I was probably wrong in saying it was only worth a tenth of that, but I still think $580 million was high. Remember, what he bought wasn't the present-day Myspace. Most of Myspace's user base (and thus value) was added since the acquisition.

"Most of Myspace's user base (and thus value) was added since the acquisition."

How many of those new users were because of News Corp's acquisition? If majority of those users would be added anyway (if it was just a matter of time), and an astute investor could predict that, its valuation of $580m or even more would be justified.

Today most financial publications believe Murdoch got Myspace for a bargain.

bargain? he got it for a steal. Even sumner redstone (notoriously suspicious of the web "hmm what is that nuisiance stealing from my billions??") said it was worth 1.5B -- conversations with Michael Eisner.

Something is worth whatever people are willing to pay for it, esp. in the case of internet phenoms.

Yeah, but we're not talking about people here. We're talking about one guy, who possibly did a stupid thing by buying it. If someone mistook glass shards for diamonds and bought them for $10k, it doesn't mean the glass shards are worth $10k.

One guy who wouldn't have paid so much if there weren't other people offering similar amounts. My point is that you can't pick an arbitrary amount ($58 Million) for the valuation - but that this amount is always dependent on other people.

The problem with your example is that we all have limited knowledge about any given business transaction. Assuming ten people were standing around bidding on little rocks thinking they are diamonds, for that moment (to those people) they are worth $10k. When they have more knowledge (i.e. that this is glass and not diamonds) then the worth of those rocks drops. So the worth varies based on the knowledge in the market and valuations of others.

Now in any given market if one has more knowledge about a good or service one might be able to say that a good or service is over valued. For instance, I have always believed Myspace to be over valued. However, this realization does not give one the ability to pick a number out of the air and state that it is a correct valuation.

On average. Murdoch is way over one one end of the bell curve (too early to say which).

> Most of Myspace's user base (and thus value) was added since the acquisition.

Nah, the hot young promiscuous girls were there from early on.