Online Video Sharing

MySpace unceremoniously dumped PhotoBucket late Tuesday night, adding the popular photo and video-sharing site to a list of companies that MySpace has restricted access to.  MySpace claims that PhotoBucket was violating their TOS by generating add revenue from Videos posted to MySpace, but PhotoBucket CEO Alex Welch denies that videos contained advertising.

It appears that this dispute arose over numerous posting of a Sony-sponsored slideshow featuring images from Spiderman 3.  Although the slideshow itself was not generating money on a PPC or CPM basis, my impression is that Sony sponsored the ad with the understanding that PhotoBucket could drive a substantial number of impressions, with the largest source of these presumably coming from MySpace.

So the question here is whether this action was a direct violation of the MySpace TOS.  Fox Interactive Media certainly thinks so, stating that,  "Photobucket recently began running an ad-sponsored slideshow,” and encouraged users to post these slide shows on MySpace. “We spoke to the company about their actions, but they refused to respect our community’s terms and we had no choice but to disable their service.”

In a written statement in response to MySpace, Welch states that “Photobucket was not contacted by MySpace about this issue… Some of our users choose to share their slideshows with friends on blogs and social networks, of which MySpace is obviously one. This content is not clickable and does not generate revenue for Photobucket – only the branded content and environments on Photobucket do that. In addition, MySpace is claiming that some of these slideshows contravene its terms of service. However, it has decided to block the posting of user-generated videos from Photobucket, not slideshows.”

The TOS point in question is Item 8-13 which states that "Prohibited Content includes, but is not limited to Content that, in the sole discretion of MySpace.com: ……. Involves commercial activities and/or sales without our prior written consent such as contests, sweepstakes, barter, advertising, or pyramid schemes;"  The TOS then further states that, "advertising to, or solicitation of, any Member to buy or sell any products or services through the MySpace Services," is prohibited.  So it certainly seems that MySpace is within their rights to include or exclude whoever they want from their playground in this instance.

It is hard to argue, however, that the relationships between 3rd party widget providers and MySpace has been all but one-sided.  MySpace and the large landscape of widget companies have all benefitted together.  Overall, the MySpace layout controls and functionality  leave a lot to be desired, and many community members have probably only stuck around (and invited their friends) because of the freedom that they have historically had over adding 3-rd party features & designs to their profile.  Widget companies have provided a benefit to MySpace by adding this advanced functionality and keeping development and associated hosting costs off their balance sheet.

Certainly as free services continue to try and find ways to monetize the eyeballs they’ve collected, disputes will arise.  I can’t imagine that PhotoBucket and MySpace are not able to get back to the table and find a possible financial solution for this mess.  But maybe that’s just part of the reasoning behind this move.

Technology and Web 2.0 pundits have been weighing in on the future plight of PhotoBucket and the frailty of building your business depending on the traffic of others. You can read more on TechCrunch, GigaOm and Scobleizer.