13:05 PM

SiliconValleyWatcher confirms Yahoo is negotiating acqusition of Flickr

By Richard Koman for SiliconValleyWatcher.com


Yahoo, the leading Internet media company is in negotiations to buy Flickr, the fast growing photo sharing web site. This follows reports by Om Malik at Business 2.0 earlier in the week, of a possible deal .

A high level source within Yahoo told SiliconValleyWatcher that the two companies are in negotiations over the purchase price and other details, but that as of late Friday night Pacific Time, no final agreement had yet been reached.

The Yahoo source said that industry reports valuing Flickr at $35m or more were too high and indicated the final valuation would be smaller.

The acquisition of Flickr would provide Yahoo with one of the hottest online companies to have emerged in recent years.

Flickr is emblematic of a new breed of Internet companies that have become successful as platforms for a diverse number of communities of users. And often there is no way to predict what types of communities will arise to take advantage of the online services.

The challenge for any new owner of Flickr will be in how to continue Flickr’s growth and monetise its operations without harming the communities of users that grown around the service.

Yahoo might find itself in a bidding war if other online media giants such as Google, AOL, or even Microsoft decide to compete for Flickr.

HeyPix is another photo sharing site similar to Flickr. Both sites have "blogging" tools and support RSS, a technology that syndicates information to communities of users.

A HeyPix spokesperson told SiliconValleyWatcher: "I hope the Yahoo's and Google's of the world are better built to keep innovation going than some of the older monolithic companies. Flickr is a great company, and them doing well and continuing to get better only makes HeyPix's market stronger, so we also hope that they continue to do well."

For a in-depth look at Flickr, check out my Q&A interview with CEO Stewart Butterfield on the O'Reilly Network.