Blog Post

Photobucket vs MySpace, Round Two

Updated: FIM just sent in this statement on why they are blocking Photobucket.

“MySpace allows its users to embed video, slide shows, and other features from third parties so long as they comply with our terms of service.

Photobucket recently began running an ad-sponsored slideshow and encouraged users to post these ads in bulletins and profiles throughout the community. We spoke to the company about their actions, but they refused to respect our community’s terms and we had no choice but to disable their service.

MySpace does not block third party embeds or services that abide by our terms of use. We support the freedom of expression and creativity of our community and must continue to protect the experience expected by our users.”

For second time this year, Photobucket is saying MySpace is blocking photos and videos hosted by Photobucket. Back in January 2007, when the first such incident happened, it ended up amounting to saber rattling.

Fox Interactive Media soon explained it was merely trying out a new filter to prevent security breaches on MySpace. Now, it is happening again. MySpace is apparently blocking Photobucket videos. The blocking (or outage) began at 10.30 P.M. Pacific Time, and this time it seems to be pretty serious. This time Photobucket is taking the battle to the keyboards, rallying their users and asking them to put pressure on MySpace. So much for the claim that they were the third-largest video site behind YouTube and MySpace!

Regardless of who is to blame, this widget squeeze, if that is indeed the case, exposes the soft underbelly of all these start-ups that have pinned their hopes on the MySpace ecosystem.

Well, it seems like there is a toll to pay to get access to MySpace. Google paid hundreds of millions of dollars to get access to FIM’s playground. It is not surprising to see Rupert’s lieutenants play whack-a-mole with start-ups with little to offer in terms of monetary compensation.

The Photobucket team should be able to sense how deep the crisis is for them – the users can take their videos elsewhere, for instance to MySpace videos or YouTube. Look what happened to Revver — which got blocked from MySpace because it was showing ads on videos – they seem to be running uphill since then.

The blockage isn’t good for Photobucket for other reasons – they are rumored to be for sale, seeking $300 million or more. That price dropped, I bet!

29 Responses to “Photobucket vs MySpace, Round Two”

  1. Imagine if Microforst cried foul because application develoeprs were you know, selling software for windows, and making money without them getting their cut?
    Or Google complaining that sites were getting traffic and then making money and not giving GOOG their cut.

    The difference is that Google and MS have built platforms. Myspace is just an app. Platforms have a lot better long term viability than apps.

  2. . . . Well, recent actions by some of the large API providers like Google, Amazon, MySpace and Firefox suggest that there may be another, less welcome, exit – having the API rug pulled out from under you or, almost as bad, finding out that your friendly API provider has just introduced a service that competes directly with your own. Neither event is conducive to nailing that big acquisition exit deal. . .

  3. Anonymous Coward

    This is an object lesson in why companies that build widgets used by subscribers on other websites should never be valued as standalone companies.

    One line of code from that 3rd party literally puts these guys out of business. How many times does this have to happen for VCs to take note?

    Go build your widget with the pocket change from friends and family.

  4. If the updated statement is correct, then I see no reason why MySpace shouldn’t have blocked them. MySpace has been actively fighting bulletin spam and people trying to monetize on their site.

    As a MySpace user, I can say that bulletin spam and marketers are a huge problem; I get at least 5 invites each day from marketers that have pages filled with ads. MySpace can’t be discriminatory, so it’s understandable that they would block ALL of these sources (which would include Photobucket, if they were distributing ads).

  5. Om,

    This is exactly what I would have done if I were on the Fox side. Toll-Free is not capitalism. Win:Win is. If Photobucket is to reap the benefits of the MySpace playground, as you call it, they SHOULD pay for the privelege.

    I wrote this piece called News Corp: Bewildered Pioneer ( earlier. It explores how MySpace’s low monetization rates have left News Corp confused.

    Collecting its tools from parasitic sites like Photobucket and YouTube is precisely what they need to do to change that.

    Great analysis!


  6. Bottom line here: It’s Rupert/FIM/MySpace’s house to do with as they please. Any companies uphappy with the house rules–stated or not–have this wonderful free market option:

    Go build your own house.

  7. Aren’t ecosystems, you know, systems.

    So. part of the dynamic force of myspeace is precisely the ability to add content like video, flash, what-the-ever to your yourspace.

    So, News is turning yourspace into newspace. At what point does this drive myspace users to a new space? Not likely? Orkut, friendster anyone?

  8. Any ideas who Photobucket was in talks with for getting bought? Maybe, it was MySpace and the price was too high. And this is a negotiating tactic.