On Fri, October 13, 2006 2:22 pm, Jon Alper wrote:
> Just for the record...
>
> Returning money to VC's and founders upon sale of a 'not-yet-profitable'
> company doesn't mean the company had a viable business model.
>
> It just means they were able to convince the company who bought them that
> they had a business model... Or that they had other assets the acquiring
> company could use to support a viable business model.
Agreed; no one here (that I recall) said they'd never be able to sell out
to a buyer for outrageous sums. We've all seen this happen before, it was
obviously going to happen again with YT. The "making money" challenge is
about revenue generation, and as far as I know they still haven't
addressed that. Even with Google as owner this is a big TBD - they have
the eyeballs, which in conventional wisdom in this industry equals
dollars, but the real question is how Google will avoid destroying the
service's interest and utility, avoid the obvious pending assault by
Hollywood, and still manage to keep the eyeballs coming in?
It's like the blog world, or a Wikipedia - sure, you have a ton of
traffic, but how do you monetize that without actually compromising the
very values which got you the traffic to begin with.
To offer a car analogy, since those are always popular online... GM could
do wonders for its falling unit sales by reducing its prices below cost.
They'd bring in a ton of new business, customer numbers would go way up.
But then eventually they have to monetize those customers - how do they do
that without raising the prices back to profitable levels, therefore
destroying the exact values that brought those customers in the first
place?
-Rh
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