Thursday, April 20, 2006
More (Less) 2.0 Than 2.0
For some time now, the usual suspects have been abuzz about PhotoBucket. The usual argument is what this TechCrunch post says - it hinges on Photobucket's enormous traffic.
Nearly every VC I've chatted with in the last few weeks has PB on the top of their list, and they make a point of trying to be offhand when they ask me about it, but it's clear the numbers make them kind of breathless ("x% of all traffic!").
Should they? I think PhotoBucket is a nice example of strategy trumping spreadsheets.
Let me explain simply. Though it has a ton of traffic, Photobucket will always be at the mercy of players at the edges of the value chain - like MySpace, Xanga, etc. These are the players who will be able to exert market power over PB, because they will control the redistribution of revenues further down the value chain.
That PhotoBucket's got traffic isn't so surprising - unsurprisingly there is a huge demand for free stuff, especially bandwidth intensive (read: more costly) free stuff. I don't see how PhotoBucket is positioned to profit in any defensible or privileged supernormally from that (ever-present) demand.
From the pov of a spreadsheet and simple assumptions, PB might look like a world-beating play; from a strategic pov, IMHO, it is less of one.
Interesting. So do you think it's possible to build a (sustainable) business that feeds into the MySpace ecosystem, kinda like Fred Wilson's edge feeders? Insert self-promoting link here:Feeding the MySpace Beast
I'm thinking that maybe there are ways to leverage MySpace and similar networks through rev share with users. Thoughts?
Rather than rev share with users, MySpace will price sponsored access to their user portfolio for the photobucket/flickr/please use our server space 2.0/ services to peddle their "freemium" services and build their soon to be ad driven revenue models
The idea is that MySpace will be the only effective way to get your stuff to alot of people on an increasingly disaggregated now truly world wide web.