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Which was the Better Buy? YouTube or Flickr

Posted at 9:30am EST on 11/25/2008

The year 2005 marks one of the largest turning points in the tech industry. Yahoo! makes a bold move to acquire a fairly popular photo sharing website called Flickr in March 2005 [press].

The year 2006 marks one of the highlight moments for the Yahoo! competitor, Google. YouTube is acquired on October 9th, 2006 [press].

Google was a little late to the game, roughly a year and a half late to the acquisition game. But don’t worry, since 2006, Google has had no reservations about making other acquisitions.

A little preliminary math, let’s take a look at the cost. Yahoo! acquired Flickr for USD$35 million. Google acquired YouTube for USD$1.65 billion a year and a half later, making the actual price of YouTube — in relative value to the Flickr acquisition — USD$1.58 billion, roughly 70 million in difference. [1.65 billion - (1.65billion * .04 ), 4% for inflation]

$1,580 million [YouTube] vs. $35 million [Flickr]. That’s a huge difference of $1,545 million [$1.545 billion].

So the question begs itself: Who got the better deal?

Looking at the web traffic

Photos were, have been, currently are, and will continue to be a large interest point for users of the web. But, so is video, in the same regard. Video, however, was never so easily accessible and “sharable” as YouTube made it, revolutionizing the video industry.

Or, in terms of a graph, take a look at their growth.

Two years ago, Oct 2006, Flickr.com was getting slightly under 10 million uniques/mo. In the larger view of things, that’s not a lot of traffic. Bear in mind, this is a year and a half after Flickr.com was acquired by Yahoo!

Let’s look at YouTube’s numbers two years ago. 25 million uniques/mo. More than twice the traffic of Flickr.com at the time. Note, the graph dates back to the month which YouTube was acquired, which helps explain such a dramatic growth in traffic.

Last month, October 2008, Flickr.com was getting just under 30 million uniques/mo, which is not a number to sneeze at — that’s some serious traffic. But, looking at Google’s acquisition, YouTube.com got a little over 60 million uniques, again, twice the traffic of Flickr.com. These two flagship sites, YouTube.com and Flickr.com, represent a large portion of traffic going to either company.

Looking at services provided

Let’s take a different angle though. More than just traffic, let’s look at what is actually being offered in terms of services.

YouTube.com currently does not provide a “pro” type account, which might provide more detailed analytics. They do offer advertising, but it’s not a direct “pro” account.

Flickr.com offers pro accounts at a rate of roughly $2/mo. You can get a pro account for 1 year for $24.95 or 2 years at $47.99. These pro accounts will give you unlimited photo uploads, sets, collections, and provide access to the original photos you upload. Additionally, the pro account will provide the user an ad-free browsing experience. Lastly with the pro account, you will get stats.

So the question that needs to be asked is: Does Yahoo! value the advertising of a single person to be worth $24.95 per year? Or, is Yahoo! going after the user experience more than the dollar.

YouTube.com could easily offer people a “pro” account status by paying $24.95 per year and then offer an ad-free browsing experience. But do they? Would they even want to?

YouTube.com has grown month after month and I think they’re becoming blinded by the growth over what the user experience really could be like.

But going back to the original question, which was the better buy? Flickr or YouTube.

In all honesty, I think Yahoo! got the short end of the stick on this one. Photos are great, but what it really comes down to is engagement. User interaction and loyalty.

YouTube has created an atmosphere which draws people to come back time and time again. While I believe Flickr has done the same, they did it in a different way.

Alex Iskold wrote an article on ReadWriteWeb about YouTube being the next Google. I think the story he wrote about it shows exactly what I’m talking about.

During one of the conference breaks, I met Ian Kennedy, one of the heads of Service Innovation at Nokia. (You’ve seen a lot of Ian around the web because he used to be the product manager for MyBlogLog at Yahoo!.) Ian and I started talking, and he mentioned that his son accesses the web through YouTube. At first, I didn’t get it and thought Ian was making a joke.

But then I realized he was not. Whenever his son needed any information, he would open up YouTube, type in the search term and then just watch the videos that showed up as matches. He never Googled anything; he never went to any other site; his entire web experience was confined to YouTube videos. It was rather puzzling, I thought. Could it be that there are YouTube videos on any topic? My curiosity was piqued, and I decided to run a little experiment.

I think this story is exactly what I’m talking about. The little boy didn’t go to Flickr.com to find everything he needed.

I want to modify and add to a common phrase. “A picture is worth a thousand words.” I’d like to modify it to, “A picture is worth a thousand words and a video is worth a million words.”

I think the point I’m trying to make is true though. The web is moving faster and faster to a video world and photos just aren’t keeping up with the trend. Photos are great, I love photography — I honestly do — but I really do think that videos are the wave of the future — right now.

YouTube was definitely the better buy, despite Flickr launching “videos for Flickr.”

A huge thanks to Marshall Sponder for contributing to this post.