Monday, October 09, 2006

Facebook and YouTube

I've said before that Facebook should take the money and scamper, if indeed Yahoo is willing to pony up $900MM large. My biggest concern is that while Facebook may be different in many ways than MySpace, it's not really a competitor. I'm not sure it can reach beyond its niche, and it runs a very real risk of being swamped under as MySpace's youthful devotees start entering college. I just don't see enough upside versus risk for Facebook to justify scorning mountains of the good stuff.

YouTube, apparently in play at $1.6B mark from Google, is a different story. This company is comparable to MySpace in reach, and even more so in possibility. YouTube has, seemingly overnight, built an unbelievable brand. There's a lot of hand-wringing over YouTube and copyright issues, but it's all noise - I guarantee those issues will be in the margins, if not forgotten, within a year. Besides all the kooky stuff, smart media companies have begun seizing on YouTube as a distribution source, and who knows what the company could pull off with the heft of a major partner? All in all, it's not at all shocking to see the price this high. While YouTube's sub-30-year-old leaders will most likely sell, unlike Facebook I wouldn't fault them for holding out and continuing to grow the business.

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