MySpace's parent to buy Photobucket

After an ugly name-calling flap last month, News Corp.'s MySpace and Photobucket will end up as part of the same company.

Fox Interactive Media (FIM), the News Corp. division to which MySpace belongs, announced Wednesday it has agreed to buy Photobucket, which operates the U.S.'s most popular photo site.

FIM also announced its agreement to acquire Flektor, a company that lets users edit photos and videos and embed them on Web pages.

The acquisitions are expected to boost the photo and video sharing and editing capabilities of FIM's Web site network, particularly MySpace, the world's most popular social networking site.

For about two weeks in April, MySpace blocked the videos and photo slideshows its users created, stored, and edited with Photobucket.

The move, MySpace said, came after Photobucket knowingly violated its terms of service by encouraging MySpace users to run an ad-sponsored slideshow in their profile pages.

This prompted Photobucket's CEO Alex Welch to term the action "a retrograde step." Photobucket also said MySpace never contacted it before implementing the block, essentially calling MySpace officials liars.

The spat again highlighted a recurrent criticism of MySpace: that it has been reluctant to open its platform to third parties, a hallmark of the Web 2.0 mashup philosophy.

MySpace grants access to its platform on a case-by-case basis to companies that request it, but doesn't have open APIs (application programming interface), something most Internet companies provide for many services.

At the time of the controversy, Welch captured the essence of these objections, saying MySpace's action contradicted "the very ethos of personal and social media" as well as "an unacceptable attempt to limit the freedom of the very people who are its lifeblood -- its users."

Last week, Facebook, a MySpace competitor, made a big splash when it announced it is opening up its service to external developers, a move that was seen as an attempt to capitalize on MySpace's contrasting philosophy.

News Corp. and FIM executives have been candid about their misgivings over third-party services on MySpace, which they feel take advantage of the site's massive popularity.

Photobucket, which lets users store photos, slide shows, videos and graphics on its servers and then link them to other Web sites, receives almost 57 percent of its upstream traffic from MySpace, Hitwise Pty Ltd. said in April.

MySpace and Photobucket eventually reached a truce and MySpace lifted the ban. Shortly afterwards, rumors began flying that FIM was in the process of acquiring Photobucket.

Wednesday's confirmation of the deal could be interpreted as being in line with FIM's reservations about having third parties build a business on MySpace's back, preferring instead to acquire, in this case, Photobucket, and bring it into its fold.

In November 2006, MySpace had the 38.7 billion page views, the most of any site on the Internet, according to comScore Networks Inc. In March of this year, it had almost 95 million unique visitors from around the world.

Meanwhile, Photobucket ranks by far as the most popular photo-sharing site in the U.S. with 41.4 percent of visits to sites in that category in March, according to Hitwise.

Photobucket, founded in 2003, has 39 million registered users and ranked 34th among comScore's top 50 U.S. Web properties in March, with almost 16.8 million unique visitors.

FIM didn't disclose terms of the acquisitions.

The Flektor acquisition has been finalized, but the Photobucket deal still requires regulatory approvals is expected to close in the next 30 days, a FIM spokesman said via e-mail.