Are they [Youtube, Facebook, etc.] really profitable?
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Actually, on second thought, no.
GOOG recently announced an 'overlay' ad system for Youtube posted videos, designed to generate revenue:
<http://www.informationweek.com/news/showArticle.jhtml?articleID=201801805>
Who knows if long term this will help them see a ROI on their YouTube acquisition?
So let me amend my earlier statement:
I don't know if any of these services are profitable in the traditional sense: no doubt, most aren't. What I do know is that they're being used as, to quote "Bitch", "bake your own bread and circuses" platforms. Companies are deploying these platforms as customer flypaper and still sorting out how to monetize their success.
And they are successful if you define 'successful' as heavily used. This is different from the 1.0 situation in which clever monkeys thought up clever things, attracted VC capital, blew it on big ads, big offices, ice sculptures and lap dances and failed to get the eyeballs (the first, critical step to having even a prayer of future profitability) to justify their investor's irrational exuberance.
Is MySpace profitable? I doubt it, but NWS certainly is and Rupert apparently sees MySpace as a useful component of his clanking media machine. And that increasingly seems to be the situation: 'web 2.0' services as elements of larger, more solidly performing organizations.
.d.