There was a lot of fingerpointing, denials, and “he said, she said” going on today as everyone digested the news that MySpace had blocked PhotoBucket’s 40 million members from embedding videos into their MySpace pages.
From my perspective this looks like MySpace just found an excuse to send a big middle finger to the largest independent widget company in the hope of disrupting their ongoing acquisition talks. Om Malik sees things differently and thinks Photobucket practically asked for this blockade (although see his more recent take). Robert Scoble calls Photobucket and services like it “parasitic.” Nick Carr says this is all basically inevitable, regardless of who’s to blame.
But the important question isn’t who’s fault this is. What is more interesting looking forward is, can Photobucket survive without MySpace?
I say yes.
Photobucket isn’t like YouTube, which was deeply unprofitable from day one. They’ve been at or near profitability for a long time, dipping back into the red to grow headcount and infrastructure. They have a diversified revenue stream - some from premium accounts and most from on-site advertising.
I took a look at their leaked revenue numbers from last month. Most of Photobucket’s revenue is generated from on-site advertising - 63% of it in 2005, and 68% in 2006. In the leaked documents the company says they’ll do $32 million in revenue this year. That projection is probably dead on because it is being distributed to potential buyers - any future variance could kill a deal in progress and so they are probably being very conservative.
That advertising revenue isn’t going anywhere. Unlike 2006, Photobucket is now set up as a destination site - a good hedge against exactly what MySpace did last night. The company says that over half of video views are now on their site (and generating advertising revenue), way up from a year ago. They also say that only 25% of their users embed videos at MySpace. At their current growth rate, even a permanent ban only sets them back six months or less in terms of users and page views.
And many MySpace/Photobucket users will simply leave MySpace and go to one of its many competitors rather than lose the ability to embed their Photobucket media. Re-creating a profile at another social network takes a lot less time than re-uploading hours of video. In the end, Photobucket could prove to be stickier than MySpace.
Photobucket execs were in a chipper mood today when I spoke to them, noting that traffic to the site is way up and that they’ve had more press attention in the last 24 hours than in the last year combined.
Update: See this BusinessWeek article as well.
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Myspace may win this battle, but they will not win the war. The brand is becoming “uncool” for the kids, and “unusable” for the adults.
I really LOOOOVE how all the people who say that users will quit MySpace because of their precious content.
Quit them and go where?
Facebook? Uh. Huh. and Facebook will allow Photobucket to leech off its success by allowing Photobucket to put ads in its videos?
Riiight. Its not about MySpace being greedy dudes. Its time people realize that Widgets have no real business models EXCEPT getting acquired by a big dumb company with too much money… like Google.
Photobucket won’t get 300 million now.
Wait a month after the press dies down and more myspace users have edited their profile, and I bet photbucket loses a large amount of traffic.
@ tr, are you kidding? people go all over - private message boards and community groups launched by their friends and other users, public message boards, chat rooms, other social networking sites, facebook, whatever. there are a million places to play on the web and we haven’t even gotten into passive entertainment (aka, watching shows, etc.) which is the inevitable next step for the web’s evolution as entertainment.
i think most web users at this point have a few places they go and engage. even if it doesn’t look like myspace or offer the same experience, it’s all the same in the business: they’re competitors.
@ MysSpace User:
what the hell is wrong with all you people….photobucket’s brand is ugly?? can we say myspace! talk about eyesore…and all this talk about network effects..etc…puh-lease, how old are all of you??!! “MySpace Use”–um, wow, hello late adopter, obviously. and yes to the above, the once Friendsters who turned Myspacers ARE now at Virb. MySpace is already obselete….its for all the mall trolling crowd and their fast-food slurping, mega-blockbuster-movie going ilk. you are speculating about the habits of people like me– early adopters. you all are apparently late and way late adopters. welcome to the 21st century.
First MS blocked all the adder bot software, now this. what’s next? blocking new bands from creating accounts? or charging for the service?
time for a new myspace. hi5 isn’t it, nor is tagworld, bebo or tagged. facebook is too restrictive and hard to use for the non-techie boomers (which is the fastest growing new segment of MS now).
someone step up to the plate, willya?
“Re-creating a profile at another social network takes a lot less time than re-uploading hours of video. ”
Actually, rebuilding your friends list of hundreds of people and getting them all to join a different social network takes way more time than uploading your videos.
I was hoping MySpace wasn’t pulling a Microsoft & as soon as they spot a c0ol niche category takeoff they bully their way in with their own Crappier version*
;))
But if they’re violating TOS - U would think MySpace would have the decency to work something out with a co. like PhotoBucket that allowed Peeps to Glitter up their MS Ride* I was shocked to see PB has 17 Million users to Flickr’s 7M*
Obviously relates to everyone linking their Pix to MS huge community*
Facebook having 3Million Canadian users was a shocker too*
I suppose PhotoBucket will survive but will hope Google or Yahoo! or Fox pop the Magic Purse Strings just 1 Mo’ Time!!
;))
@patricia
True, MySpace isn’t the end all and be all. I’m just saying that most people would rather dump Photobucket than dump MySpace if forced to make a choice.
BTW I still don’t believe in Photbucket’s business model. Making money from displaying ads to uploaders but not viewers - IMHO I won’t be surprised if the whole thing is a house of cards propped up by VC money and tons of “traffic”.
They can survive and besides, photobucket can get around it.
I have photobucket images on myspace right now. If you use slide.com, they allow you to pull photos from any popular photo hosting site to create a somewhat customized slide show and it can be placed on myspace.
Therefore, myspace still has photobucket images on their site. And, you can do it without having to upload all your pictures to another host.
Waaaaay back in the mid 90s Netscape used to have Yahoo as the default search engine on Netscape.com. Then one day they realized that real estate was pretty valuable, so they had an auction and Excite won wiht IIRC something liek $75 million.
That, to my mind was when we really hit the bubble, because I believe Excite only had about half that money in the bank. They gambled that they’d be able to IPO on the strength of that deal and use that cash to finance. They were right in the short term, though it all collapsed in the long term.
I wonder if something similar will happen here.
Photobucket needs to stop being so arrogant. You are a WIDGET for God’s sake. A WIDGET! Get real and share the bounty or sell your product to a social network.
Facebook doesn’t allow widgets so people can’t move there. You can move to Bebo, TagWorld, etc.
i got one word..
VIRB
Photobucket was doing fine before MySpace ever became big & will continue to do well. People use Photobucket at many other sites other than MySpace…such as eBay.
If you have html content you want to share with your own crowd, via MySpace, Facebook (or soon many others), you can simply add it to your profile via Minggl and the social site won’t even know it’s there. But your authorized friends (those who know the password or pass your “tag” filters) will see it whenever they visit your profile. This includes widgets, videos, or any other stuff the social site tries to block.
Photobucket will take a nice hit, but I think they will survive.
If I owned photobucket, I would be looking to sell ASAP.
(this is just and overview of all the comments I have read, both pro and con) ok, just to try to get everyone to realize….MySpace has a policy (terms and conditions which everyone who signs up for MySpace agrees with), which in turn, Photobucket also had the same policy to abide by, but didn’t, so MySpace has the right to do what they did, there is no if, ands, or buts….either you like it or don’t but just deal with it…like Dewey said, learn how to use html code other than Photobucket (personally never have liked Photobucket) but have my other options for getting my html codes