Have you ever looked at your Yahoo! (NASDAQ: YHOO) Flickr account and thought, "Why am I doing this? I can just throw my pics up on Facebook"? If this has crossed your mind, you're not alone. In fact, many photo-sharing sites – Snapfish (NYSE: HPQ), Photobucket, Picasa (NASDAQ: GOOG) and Shutterfly, as well as Flickr – are asking the same questions. With the development and enhancement of photo management capabilities in major social networking websites, niche players need to find new ways to stay relevant.

The situation is still far from grim. Fed by traffic from their behemoth owners, the photo-sharing sites remain substantial forces, and they are currently home to more than 20 billion pictures. There's still plenty of interest in these environments ... which has been bolstered by specific features that make the likes of Flickr attractive to both professional photographers and amateur shooters. The ability to order prints and personalize portfolios, for example, still provides an edge over sites like Facebook and MySpace (NYSE: NEWS).

Nonetheless, the threats from the social networking space are quite real.

Fox Interactive Media, the internet arm of News Corp. (NYSE: NWS), is reorganizing due to a shortfall in revenue. According to TechCrunch, "The company, under President Peter Levinsohn, will miss their revenue target of $1 billion for the current fiscal year ending June." The miss could be as much as $100 million. Several of the top sales and marketing people at the unit will be moved or replaced.

The news indicates how hard it is to make money on social networks like News Corp's MySpace and photo-sharing property Photobucket. Unlike portal sites, social networks are a patchwork of content created by users and are hard to break into content categories like financial, autos, or music the way that advertisers like to target their messages.

The revenue miss also begs the question of whether the other large social network, Facebook, is worth anywhere near the $15 billion valuation it was given recently in a round of fund-raising.

Social networks may simply be good for users but awful for marketers.

Douglas A. McIntyre is an editor at 247wallst.com.

MySpace, owned by News Corp's (NYSE: NWS) Fox Interactive Media, has become the largest social networking spot on the internet, and the company is taking steps to keep it that way by purchasing the photo-sharing site Photobucket for a reported $250-300 million.

Up until now, in order for MySpace users to embed photos and videos into their space, they had to first post that content on outside sites such as Photobucket and YouTube, then embed links to it. Photobucket holds a dominant share of that photo-sharing market (41%) and over 40% of the links to its content comes from MySpace users.

A couple of weeks ago, Fox Interactive Media (FIM) began to block content from Photobucket, accusing it of encouraging MySpace users to embed Photobucket-hosted content that carried an accompanying advertisement. If this was a negotiating tactic, it didn't seem to drive the price down much; News Corp is rumored to have dropped $250-300 million for the site.

The move will allow FIM to keep MySpace customers within the family fold as they upload content, thus avoiding the possibility that while on the Photobucket site they might be lured to try a competitor to MySpace.

FIM also announced a smaller deal to buy Flektor, a site that allows users to prep better user content by editing and mashing up their photos and videos.

While their initial plan is to maintain separate identities for the companies, I'd expect FIM to eventually fold both companies into the MySpace family to create a seamless one-stop shop. It also now has the opportunity to market MySpace to the reported 30 million people that visited Photobucket in March.

While the price paid seems steep, the race to integration has become a sprint, and all the big rollers have bought into the game. It's not a market for the thin of wallet or faint of heart.

A few weeks ago, I met up with Mark Sigal, who is the CEO of vSocial. In fact, it was on that day that MySpace announced it was blocking Photobucket users from posting videos.

Sigal actually thought this was a prelude to a buyout. "MySpace could be wielding some of its power to get a better valuation," he said to me.

Well, this week MySpace bought Photobucket. It's not clear what the price tag came to. Although, a story in Red Herring indicates that it could be as high as $300 million.

It's a smart deal for MySpace since online video has become a strategic asset. While Photobucket does not have a megabrand like YouTube, there are still 40 million unique users.

Besides, much of Photobucket's traffic came from MySpace (almost 60%). So, in terms of an M&A exit, there was really only MySpace as a suitor.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

News Corp (NYSE: NWS) Interactive is close to finishing a deal to buy online photo-sharing site Photobucket for about $300 million. Photobucket is one of the largest properties on the internet with over 14.7 million unique visitors a month, according to NetRatings.

After the purchase of social network MySpace, News Corp went from an also-ran online to one of the largest internet networks. The company also has sites for its news organization and studio. Photobucket makes that footprint much bigger.

Photobucket supplies many of the photos loaded onto MySpace. As a matter of fact, it would appear that the two sites have a large number of unique visitors in common, which could have pushed the value of Photobucket's audience down a bit during the bidding. Duplicate audience is not usually worth as much as visitors who are completely unique. But, Photobucket is also a large video sharing site, so News Corp picks up a competitor to YouTube.

The large questions raised by the purchase is where companies like Yahoo! Inc. (NASDAQ: YHOO) and Eastman Kodak Co. (NYSE: EK) were? Yahoo! has an online photo business, but with the company's problems it would seem that adding to that strategic part of its business would have made sense. Meanwhile, Kodak is struggling to move to a digital photo market. It has an online photo-sharing site, but picking up one of the largest sites in the industry might have helped the company with its turnaround.

It seems that Mr. Murdoch and the management at Google Inc. (NASDAQ: GOOG) are the only buyers with any stones.

Douglas A. McIntyre is a partner at 24/7 Wall St.

In this week's episode of the Bloggingstockcast we cover Photobucket and News Corporation's (NYSE: NWS) MySpace's new truce, Suze Orman's Caribbean cruise of debt, Buyyourfriendadrink.com, the General Electric Company (NYSE: GE) NBC's Universal Studios collaboration to make the Simpson rollercoaster, and celebrate our one year anniversary of blogging.



Want to be featured on BloggingStockcast? Post a link in the comments section to a video for our consideration. Tell us your favorite stock and why in one brief line and make sure to say "And you're watching the BloggingStockcast!"

The CEO of Photobucket was certainly happy when he wrote his latest blog post. The title says it all: "Videos working on MySpace again!"

Recently, MySpace blocked the videos from Photobucket because of alleged violations of contractual terms. Basically, it looks like MySpace wanted to get a better cut – and I have a feeling they prevailed on this.

Although, Photobucket has a sophisticated system to allow for filtering of videos. That's not easy to pull off and is something that MySpace needs.

At the same time, MySpace is the gorilla in the social networking space and can throw its weight around (the site has more than 90 million unique users). As seen in this case, the company has shown it will go to the mattresses if it has too.

Yes, this is the fun-loving world of social networking.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

I recently talked to a former big-wig at MySpace. He said he was very impressed with the online video/mashup site, Photobucket.

Well, maybe Photobucket was getting too big. According to a piece in CNET, MySpace has blocked Photobucket users from posting on the site.

Why? Well, users were placing ads in the videos. And that's apparently a violation of the MySpace terms of service.

From what I understand, Photobucket gets a big chunk of traffic from the News Corp. (NYSE: NWS) site. So there's probably incentive to get a deal done, right?

Maybe not. Photobucket is trying to rile up its community against MySpace's actions. You can check it out on its blog.

I had a chance to interview Mark Sigal, the CEO and co-founder of vSocial, an online video site. According to him:

"There is no question that Photobucket hugely benefits from it's plug into MySpace, although I don't know the specific percentages. It speaks to the paradox of MySpace on the one hand benefiting from the rise of social media, which is fundamentally about openness and ease of viral distribution (so-called "embed and spread"), and on the other wanting to maintain control of it's ad inventory. Similarly raises the question of how services like Photobucket, which rely on being able to monetize viral traffic, build a business."

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Microsoft Corp. (NASDAQ:MSFT) figures it is not in enough businesses already, so it plans to offer a high-definition photo [subscription required] format to the world's camera industry. The old standard, the Joint Photographic Experts Group (JPEG) compression format, has been around awhile and may not be able to break down photos into small files as well as Microsoft can.

The move by MSFT is not unlike the one that it made into the video world five years ago. It offered its Windows Media video compression in place of the old MPEG-2 standard for breaking down video files for transmission.

Moving photos around the internet is a big business. Companies like PhotoBucket and Flickr would not exist if photos could not be broken down digitally and sent over IP. The Microsoft product offers the opportunity to do this with less bandwidth usage than the JPEG format.

There is a lot at stake. Research firm NPD Group said that digital camera sales hit $6.9 billion in 2006. The new software could be a blessing for that industry.

Microsoft does not want money for the new technology; it is part of Vista. The world's largest software company thinks this might drive consumers to adopt Vista faster. It may be right.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Rupert Murdoch: never drawn, never beaten. Not in the newspaper industry, cable programming, satellite TV, studios, and now, the Internet.

Murdoch looks as old as Methuselah and probably is, but his News Corp. (NYSE:NWS) purchase of MySpace has taken his Internet division, called Fox Interactive, out to a page view lead over the previous leader, Yahoo! Inc. (NASDAQ:YHOO). ComScore says that Fox Interactive had 39.5 billion page views in November. Yahoo! had 38.7 billion.

Yahoo! kept the lead in unique visitors at 129.9 million compared to 119.7 million for Time Warner Inc. (NYSE:TWX) sites which were in second place. It hardly matters. Yahoo! 's margin in page views and unique visitors has disappeared.

Yahoo! has recently announced a major restructuring of its management, but it does not address why the Internet portal has not had success in expanding its audience in video sharing and online community sites through acquisitions or home-grown products.

YouTube shows up in the ranking with 25.5 million unique visitors. Its new parent, Google Inc. (NASDAQ:GOOG), has 108.3 million. Facebook, a community site Yahoo! approached about acquiring hit 16.7 million unique visitors in November, and independent photo sharing site Photobucket hit 15.6 million. Yahoo! is already in the photo sharing business with its Flickr brand.

Douglas A. McInyre is a partner at 24/7 Wall St.

PhotoBucket, the huge online photo sharing site, is not for sale. But of course its CEO decided to have a press interview to make that clear.

In September, PhotoBucket was the 41st most visited site in the US. It had 14.7 million unique visitors, putting it ahead of sites like Overstock and Craigslist. The company is independent and backed by venture capitalists who are probably hungry for the kind of quick return that MySpace and YouTube VCs got.

By talking to the press and signaling that PhotoBucket could be had for the right price, the company is probably starting a bidding war. With photo-sharing and online photo development as two key community and commercial functions on the web, there are several potential suitors.

One would have to be Kodak, which needs one "Hail Mary" pass to get itself back into the game. Its digital businesses have not been able to replace the drop in its photo paper unit, and the company is viewed by many on Wall St. as a failure. The company's EasyShare online store is already a presence in the photo-sharing world, but does not have anywhere near PhotoBucket's reach. With a market cap of $6.5 billion, Kodak would have to offer a lot of the company to be a bidder.

Yahoo!, which is already in the online photo business with Flickr, would use the reach that PhotoBucket offers. It also might signal that Yahoo! management will not simply keep its head in the sand while Google, News Corp, and other companies work the M&A circuit to try to get ahead.

The other logical buyer is AOL. Richard Parsons, the chief of AOL parent Time Warner, has said that he will not overpay for online properties, but the audience at AOL websites is still largely flat and lagging behind the growth of rivals. PhotoBucket might help transform that.

Head over to Las Vegas. The odds are 8-to-1 in favor of PhotoBucket being bought this year.

Douglas McIntyre is a partner at 24/7 Wall St.