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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