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Originally Posted by milo
i mean jesus christ had anyone heard of last.fm (i ****ing hadn't)
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There's a GD group there...so yeah. Skiddy posted a link to AudioSproggler (which is the same company/thing) well over a year ago and quite a few people here signed up. It's also based on quite a simple but clever idea, and Last.fm (unlike MySpace, or Facebook) doesn't really rely on you doing anything to keep increasing their "value".
While the valuation of these companies always seem dodgy, they're just high risk investments. There's probably someone who lent the MySpace people a $1m at some point, and we'd all laugh at their idiocy. But then Rupert Murdoch bought the site for $500m (!) and anyone who got in on Day 1 is looking pretty shrewd. I heard Facebook at one point was holding out for $2bn which most people laughed at. But then someone pointed out that if you consider that they had comparatively good marketing data on ten million American college students (i.e. the future high earners) on a range of things, $2bn looks kind of paltry.
Whether these sites are worth these sums is debatable, but I can understand why people invest. Something like Facebook, if done properly (and if reaching a critical mass) could have huge marketing potential and arguably could go even further in providing a service indirectly or directly.
To take one simple example - let's look at employment agencies. I'm not sure what the combined market value of Reed, Adecco, Kellys, Office Angels, etc is but it must be pretty vast if you consider the number of branches, and what each branch must have to make, the rates charged for each temp/perm appointment and so on. Certainly at the low end of the market (for studenty type jobs) they provide very little else but a slight CV tailoring service, and then an introduction. We're recruiting a temp at present, we speak to the usual suspects, they forward on some CV's (some entirely inappropriate) - we pick one, hire the person for four months, and the agency makes however much (probably £2k or so) for what...forwarding on a CV? Processing some payrolls?
I mention this because a "networking" site done properly could easily replace large swathes of the employment agency market without much technical innovation. And then you can move your attention to estate agents, which in London at least seem to have offices every 10 feet.
The point is that these businesses in the "old economy" (sigh) made (or are still making) huge sums of money for doing very little. The internet will change them all drastically, but the thing that's stopped them being washed away much quicker is the issue of reputation / quality control / etc. Once a web site (of whatever model, doesn't need to involve networking at all) "solves" that problem - in the eyes of the wider public audience - they will make insane amounts of money. The profitability will decline in time of course, but people in on the ground floor of whatever venture it is will look pretty shrewd.