Oh my, but the MySpace.com acquisition for more than half-a-billion dollars is going to cause a VC-driven content train wreck. We already had startups falling out of trees making MySpace comparisons, now they’re going to be thick on the ground, with the “MySpace of X” and the “MySpace of Y”, and the “MySpace crossed with Google”, etc. etc. I shudder to think how many VCs will fund MySpace-alikes through a thought process like the following:
I shouldn’t fund this piece of crap. No revenue. No protection. No nothing …But wait, I would have said the same thing about MySpace if someone had brought it to me. No nothing there, and they got bought for more than half a billion. How silly would I look if this stupid startup turned into another MySpace? …Maybe it could be another MySpace. Maybe I should just put a few million into it. Can’t lose more than I put in. … Hmmm, let’s put a term sheet for this thing on the agenda for the next Monday-morning meeting.
More seriously, this is a remarkable event for user-created content. After all, according to Neilsen/Netratings, MySpace served up more ad pages in May than every online site other than Microsoft and Yahoo. That is fabulous stuff, and it will feed a fervor for more of same — most of which, of course, will fail, but that’s okay.