MySpace and Photobucket have called a truce, and Photobucket videos are no longer being blocked on the News Corp-owned social networking site. Whilst there was speculation that the reason for the original blockage was that News Corp. was nervous of a possible competitor acquiring Photobucket, the real reason was that a minority of Photobucket embeds were breaking MySpace's terms and conditions which state they should carry no form of advertising.
From the official Photobucket blog:
We want our users to be able to share their content and understand it must be within the framework of MySpace’s Terms of Service for it to appear on the site.
So after an initial war of words, it's a public omission that Photobucket was in the wrong.
Photobucket also say:
Moving forward, we’ve established open lines of communication and procedures with MySpace to prevent a sudden block of Photobucket content in future.
What is clear here is that MySpace has all of the power and can suddenly block any third party widget if it chooses. What we don't know (and probably never will) is what 'open lines of communication' already existed between Photobucket and MySpace, and why it took two weeks for a u-turn from News Corp?
Mike Arrington makes the point that it may be that News Corp. had underestimated the user and media backlash over the blockage, and that it made sense to let Photobucket back in, along with a well managed statement about future compliance with the site's terms and conditions. That feels a lot like bullying.
One thing we do know for sure, startups should be aware of relying too heavily on the MySpace ecosystem.