The big picture: Photobucket vs. MySpace

MySpace has pulled millions of Photobucket video from its site. That's the headline of the moment, but the real interesting developments occur when you zoom out a bit.

The big picture matters a lot more than the initial story (Techmeme discussion). Here's why:

Web 2.0 business models. Photobucket clearly depends on the MySpace ecosystem. However, one move by MySpace--if it sticks--can torpedo the business. As Deep Jive Interests notes: MySpace has reminded everyone who really owns the widgets. Building a business that largely depends on someone else's platform or technology can be painful. Another exhibit: Flock, which built a business on Mozilla technology. Now Mozilla is doing something similar.

The monetization of MySpace. Rupert Murdoch is all business and he's going to push a lot of initiatives to make money. The big question is whether monetization alienates users and hurts MySpace growth.

The staying power of social sites. Photobucket is urging its users to vote with their keyboards and complain to MySpace. The big picture: MySpace is looking more like a walled garden every day. That's fine, but at some point it's going to look more AOL-ish. In other words, MySpace is going to lose its cool. How well does a customer lock-in strategy work on a social site? There are no simple answers, but the fall could come quickly. Just as peer pressure fueled growth it could also result in an exodus. The momentum can cut both ways. That fact is one reason why I'm wary of the "pay anything for a social site" approach.

It's likely this Photobucket vs. MySpace spat will blow over, but the big picture issues are going to remain for a while.