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This article was published on July 1, 2011


Google+ cost an estimated $585 million. Will it live up to the bill?

Google+ cost an estimated $585 million. Will it live up to the bill? Image by: Jon Sullivan
Courtney Boyd Myers
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Courtney Boyd Myers

Courtney Boyd Myers is the founder of audience.io, a transatlantic company designed to help New York and London based technology startups gr Courtney Boyd Myers is the founder of audience.io, a transatlantic company designed to help New York and London based technology startups grow internationally. Previously, she was the Features Editor and East Coast Editor of TNW covering New York City startups and digital innovation. She loves magnets + reading on a Kindle. You can follow her on Facebook, Twitter @CBM and .

Forbes’ Bruce Upbin posted a few interesting calculations that add up the cost of the work put into 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 (I think this is too low but I’ll go with it)

– $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, which I believe understates what Google has spent – and certainly understates the eventual cost.

As we reported this week, 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.

What do you think? Will Google+, or Facebook for that matter, follow the path of MySpace, Friendster, 6 Degrees, and the dozens of failed social networks that came before it? It’s hard to imagine in the present that a network as giant as Facebook will ever fail. But, there was a time I thought that about AOL too. Google+ is certainly shaking things up in the social scene. And it’s clogging my inbox in the meantime.