Last week, Mike Butcher of TechCrunch UK reported that News Corp. was in talks to buy the professional networking site LinkedIn. As well as claiming a "well-placed" source, Butcher speculates that an acquisition on News Corp.'s part, makes a lot of sense, as social networks are replacing newspaper classified ads as a method of professional recruiting.
News Corporation, headed by the shrewd Rupert Murdoch, owns some of the premier advertising properties aimed at top-tier professionals including The Wall Street Journal and (in the UK) The Times and The Sunday Times... In the new environment of professional online networking Newspaper classified advertising is becoming an anachronism... and this trend is reflected in the decline of the advertising market in the newspaper sector.
The rumor was given more weight today when VentureBeat ran a follow-up story, also claiming a "well-placed" source. The post adds to Butcher's theory: News Corp. would incorporate LinkedIn into its various newspaper properties around the world.
News Corp.’s strategy, from what we understand: Somehow integrate LinkedIn’s network with the Wall Street Journal as well as its other newspapers around the world, hopefully figuring out how to recoup News Corp.’s newspapers’ declining classified ad revenue in the process.
How would LinkedIn's users respond to News Corp. being the new owner? A comment or two left on the VentureBeat post suggests negatively. But I can see how a purchase makes sense for both sides.
Firstly, it's worth reminding ourselves that LinkedIn is already profitable. So News Corp. wouldn't be speculating purely on future revenue. The second aspect is that News Corp.'s broadsheet papers would give more mainstream exposure to LinkedIn -- outside of the U.S. and tech sector, where I still feel LinkedIn dominates in a good and bad way. I'm judging by my own experiences here, but lots of people I know in the UK use LinkedIn if they're connected to Silicon Valley or the relating industries. But for others, Xing or Facebook (to a lesser extent) are used for professional networking. In other words, social networks on News Corp.'s newspapers (beyond the U.S.) powered by LinkedIn could really inject some new users into the service. Users who might otherwise not have considered using LinkedIn.
For LinkedIn, they get to cash out now, before Facebook has a chance to take a serious stab at professional networking. Something which they are certainly working on.