Tuesday, October 10, 2006


You hear it, don't ya? The DeathStar music? Or at least the "One million dollars!" shout?

"Google's Growing Grasp" from Time Magazine, Oct. 1, 2006.

"The Future of Social Networks - Communication" GigaOM's Robert Young.

Dot-Com Bubble, Part II? Why It's So Hard to Value Social Networking Sites

October 04, 2006 in Knowledge@Wharton

Less than three years after emerging from nowhere, the hot social networking website MySpace is on pace to be worth a whopping $15 billion in just three more years. Or is it?

Is the much smaller Facebook, run by a 22-year-old, really worth the $900 million or more Yahoo is reported to have offered for it? Maybe. Or maybe this is Dot-Com Bubble, Part II, with MySpace, Facebook, YouTube and the other new Internet phenoms destined for oblivion when the fad fades.

"What makes this hard is that these companies seem to be so many years away from the kind of earnings that the valuation numbers are forecasting for them," says Andrew Metrick, finance professor at Wharton. The $15 billion MySpace figure "would imply that a lot more people will be on MySpace than are currently on it." (full article)

Coming Attraction: YouTube's Business Model

October 04, 2006 in Knowledge@Wharton

A deal between YouTube and Warner Music Group to share music videos and revenue could usher in an era where the interests of content copyright holders and freebie-loving consumers align. Or it could wind up being just another stab at a business model for YouTube. The outcome will be determined by how the revenue between copyright holders and distributors like YouTube gets shared, say experts at Wharton.

Creating a revenue sharing model that is satisfactory to all is easier said than done, these experts note. It's a fundamental question: If "information wants to be free," as many assert, how do you make money?

On Sept. 18, 2006, YouTube, the largest video sharing site on the web, and Warner Music Group announced a deal to distribute WMG's music video catalog on YouTube. The catalog includes music videos, behind-the-scenes footage, artist interviews and other special content. In addition, YouTube's bevy of amateur video producers can use WMG's music library as soundtracks for the content they upload. As for copyright management, YouTube plans to build a content identification and royalty reporting system to identify video content -- such as the most recent Madonna video -- and divvy out payments to artists. The system, to be launched by the end of the year, will allow WMG to authorize rights to YouTube users. Advertising revenue will be shared between WMG and YouTube.
While details about the WMG/YouTube deal aren't fully fleshed out, some experts at Wharton are optimistic. Wharton marketing professor Peter Fader says YouTube's latest partnership (it also has a promotional deal with NBC) is "the single biggest business development deal in the history of digital media. This changes everything, and people will look back at it as a turning point." (full article)

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