 m. This is the same valuation as was reported for the founding round in 2014. It is Twitter’s second attempt to enter the music space. It experimented with its own music app but then shut it down. The investment is nevertheless another sign that audio and video content becomes more and more valuable to social media networks. The question in that deal remains if SoundCloud and Twitter will also enter into the video space or will stay predominantly audio only.

Both deals show that communities and content are seen as critical important for the future. Being able to engage directly and actively with users and enabling users to engage with each other in valuable ways is the future for many brands and product companies. But no community is worth much if it does not have content which is engaging for it. Overcrowded social media platforms such as Facebook might therefore give room to more specialized communities where members share a similar interest, find more meaningful content, and engage in a valuable way.

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Bernhard is the founder of HELLO STAGE. He is probably the first opera singer pitching an Internet start-up in Silicon Valley. Before founding HELLO STAGE in Fall 2013, Bernhard was the CEO and Artistic Director of the Wiener Konzerthaus. He held several C-Level positions in European technology companies with EUR 100+ million turnover. See www.bernhardkerres.com.

Bernhard leads HELLO STAGE from somewhere between Silicon Valley, New York and Vienna. He writes about his experience in the innovation hot bed on this blog.
Author: Bernhard Kerres
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