There’s lots of speculation out there on the yet-to-be-closed MySpace acquisition of iLike that we first reported on Monday.
Much of that speculation is factually incorrect, we’ve confirmed from a source close the the deal. iLike, which has been profitable for over a year, had multiple offers to be acquired.
Our source says that, in addition to MySpace’s offer, both Facebook and Amazon submitted bona fide written offers to buy the company. At least one other large company expressed interest to Allen & Company, iLike’s advisors to the deal.
Activision Blizzard and Microsoft have been incorrectly rumored to have been seriously interested in the company, however.
iLike ultimately chose MySpace based partly on price, and partly on a fit with the buyer, sources say. Facebook was largely off the table due to building distrust between the companies.
Also, multiple sources tell us that the deal negotiations with MySpace have been moving along quickly and are now virtually complete. There was no last minute canceled iLike board meeting (in fact no board meeting was scheduled), and no hiccups over tax issues on the deal.
“People are literally making this drama up,” said one source.
It’s also clear that the relatively low valuation that iLike commanded in this sale was due less to their performance and more to uncertainty created by Facebook over their future on the Facebook Platform.
iLike is profitable and has 50+ million registered users. Unlike other music services they don’t have crushing streaming payments to make to labels because, well, they don’t stream music.
They are certainly now in a position to stand on their own as a company over the long term. Except that ongoing uncertainty over Facebook’s intentions to compete with them directly as well as regular changes to the rules around Facebook Platform mean they could get cut off at any time.
In other words, this is less about iLike’s financial and user growth and more about the value of users from Facebook Platform. Facebook seems unwilling to let Platform partners get too big. There continues to be no clear line as to where Facebook’s internal apps end and Platform begins.
We continue to expect the deal to be closed and announced shortly. And we eagerly await Facebook’s response to their main competitor, MySpace, suddenly owning (the de facto) Facebook Music.