Business -- 19 days ago
Technology, Online Media, Valuations and the Future
Words: Gentleman's Journal
, Last week saw Twitter gain a new investment giving it a value of $9 billion, an increase of 10% from its previous funding round in 2011. This new funding came from the worlds largest asset manager, Black Rock. For a company that started back in 2006, this valuation is pretty amazing by anyone’s standards, however it still leaves people asking the same question “how can a company that doesn’t generate revenue be worth $9 billion”? It seems today companies are valued not on how much money they make, but how many users they have. In the case of Twitter, it has doubled its active users to 200 million. The value seems to have come from the potential of monetization. Whilst Twitter has already developed an advertising business that allows users and brands to promote themselves on the site, it is not yet clear if Twitter has turned a profit.
After Facebook’s drop in valuation from $43.50 to just $25 three weeks after the IPO. Twitter is more careful than ever on how it is valued, so it doesn’t have the same fate as the likes Groupon, Facebook and Zynga. With all the investments in Twitter, they have acted as their own broker, therefore being able to agree a price individually with each buyer and therefore being able to keep a tight control on their valuation.
With growing pressure for Twitter to have an IPO, they seem to be hesitant and rightly so, it is this caution that could continue its online success.
One form of social media that is less talked about in terms of valuations is You Tube. It is this social platform that you and I should be paying attention too. Over 800 million people now visit the streaming site each month and 72 hours of video a minute are uploaded. You Tube is not just making millions through advertising, it’s making some of the video creators hundreds of thousands too. Individuals such as Jamal Edwards of SBTV have 144 million channel views and Charlie Mcdonnell who has 265 channel views on his channel “charlieissocoollike”. Mcdonnell’s channel has 1,6 million subscribers and he reportedly earns more than his parents.
Google (the owner of You Tube) have said more than 1,000 people worldwide are earning $100,000 (£63,000), however the actual figure has been said to be more like $276,000 (£174,000).
To the shock of many commentators Google brought You Tube for $1.65 billion in December 2006. Back then it had yet to turn a profit and many wondered what they were doing, maybe Google thought the same thing at times too?
Today, You Tube is the second-largest search engine after Google itself. The genius behind You Tube was that it was created unlike any other at the time, It didn’t charge or offer financial gain. This view is still shared today by the You Tube talent, who say you have to be authentic and if you do it for the money the internet will detect this. This new generation of so called ‘Vloggers’ are now becoming celebrities in their own right.
The fact is, You Tube is taking over TV, and Google who were once considered crazy for buying the video sharing at the price they did, have more than made their money back. You Tube has become a social media platform that is worth its valuation.
It is creating an industry within an industry. It’s not ‘if’ it will destroy TV, it’s ‘when’. You Tube can already be streamed on to your smart TV in the sitting room and advertisers are seeing the potential value of this. Unlike Facebook and Twitter, You Tube offers consumer interaction unlike any other. It is only a matter of time until tablet technology and other social mediums realise You Tube’s strengths. Maybe the press should concentrate on Google’s brother and less on Twitter and Facebook. There might be a lot more growth in it than meets the eye?
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