Irony of ironies: Bolt.com, a site that started off as a content producer, got YouTube envy, became a file sharing site, finally shut down when GoFish changed its mind on buying the troubled company (GoFish is a syndication partner of WatchMojo.com).
This one is odd… I was talking to some colleagues today, telling them how it was in our interest to see all of the leading video destination websites succeed: YouTube, Revver, Veoh, GoFish, Joost, etc. We partner with them, so their growth and health translates to our health and grow. But I do think that you will see a fallout and many more cases like Bolt.com, and when that happens, it won’t be due to company mismanagement but rather, the background of how most of these file sharing sites came to be.
Sit back, and let’s pontificate. The second wave of content and aggregation online (2000-2004) saw a lot of so-called link dumps aggregate content and link out to the underlying content. The most successful of these was no doubt College Humor, who sold out to InterActive Corp. for a price tag of $20M by selling 51% of the company to Barry Diller.
Mind you, its CollegeHumor.com was a success, but that came at the expense of not growing CampusHook.com (a precursor to Facebook) and Vimeo (a precursor to YouTube), so admittedly, you can’t really blame others for giving up on original content for the file sharing and social networking route.
Either way, College Humor started off as a link dump, linking out to other sites hosting the content, but ultimately it a) created its own content and b) started to host some content, too.
a) was a matter of common sense to secure premium advertisers and charge higher ad dollars, b) was a reaction to falling hosting and bandwidth fees. It was also a business: if they hosted the content, even if it was not theirs, user time spent on the site would increase, as would the frequency of pageviews to uniques. Link dumps, after all, were notorious for getting 1 pageview to 1 unique user (the 1:1 dilemma), combined with low CPM rates, this meant that most sites needed volume to make meaningful revenues. And, since they did not own content or host any of it, they would not really create value for their owners.
Some time in 2004 that all changed. I’m guessing here, but I’d say that all of the webmasters and programmers who would otherwise code such link dumps (Dave’s Daily, etc) all of a sudden began to notice that higher broadband penetration and cheap bandwidth led to more and more people consuming video. At the time, there was little professional content, so most of these sites began to offer user-generated content.
Having learned from the 1:1 dilemma and realizing that hosting and bandwidth was much cheaper, many of the link dump coders turned to coding video file sharing sites where you could upload your favorite user generated videos and share them. By hosting the content, the site’s no longer had to worry about the 1:1 issue and expanded their content base. Initially, the fact that they did not own the content was probably not a major issue because the site’s volume of video content translates to more pageviews, and thus, more revenue.
At some point, I suspect, VCs took notice and began to pour a lot of money into these firms. Sure, the koolaid drinking stories are very different, but in my experience, I think this is how many of today’s major file sharing video sites emerged.
Some sites probably wanted to avoid the inevitable hosting of copyrighted material, but over time, some saw with shock and awe YouTube’s breathtaking rise and subsequent sale for $1.65B and turned a blind eye. In fact, as one site would try to clean up its act, users would pick up and move to the next one. That is, some would argue, how some of our more successful syndication partners have grown so quickly, I am told.
The problem, of course, is that so long as most of the content on these sites remains of the UGC and copyright violating nature, then all these sites will see are considerable hosting fees and sagging revenues. In other words, sure, the number of pageviews for sale soared, but the CPMs - I think - will trail so long as the quality and copyright issue is not addressed.
Of the 30-100 file sharing sites that have been financed, some will change and morph over time and probably become pretty successful, but I suspect that a good handful or dozen will eventually get the rug pulled from underneath them from their investors who get tired of funding losses, with no path to profitability in sight.
When I see Bolt.com shutting down, I can’t help but think it’s a case of greed, frankly. Bolt.com could have been a very successful content producer in the 13-18 space, but instead, it got greedy and shuttered that business to become a me-too version of YouTube. While YouTube sold to Google and can shelter itself with Google’s battalion of lawyers, Bolt.com became the first casualty of the record labels and film studios wrath.
With jurisprudence under its belt and a poster boy to flaunt, expect a lot more of these cases to take place in the next 1 to 3 years.
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