The Next Iteration of this Web Thang.
Blustery winds on the Peninsula today and a double fatality @ 330am a couple km's from where I went to uni and not too far from where I spent my first 21 years in South Caulfield. It's sometimes hard to tell whether it's the calm after the storm (we've had alot of parsing, indexing and speed issues we are only 1/3rd of way thru fixing) or before the storm (approaching grand final week and Im off to Sydney Wednesday-Friday to present at Web Directions - which has a great audience of dressed down, smartedup geeks.)
So while I'm tweaking and fiddling with powerpoint on a Friday with the need for the file to be ported to Keynote, I'm seeing the $1.5B YouTube number hit the blogosphere like a feeding frenzy at Australia Zoo.
The $1.5B number shouldn't surprise anyone because irrespective of YouTube's monthly bandwith costs, video ad CPM's, and copyright issues, any web property that can affect the user (and thus ad) share of the tens of billions of dollar market cap'd GEMAYA (and their new Via-media brethren), means someone will ante up real dough at some time. It's as simple as buying more media usage, as long as its strengthens your reach and demographics to advertisers, not weakens the proposition or inventory. (and lets face it video will be the medium, i love text, but hollywood and tv wasnt built on image and sound for nothing !!)
I'd be more worried for Facebook though, as like Linkedin (which has a even better yet smaller audience and non-purposeful frequent user experience - it's far more targeted for next gen employment classifieds ads) Facebook has a known demographic in a relatively controlled environment, but the number of members that they have means the Price:User Multiple is very high vs other social networks. And while the leadership premium ala network effects is real (who is #2 to Skype again ?) Facebook may be more challenged in getting it's investors as many benjamins as YouTube.
Facebook will also have the Russian Roulette of having opened up its service to the broader non university market, which within the next quarter will mean there is enough user adoption data to extrapolate a few years out, to establish the total audience + long term mix of American University Students VS The Rest of Us. I would have thought they would have preferred to have sold before this, promising the blue sky of this unlimited audience to the acquirer but in its heart knowing its full of troubling assumptions. I also thought they would have rolled out to every university with more than x students globally, before they tried to get less educated Yanks onto it ;)
Facebook is betting on huge growth for its structured social networking (currently limited/skewed to US market - which all multibillion web businesses dont have as a feature), however if the same hook isnt there for the rest of us that Facebook has for uni students, and Linkedin has for white-collar tech execs, then its growth forecasts beyond university may be challenged. Which may affect the valuation. And the premium to be paid. Not to mention their current loyal users who have low switching costs dont like new features, let alone sharing the island with other non-keg connected people.
What's going to be interesting is what happens once Facebook and YouTube are absorbed by MediaCo/Gemaya in the same way Flickr and Delicious were into Yahoo - with probably a great example being Cuban's multi-billion dollar Broadcast.com acquisition by Yahoo (ironic Cuban isnt grokking YouTube)
Once the Facebook and YouTube acquisitions go down (i assume they wont ipo thru weak financials..) at that point (without having looked at traffic numbers) there will be a lack of independent monster ecosystems to buy that have the dual content/distribution characteristics. Sure you have digg, and that will probably be where the next deal buzz goes, and sure there will be some mopping up by ViaFoxGemaya of the Bebos, Cyworlds + Revvers who have either a top 5 market position (often with non US region leadership) and/or technology (can anyone say viral video ad insertion technologies :), but the monster traffic independents will be gone.
If the YouTube opportunity was created by Flickr's absorption into Yahoo, and MySpace was begat by Friendster's slide into Orkutness, then the vacuum will present another window for the New New Thing. Edge proponents will plead for the once renegade social and video networks to open up their API's to 2.1 WadgetCo's, but will end up on a dripfeed as they are stalled. Post big acquisitions, even more fund Money will accumulate and be funnelled into the new destination/edge ecosystems that get watercooler buzz.
If every user is at the centre of this overthrow as Fred says; And every user is a creator, then the Wordpress', Bloggers and Typepad become interesting (old) channels into the (new) markets. If they are willing to truly innovate and push in the direction of, but beyond Vox and Rojo. Or just as Google came into search, when that market was dead, NewCo's ala The Automattics may move beyond the text/image upload/video embed experience (and the parallel social networking sites of today) and (be funded to) deliver the new.
Ditto the potential opportunity with the search engine and news categories which still retain their old in'n'out user experience. (search'n'find but no microchunks to annotate and share) Buying and building a better shovel in these traditional markets (think about what Flickr should have done pre-YouTube and apply it to search and blogging), might be the quickest way to flank the Triple Play Portals.
I'd be betting on the new window being absorbed by more vertical, enterprise and regional plays. (disclaimer disclaimer :) Whether it's boompa.com for autos, Jobster for Jobs, Mobissimo for Travel, Prosper/Zopa for Finance, it's no doubt there will be more social media influenced category killers in jobs, home improvements/real estate, sports and trading; The new plays won't be verticalised imitations of Youtube or Facebook though; Nor will they be just edge or destination. It'll be the next iteration anyway of this web thang.
So while I'm tweaking and fiddling with powerpoint on a Friday with the need for the file to be ported to Keynote, I'm seeing the $1.5B YouTube number hit the blogosphere like a feeding frenzy at Australia Zoo.
The $1.5B number shouldn't surprise anyone because irrespective of YouTube's monthly bandwith costs, video ad CPM's, and copyright issues, any web property that can affect the user (and thus ad) share of the tens of billions of dollar market cap'd GEMAYA (and their new Via-media brethren), means someone will ante up real dough at some time. It's as simple as buying more media usage, as long as its strengthens your reach and demographics to advertisers, not weakens the proposition or inventory. (and lets face it video will be the medium, i love text, but hollywood and tv wasnt built on image and sound for nothing !!)
I'd be more worried for Facebook though, as like Linkedin (which has a even better yet smaller audience and non-purposeful frequent user experience - it's far more targeted for next gen employment classifieds ads) Facebook has a known demographic in a relatively controlled environment, but the number of members that they have means the Price:User Multiple is very high vs other social networks. And while the leadership premium ala network effects is real (who is #2 to Skype again ?) Facebook may be more challenged in getting it's investors as many benjamins as YouTube.
Facebook will also have the Russian Roulette of having opened up its service to the broader non university market, which within the next quarter will mean there is enough user adoption data to extrapolate a few years out, to establish the total audience + long term mix of American University Students VS The Rest of Us. I would have thought they would have preferred to have sold before this, promising the blue sky of this unlimited audience to the acquirer but in its heart knowing its full of troubling assumptions. I also thought they would have rolled out to every university with more than x students globally, before they tried to get less educated Yanks onto it ;)
Facebook is betting on huge growth for its structured social networking (currently limited/skewed to US market - which all multibillion web businesses dont have as a feature), however if the same hook isnt there for the rest of us that Facebook has for uni students, and Linkedin has for white-collar tech execs, then its growth forecasts beyond university may be challenged. Which may affect the valuation. And the premium to be paid. Not to mention their current loyal users who have low switching costs dont like new features, let alone sharing the island with other non-keg connected people.
What's going to be interesting is what happens once Facebook and YouTube are absorbed by MediaCo/Gemaya in the same way Flickr and Delicious were into Yahoo - with probably a great example being Cuban's multi-billion dollar Broadcast.com acquisition by Yahoo (ironic Cuban isnt grokking YouTube)
Once the Facebook and YouTube acquisitions go down (i assume they wont ipo thru weak financials..) at that point (without having looked at traffic numbers) there will be a lack of independent monster ecosystems to buy that have the dual content/distribution characteristics. Sure you have digg, and that will probably be where the next deal buzz goes, and sure there will be some mopping up by ViaFoxGemaya of the Bebos, Cyworlds + Revvers who have either a top 5 market position (often with non US region leadership) and/or technology (can anyone say viral video ad insertion technologies :), but the monster traffic independents will be gone.
If the YouTube opportunity was created by Flickr's absorption into Yahoo, and MySpace was begat by Friendster's slide into Orkutness, then the vacuum will present another window for the New New Thing. Edge proponents will plead for the once renegade social and video networks to open up their API's to 2.1 WadgetCo's, but will end up on a dripfeed as they are stalled. Post big acquisitions, even more fund Money will accumulate and be funnelled into the new destination/edge ecosystems that get watercooler buzz.
If every user is at the centre of this overthrow as Fred says; And every user is a creator, then the Wordpress', Bloggers and Typepad become interesting (old) channels into the (new) markets. If they are willing to truly innovate and push in the direction of, but beyond Vox and Rojo. Or just as Google came into search, when that market was dead, NewCo's ala The Automattics may move beyond the text/image upload/video embed experience (and the parallel social networking sites of today) and (be funded to) deliver the new.
Ditto the potential opportunity with the search engine and news categories which still retain their old in'n'out user experience. (search'n'find but no microchunks to annotate and share) Buying and building a better shovel in these traditional markets (think about what Flickr should have done pre-YouTube and apply it to search and blogging), might be the quickest way to flank the Triple Play Portals.
I'd be betting on the new window being absorbed by more vertical, enterprise and regional plays. (disclaimer disclaimer :) Whether it's boompa.com for autos, Jobster for Jobs, Mobissimo for Travel, Prosper/Zopa for Finance, it's no doubt there will be more social media influenced category killers in jobs, home improvements/real estate, sports and trading; The new plays won't be verticalised imitations of Youtube or Facebook though; Nor will they be just edge or destination. It'll be the next iteration anyway of this web thang.
posted by redbarren at 1:17 PM
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