Social Networks And Video-Sharing Sites Losing Their Promise

A look at News Corp (NWS) earnings shows that the "other" revenue and profit line, which is mostly its online service MySpace, only had an operating profit of $23 million. MySpace is one of the largest websites in the world. That can’t be good for the value of social networks. So far, there is not a lot of evidence that the universe’s largest video-sharing site, YouTube, is bringing in much money for Google (GOOG).

According to The Wall Street Journal an "issue is advertiser comfort with having their ads displayed alongside less-predictable content."

Predictability is not the entire problem. Social networks and video-sharing sites are a maze of unrelated content of questionable quality. Sites like MySpace have a large portion of their members who are weirdos and agoraphobics. Advertisers who spend any times on these sites know that.

Video sharing sites tend to have very poor picture resolution. Among the most popular videos on YouTube this week is one of a man on foot racing an Aston Martin. Heady stuff.

Part of the reason that AOL, Yahoo! (YHOO), and MSN have some value is that Web 2.0 has much less value than the markets wanted to believe. At least at portals, the content is categorized.

Web 2.0 content is a bust. But, no one wants to admit it.

Douglas A. McIntyre