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Google+ Costs $585M?

Google spent $ 585 million for the development and launch of Google+ social network can equivalent to the price of News Corp. acquired MySpace. Google+ employees approximately are 500 people and the average annual salary of these employees is $ 250,000.Google+ took advantage of the technology and talent from Google’s 3 acquisitions; $ 123 million acquisition of On2, $ 158 million acquisition of Widevine, and $ 179 million acquisition of Slide, the sum of the cost of Google+ reached $ 585 million………….

 

Google’s new social network to a whopping $585 million dollar bill. Upbin points out that number is eerily close to what News Corp paid for MySpace all those years ago, which was $580 million in 2005. The estimated calculations were put down by his friend Phil Terry, the cofounder of Creative Good, a user experience business. They are as follows:

  • 500 employees working on Google+
  • $250K in average all-in comp for each of them including stock-based compensation.
  • $125 million in annual labor-related costs and stock-based compensation for the Google+ team
  • Google+ also relies on or uses in part technology and people from three acquisitions
  • $123 million for On2
  • $158 million for Widevine
  • $179 million for Slide
  • Add up the $125 million in comp plus the $460M in acquisitions and you get $585 million.

MySpace was sold again for a paltry $35 million. Like MySpace and eventually Facebook, Terry believes Google’s $585 million investment may be a losing one. He proposes Phil’s law, which states, “that there’s an inverse correlation between the speed of scale of a social network and its durability.” Of its inevitable failure, he says:

While I like what I see with Google+ and think they understand some of the problem with online social networks, Google is underestimating the durability of even a “reformed” online social network like theirs. Elements of Google+ will live, especially Hangout (the very compelling video chat service) but Google+ as a social network will either not scale or, if it does, it will eventually fall for the same reason that MySpace did or Facebook will.

 

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