Photobucket passes 30 million users, hints at IPO
The Browser stopped by the Palo Alto offices of Photobucket recently to see what's up with the biggest site that nobody's ever heard of. Co-founder and CEO Alex Welch emerged from the back room into what could easily pass for the waiting lounge at a doctor's office and beamed, "Today is our big day. We hit 30 million users."
Ranked 44th on Comscore's top 50 Web properties with more than 15 million unique visitors a month and adding 80,000 new users per day, Photobucket has become a force in the world of social networking. For those who have never heard of the company, its name pretty much tells the story. Users upload content (75% photos; 25% videos, graphics, icons, avatars, etc.) and embed links to that content on their blogs, newsgroups, and the like. "We pioneered the whole idea of taking codes and embedding to other websites," Welch says. "Now we have a 70% penetration on Myspace."
Because subscribers use Photobucket primarily as a means to publish content elsewhere, Welch has a unique window into how traffic is moving around the Web. With a peek into the logs, he weighs in on the "death of myspace debate" rather definitively: Myspace "traffic is going up and to the right. It hasn't flattened at all." But at the same time, he's seeing fractionalization. Specialty networks like the goth site VampireFreaks.com are booming. And as Photobucket moves into the mainstream, its demographics are moving beyond the glitter set. Welch says users are starting to tend toward the 35/40 age range. "A lot of them have kids. Scrapbooking is huge. Two Peas in a Bucket is seeing a lot of traffic."
As for the Photobucket business, Welch wouldn't talk revenue figures but says the company made money last year, with most of the cash coming from ad sales. It has raised a total of $14 million in venture financing and Welch is clearly keeping his eyes on the IPO market. He cites video compression software company DivX (DIVX), which went public in the fall, as evidence that Wall Street's appetite for tech IPOs may be growing. "We're continuing to build the company, accelerating growth and revenue. You have to because of Sarbanes-Oxley," he says. "Ultimately, we have the reach andeyeballsballs. In 2007, we expect to be in the top 25, and you can monetize that kind of traffic. If you look at the privately held, ad-supported sites in the top 50, there aren't many."
Photobucket is a great success story that shows how Web 2.0 is rapidly commercializing itself. True innovation has yet to come. More and more niche-specific portals are emerging that either target a specific geography or an industry. Look at the success of websites like www.hotsoup.com (focused on politics), www.musaras.ca (focused on short getaways), www.ecademy.com (focused on business connections). Bottom line is you need to create communities where residents/visitors share common attributes. This opens up opportunities for targeted ads, if supported.
Photobucket is a webhosting company. The reason they don't talk about revenues is simple: It's very little.
Why? Because most of the traffic is from embedding and linking like Welch described. Nobody actually goes to photobucket to view content. You can't sell ads unless you have a visitor actually going to your site.
PhotoBucket may well be the largest webhosting site in the world but it is no Myspace. Not even close. Welch is just a greater promoter. He's got nothing.
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