In the wake of Photobucket's sale last week to News Corp., people have asked me two questions:
(i) How is Fotolog different from Photobucket?
(ii) Why did News Corp. buy photobucket?
With the week now over, let me take a pass at answering both questions.
How is Fotolog different from Photobucket?
Photobucket and Fotolog are both built around media (photos and videos) and they are both related to social networking. And they are both experiencing rapid growth. But that’s where the similarity ends. Photobucket is a tool that is agnostic of destination – while Fotolog is a destination. Photobucket stores image-based media, then distributes it to your page on social networking sites such as Myspace, Bebo, Piczo, Friendster, etc. Fotolog is a destination where you post one image a day which then becomes the center of a social interaction/chat with your friends. It’s intentionally simple – stripped down and focused on the social media experience.
The Photobucket acquisition affirms the importance of user-generated content of any media type — images, video, etc. — and media's emerging relationship with social networking. I often call Fotolog a social media site because it's all about the intersection of media and communications, two things which were once like oil and water — they traveled on separate pipes and represented distinct experiences. But they are now coming together in fascinating ways. It's early days, but I believe that the combination of media and communications — gifting, sharing and transferring social capital, between users/members, via user-generated content or digital assets that represent identity — is a more than a trend.
The first generation of social-networking sites stressed self-publishing over connections (from Geocities, to Tripod to Blogger). The next generation focused mostly on connections (sixdegrees, and friendster are the classic examples here — tools to gather friends and connections, as social capital accrues in theory to the people with the most connections). The third and current generation of sites blends media with connections — each with a different emphasis.
Focusing in on Photobucket and Fotolog — the difference between the two is clear when you look at traffic and usage data. Both sites are on a tear. Alexa (link #1 below) ranks Fotolog as 24th largest in the world — Photobucket is 44th . As CEO of Fotolog, I'm obviously privy to more data, but focussing on proportionate growth — the Alexa link shows rapid growth for both sites. Comscore measures Photobucket with 28M uniques and us with 13M. Comscore is panel-based, and at Fotolog we are working with some other data shops to confirm this data. We recently starting dropping Quantcast pixels on our site and they track us at 26M uniques — data sources aside, the point here is that both sites are large and growing fast.
Site usage patterns tell a different story. See the table below with Comscore data from March — the average minutes per day is hightlighted. Photobucket averages 7 minutes per day while Fotolog averages 23 minutes per day. Fotolog does 261M total visits, compared to 90M for Photobucket. Media-wise Photobucket has 2.5BN photos, Fotolog has about 1/10th that number at 230M – but in order to maximize user response, Fotololg only permits one up load per day. Photobucket also offers video, which Fotolog is targeting for the future. Socially, the sites couldn’t be more different, given Fotolog’s status as a destination with an emphasis on conversations. Our site has more than 2BN conversations posted, approximately 10 per image.
So why did Newscorp buy Photobucket?
The first reason that is much cited for the transaction is defensive — News Corp. / Myspace bought Photobucket to make sure no one else bought them. News Corp. understands that the media on its social network is vital to the experience, and having a third party manage the bulk of the media on MySpace was a risk. This concern can only have been exacerbated with the rise of YouTube and its purchase by Google. Moreover, Photobucket's push into video must be attractive for News Corp. as a foil for its competition with YouTube – it’s no coincidence that since that deal, Myspace has been so aggressively promoting its videos on its homepage and elsewhere. So media matters — but this is more than media or UGC – It’s also the most common form of digital personalization. Taking photos out of their analog construct, they are a very simple form of digital customization, it’s far easier to take a picture of something than to render some customization in photoshop. On Fotolog we have tens of thousands of pictures of people's computer screens while gaming, or desktops, or pictures of people sneekers – Fotolog members have posted over 60,000 pictures of Converse / Chuck Tailor's — or custom images. In other words, this is about personalization, and the camera or a "picture" is just a tool.
Beyond this strategy my guess there is a broader opportunity — Photobucket is a photo and video tool that could become a web-wide locker for the storage of digital media. Just as eBay's acquisition of Pay Pal wasn't meant to just serve just eBay, my guess is that NewsCorp’s purchase of Photobucket isn’t just meant to serve MySpace. The opportunity is to serve the web, I suspect that’s the broad strategy. Granted, there are risks to a broader strategy — eBay didn't effectively execute and while Pay Pal has recently picked up share the first few years after that acquisition amounted to treading water at best. The fact that Google is now driving into the payments business is a testament to that failure — eBay had the running room to be the web payments platform. There is also an audience risk — Photobucket users might not pick it as a the service of choice for other media types, the audience may move on and News Corp. could be faced with a whole new dominant parasite on its host in 18 months. Given all of this the deal once again distinguishes News Corp. as one of the media companies in the world driving headlong into building digital media assets that are indigenous, not extensions of existing franchises.
Lastly, people wonder what the Photobucket deal means in terms of valuation and monetization of social media sites. On this front, the acquisition is good news for Fotolog and our peers. In contrast to You Tube, Photobucket demonstrated that UGC could be effectively monetized, a path that we are following at Fotolog. The market has valued highly a popular tool that facilitates social media networking communities. That only reflects well on both the segment and both the destinations and tools associated with it.