His $12.5 million backing of Veoh clarifies where we are in terms of the Web 2.0 economic cycle:
The Web 1.0 hype is definitely back. When large broadcast companies and branded media notables invest $25 million in a highly trafficked content site dependent on advertising revenue, then digital tulip fever is on the rise. $25 million an awful lot of money. Remember that this is what Google raised from Sequoia and Kleiner-Perkins in their 7 June 7, 1999 B round which bridged them till profitability in 2001. My prediction is that Veoh will waste it all on advertising (ie: recyle it to Google and Yahoo), competing with other video user-generated businesses. And in the end, Veoh will acquire YouTube or vice-versa and then be acquired by Yahoo or Google at a knock-down price.
How is Veoh different from YouTube and the various other me-too video technology start-ups now littering Silicon Valley? All are premised on the idea that video-amateurs like posting their work on the Internet. Some have more users than others, but there appears to be no significant difference between them.
Eisner has been playing with his own long tail. He says that "Veoh's technology uses the Internet to "expand broadcast capacity to the point that every single user, whether an individual or a media company, can create their own 'channel' and every 'channel' can be supported by its own business model." But this is, of course, the spin of the consummate sales guy. There are only two business models for content: a) advertising and b) user payment. So either the videographers of Veoh need to charge their views or they need significant traffic to build advertising revenue. Thus, either Eisner has been seduced by the meaningless sales spin of a personalized business model per channel or he is seducing us with this long tale.
Hey Michael, want to invest in my new blog portal?