Tulip mania

In 17th century Holland, people were besieged by tulip mania, resulting in the value of the flowers spiralling out of control, eventually meaning that tulip bulbs were being sold speculatively for more than 20 times the annual salary of a skilled craftsman. This analogy has been used for centuries by economists forewarning of the over valuation of something with no tangible assets, a good example being loss making tech companies with proportionally small revenue streams getting crazy valuations.

Facebook’s $50 billion valuation makes it worth more than News Corp but in it’s defence it has a high earning revenue stream with the potential for more earnings as more refined software is developed. On the other hand, Twitter valuation of $10 billion is, in this writers opinion, vastly over inflated. Twitter’s revenue of $43 million last year is less than its most popular user Lady Gaga.

Spotifys recent valuation of $1 billion makes even less sense considering that it has made losses for five consecutive years, and only 10% of its 10 million users currently subscribe to the Unlimited or Premium service. Clearly something is amiss, as investors think they have struck gold and are prepared to piss money away to find it. AOL are the true masters of reaching into their seemingly endless money pit, offering $100 million for GoViral and $350 million for the Huffington post – they surely can’t have forgotten about their 800% loss on Bebo?

We have been here before, anyone old enough to remember the heady days of the late 90’s will look on with horror at the idea that there could be a new theglobe.com (which posted a record one day IPO gain of 610%, followed by a record fall), and will be shaking their heads thinking of all the now defunct tech and social firms out there. There have been many lessons learnt in the last 10 years, but the fact that Zynga a company which creates virtual farms has just been valued at $10 billion and the world’s biggest (real) farm has been valued at $1.1 billion suggests that there are still some prospectors out there willing to bet their money on a bunch of flowers.

On a less sombre note, it seems that some mainstream news outlets are awakening to the idea that viral videos can in fact be branded content; the Sydney Morning Herald was shocked to find that this video seemingly made by two stunning models was actually for Levis:

This is of course exactly the engagement that viral and branded content dreams of starting, especially if it drives 7 million views in little over a week.

Finally it seems that many of our favourite YouTube superstars are to feature their own movie, the ‘chronicles of Rick Roll’ stars A Listers Paul ‘double rainbow’ Vasquez and the inimitable Antoine Dobson. The Oscars are in the bag.

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About The 7th Chamber
We're The 7th Chamber, an award-winning viral marketing agency.

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