Flickr is worth 4 billion because he guessed at its freemium conversion rate and the introduction of advertising, then ran it through a multiplier chosen by a guy banned for life by the SEC? At the least, this is unpersuasive.
There are several factual inaccuracies in his post and unreasonable assumptions.
1) I believe that Flickr sold for $17 + a small earn out. The only authentic data on this is a post by Rafat on paidcontent.org.
2) You can't get at potential freemium subscribers by total uniques! Most Flickr viewers are not Flickr members! You need the actual uploader count and then at the very very best 1% might pay.
3) The ecommerce number is probably significantly off (2-3x) because Flickr is all about online sharing.
4) Flickr is huge but unfortunately is losing community aspects to other channels now like Facebook and twitter.
5) For another comparable, Webshots sold late last year for $45M and was probably 3x revenue.
Ultimately, Flickr has a pristine brand, leads the photo sharing category, so I'd guess it deserves a premium above photobucket so if Yahoo decided to sell then maybe $300-350M.
The bottom line is that there will never be big money in photos.
The one thing that stands out in this analysis is the author's almost casual statement that Flicker users regard "Flickr as their property and are resistant to change of any kind." Given the recent flap over adding video to the site, which is an individual user's choice, what would kind of noise would people make if ads started popping up on Flickr even if people could opt-out? The issue of how user's seemingly arbitrary whims may obstruct monetization of community sites seems to begging for further analysis.
I find it interesting that some people still pay attention to what Henry Blodget has to say with regard to valuations. The "25X revenue" as a generic formula is nonsense, not even worth debating. This type of thinking is what inflated the first dotcom bubble.
I read a while back that Flickr's conversion rate for the "pro" accounts was dismal, as in less than 1%. Sorry no linky to back that memory up but there's no way it's even close to 10%.
