CNET's Snappy Decision

It didn't take long. Just three weeks after announcing that it would acquire the company behind the popular Webshots.com photo-hosting site, CNET (Nasdaq: CNET) closed on the $70 million transaction yesterday.

Our own Mark Mahorney wondered why no one had come by to scoop the company up sooner, and he's got a point. With Eastman Kodak (NYSE: EK) looking to reinvent itself as the market leader in digital photography, why wasn't it a factor here? Don't you think that Hewlett-Packard (NYSE: HPQ) could have helped its efforts at hpphoto.com by tapping into a site that boasts 66 million photographs with 300,000 new snapshots uploaded daily?

Their loss is CNET's gain. You can't deny the allure of having someone upload their pictures only to invite everyone over to check it out. These days, dot-com real estate is as valuable as ever, and CNET has picked up one meaty parcel of virtual turf.

CNET has turned a new leaf since acquiring MP3.com. It is not afraid of treading in the chunky bandwidth realm of multimedia. Yes, its popular Download.com site was always a staple for software developers to showcase their wares to the freeloading public, but most of the CNET portfolio consisted of doling out smaller-sized news, reviews, and comparison-shopping Web pages.

Between MP3.com and Webshots, CNET is diving into treacherous waters where few have been able to monetize the delivery of larger files. Thankfully, its experience at Download.com makes it a scuba-certified winner here.

It has already made headway in the music arena by migrating the music files over to a Download.com subdomain while launching MP3.com as a third-party affiliate supporting all of the music formats beyond its namesake technology such as Apple's (Nasdaq: AAPL) iTunes Store and Roxio's (Nasdaq: ROXI) Napster. CNET stands to collect handsomely if the site pans out as it gets a piece of the action for the referrals without having to house the songs on its own servers.

So where does Webshots fit in all this? CNET is paying more than five times this year's projected stand-alone revenues for the site. That's not cheap. However, it's the synergy behind the deal that makes this a great catch for CNET. Just as CNET has been able to feed its audience from one site to another, this will be just one more way into CNET's sticky, growing web.

It's a pretty picture. I think I'll go upload it.

CNET's flagship Download.com site has always been the place to go for authorized software downloads, but if you aren't careful beyond that, then your downloading ways might lead you to catch something. Is your computer clean? Is your email ripe with unwanted sales pitches? What can you do about it? All this and more in the Viruses, hoaxes, & spam, oh my! discussion board. Only on Fool.com.

Longtime Fool contributor Rick Munarriz was one of the original MP3.com musical artists. True to his word, he has migrated his band's music over to the new CNET site. He does not own shares in any of the companies mentioned in this story.