The news this week about Sony paying $65 million for video sharing site Grouper brings back many memories from the crazy Dot Com boom days. It seems some of us haven’t learned anything! Grouper has less than 1% of the online video sharing market, is not profitable, and doesn’t know when they will become profitable. As a matter of fact, they don’t know if they will ever become profitable. Yet Sony, in its “We need to buy something Dot Com” wisdom has decided to pay $65 million for the site.
Let’s look at the deal more closely. According to ComScore, Grouper has 542,000 unique visitors in July. That’s not a huge number of visitors. Market leader Youtube has 42 times more market share. If we take the price paid for Grouper and apply it to Youtube, then Youtube would be valued at over $2.7 billion! If this is the kind of valuation companies are putting on un-proven and un-profitable Dot Com’s, I wonder how much they would pay for a site that actually makes money?
Hello Sony? I have a tech site for sale. 600,000 visitors a month and, unlike Grouper, it’s profitable! Yours for just $100 million! Hopefully this Dot Com Bubble 2.0 doesn’t lead to Dot Com Crash 2.0.