You gotta go with traffic
Regular readers will know I have been skeptical about how much social networks are worth - keen readers will have noted I have been getting less skeptical over time. The $900m Google-Myspace deal was a pointer I couldn’t ignore.
Now I’m going to concede on this entirely. You gotta go with traffic. Once you have (a LOT) that you can make the rest happen.
Just look at the multitude of business models that Myspace is running now - straight forward advertising, sponsorship, music downloads and I’m sure films etc to follow. See this for a GigaOM view of how users could drive advertising to other users. Some evidence of this also comes from the fact that MySpace is now referring more users to ecommerce sites than any MSN.
There are still many issues unresolved but you’ve gotta have faith…. 
This may sound too much like coincidence, but I was thinking this at mashup* last night. Then I got in this morning to find Yahoo! considering buying Facebook for $1bn and Youtube thinks it is worth $1.5bn.
Next time I will get it right a little earlier in the cycle! Still I think this one still has some way to go.
October 3rd, 2006 at 3:44 pm
[...] This is a follow up to an earlier post You’ve gotta go with traffic where I argued that if you’re site has (lots of) traffic it will be valuable. [...]
October 18th, 2006 at 12:17 pm
[...] The final point is from Umair - that VCs don’t get it - and the key thing here is putting a price on social capital. I am the first guy to admit that is a tough thing to do. If you have read this blog since the beginning you will have witnessed me struggling with this question. As I have said before I have come to believe that - you gotta go with traffic. To my mind that is the evidence that social capital is there and once you have social capital you can figure out a way to drive cash value from it. There is obviously a lot more to it than this, but the headline message is straightforward. [...]