Ronald Regan was called out for “voodoo economics” and Alan Greenspan called out “irrational exuberance.” Is today’s fixation on fixing unsubstantiated exuberant economic values to Web 2.0 free-to-users, bandwidth consuming, copyright infringement plagued, lowest common denominator, online Generation Y social network darlings “voodoo exuberance”?
The “exuberant voodoo” record:
MySpace: $15 billion latest Wall Street valuation, courtesy of RBC Capital
YouTube: $1.5 billion latest valuation, courtesy of New York Post
Facebook: $1 billion latest valuation, courtesy of Wall Street Journal
Digg: $200 million valuation, courtesy of Business Week
Grand total = $17,700,000,000.
What will $17.7 billion in “voodoo” worth yield “lucky” takers?
Hundreds of millions of non-paying teenage, student and under 34 year old users,
Continuously escalating bandwidth and infrastructure costs,
Millions of potential copyright infringement claims,
Uncontrolled sexual and anti-social behaviors,
Low production quality amateur content,
No proprietary technology,
No proprietary content…
What will the “exuberant” “lucky” owners be faced with?
Advertising averse non-paying users,
No non-paying user loyalty,
No barriers to competitive entrants,
Legal oversight and regulatory compliance,
The next big fad …
Rather than multi-billion dollar social networking bounties to be had, MySpace, YouTube, Facebook, Digg…may represent cash draining social networking albatrosses.