Time Warner CEO Dick Parson’s thinks YouTube and Facebook, both supposedly valued at $1 billion, might be too high.
“Google is trying to lock down or control as many of the traffic-generating sites as they can to freeze out Yahoo, MSN and, to some extent, AOL,” Mr Parsons said.
He said the two most attractive assets available to increase web traffic were Facebook and YouTube. “[But] it’s a tough assignment. Valuations that are put on those businesses that currently make no money are astronomical and you have to have a big leap of faith,” he said.
I think Mr. Parson’s is thinking too traditionally. MySpace was once thought to have been purchased for way more than it was worth at a price of $580 million dollars by Fox Corp., but it was Rupert Murdoch who got the last laugh when Google decided to pay $1 billion dollars to be the search engine of choice across all Fox sites including MySpace. Lucky break? Could be. Analysts are predicting that MySpace could generate revenue upwards of $1 billion+ per year by the end of the decade, maybe sooner.
“Pali Capital analyst Richard Greenfield estimates that the “other” revenue that includes the company’s Web sites like MySpace and FIM will top $1.4 billion in fiscal 2006, up about 25% from last year, and will become News Corp.’s fastest-growing segment in fiscal 2007.”
So my answer to Mr. Parson’s would be that with the traffic numbers that MySpace has, you can easily mold the site into whatever you want. Create new revenue channels, maybe even a whole new portal. The sky is the limit as long as you have the right team at the helm. Never underestimate the net.