In the wake of Microsoft’s aborted courtship of Yahoo and Jerry “Oh, did you increase your offer?” Yang, there’s bound to be a lot of scrutiny about what’s next for Yahoo.
One asset that’s well known but perhaps not scrutinized from an investment perspective is Flickr, the world’s most popular photo-sharing site that Yahoo picked up for a song (estimated $40-million) in 2005. Today, Flickr attracts more than 44 million unique visitors a month, according to Comscore, while Compete.com reports Flickr had 30 million unique visitors and 70.2 million page views in the U.S. last month.
Despite Flickr’s popularity, it is arguably under-monetized. In terms of advertising, it’s minimal at best. Instead, Flickr makes most of its money by selling Flickr Pro memberships for $24.95/year and offers e-commerce services through partners such as photocards, posters, frames and calendars. So, what’s Flickr worth, and, more important, what could it be worth if it was managed more aggressively?
Let’s do some back of the envelope calculations based on its current financial model. If you assume 10% of its 44 million unique visitors have Flickr Pro accounts, that’s about $110-million in revenue; if it’s only 5%, it’s $55-million. Then, add another $10-million in e-commerce commissions.
What you get is revenue of $65-million to $120-million. If we now take Henry Blodget’s 25X revenue formula (which he applied to Facebook), Flickr is worth $1.5-billion to $3-billion.
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