Is Facebook worth as much as YouTube?
I was reading Steve Ballmer scratching his head in BusinessWeek where he was wondering about the valuations that are getting paid out for companies like Skype and YouTube. — Good to hear that Ballmer's leadership on the social software industry …
Context & Ripple Effects
Steve Ballmer's BusinessWeek assessment of the web put Skype and YouTube valuations under scrutiny just as Facebook was broadening access beyond its earlier audience. The comparison matters because it frames Facebook less as a campus service and more as an asset being judged alongside high-profile internet platforms.
The available record also shows different commercial constraints: YouTube was already confronting copyright concerns and resistance from media owners, while Facebook had plans for a News Feed advertising unit. That leaves investor attention focused on whether audience growth can translate into a durable business model.
First-order effects
- Facebook's expansion brings its valuation into the same debate Ballmer raised around Skype and YouTube, increasing pressure to justify its growth with a credible advertising business.
- YouTube's copyright disputes give Facebook a contrasting investor narrative: social-network value can be assessed against engagement and advertising plans rather than media-rights exposure.
Second-order effects
- Potential acquirers and investors must distinguish between platforms whose growth depends on licensing contested media and services whose monetization depends on selling access to an expanding user base.
- Facebook's proposed News Feed ad format makes advertisers a more consequential constituency, because its commercial case depends on whether user attention can be converted into inventory without undermining the service.
Third-order effects
- The comparison signals a broader shift in web-company pricing toward the quality of a platform's monetization path, not audience scale alone.
- If expansion and advertising become the preferred model, social platforms may be valued less like standalone websites and more like distribution systems competing for advertisers' budgets.
The trend: Internet-platform valuations are increasingly being tested against the durability and monetizability of the audience each service controls.