26 Miles

Bubble 2.0?

// October 18th, 2006 // Technology

Edward Cone has an article at CIO Insight arguing against those who espouse that the Google’s acquisition of YouTube is one of many signs that we’re entering another bubble.

He points out that, while there will always be investors ready to waste their money on ill-conceived vaportech dot-com ideas, many of the latest cashouts have been aimed at companies with huge user bases, such as MySpace and YouTube, which demonstrate the street-value of brand loyalty and adversiting potential, especially in social networking sites.

What we haven’t seen yet is what becomes of popular social networking sites once they become “corporatized”. Creating MySpace and YouTube wasn’t easy, but it wasn’t that hard either, and can be repeated over and over again. If these huge investments in well-branded social networking sites result in rampant censorship, restricting access to content, or otherwise become DRM-ified, people will quickly flock to the one-off site that isn’t “0wn3d” by “the man”. After all, I gotta have my Stewie.

Time will tell if Google loses their shorts on the YouTube deal. They’re not idiots so they probably won’t. But even if they do, who cares? They throw off a few billion a year on wild ideas anyway. They don’t need all of them to pan out to make shareholders happy. Getting YouTube gave them a monopoly on the video-sharing market, at least for now, and monopolies are usually a good thing for the monopolist.

In any case, I think we’re too early in the evolution of the next-generation of web-based companies to forsee the true value of our collective investment.