When Amazon bought Goodreads, BusinessWeek published an article with a headline reading "Amazon likely paid $1 billion for Goodreads".
This was Kyle Stock's reasoning on the $1 billion figure.
Here’s how the numbers play out. LinkedIn (LNKD) is the heavyweight champ in this category. Based on its current market valuation and 202 million active accounts, investors are valuing it at $95 per user. Instagram is at the bottom of the spectrum, despite the hysteria over its $1 billion sale to Facebook (FB). At the time of the deal, it had 35 million users, meaning Facebook paid just $29 per Instagrammer.
Much of the social market, however, has settled neatly in between those two points. Facebook has a running value of $58 per user, while Pinterest and Twitter are right around $50 a head, based on recent financing rounds and network statistics.
Working with that range, Goodreads’s 16 million users at $55 each would add up to a sticker price of $880 million.
Then Kara Swisher came out and reported that Amazon actually paid about $150 million for Goodreads.
BusinessWeek now has amended the headline of that article to read "Rampant Speculation: How Much Did Amazon Pay for Goodreads?" Look at the URL, though, and you'll see the original headline remains, even though BusinessWeek has not called out the edit anywhere else on the page.
The poor analysis doesn't need my commentary. All users are not created equal. What's equally poor form here is the bait and switch headline. So many media sites rely on the attention-grabbing headlines to attract eyeballs to serve up display ads, and so many of those headlines are skimmed on aggregator sites or Twitter or elsewhere without ever being clicked on. The level of misinformation being spread by stories like this plants them further down the road from journalism, somewhere closer to the county lines of sensationalism.