The Social Media Bubble Burst: Yahoo! will sell Delicious?

delicious social bookmarking
Delicious for sale?
I have just read Delicious blog’s latest update regarding the buzz about the shutting down or sales of Delicious, one of the most popular social bookmarking sites.

Yahoo!-owned Delicious will possibly be sold to interested investors, as Yahoo! thinks that Delicious is “not a strategic fit at Yahoo!” One thing for sure, shutting down Delicious is not a path Yahoo! will take.

The social media bubble burst?

In my opinion, that official statement should read, “Delicious is not making money and too resource-intensive for Yahoo! Therefore it should be sold to others, rather than shut it down and make Yahoo! no money at all.”

Nothing wrong with the business divestment decision – it’s just an indication that even the big guys are tightening their budget and very closely monitoring their spending.

Yahoo! is not only the one thinking about letting go social media-related assets. Other big guys do so, too. One prominent and related example of this is the deceased Propeller, another top social bookmarking site, as of October 1, 2010.

Top social bookmarking sites are tumbling one by one. The most probable cause is that they are resource consuming, while only making a little, even not a dime, for the owner.

News / stories / links moderation is a major headache due to the huge number of spams – so does any other sites with user-generated and user-submitted content, such as forums and directories. Moreover, web hosting-related costs can be expensive for high trafficked sites, such as Delicious. One more thing – site maintenance and operations are resource consuming, as such sites are facing attack threats from crackers and hackers.

Making money via social bookmarking sites is, in my opinion, notoriously difficult, although not impossible.

Placing click-based ads, such as Google AdSense returns a very poor income, considering the typically-high social bookmarking site traffic. Impression-based ads? Not much CPM value, I suppose.

Other advertising methods? Who would be interested placing an ad to a high traffic social bookmarking site, which visitors are largely Internet Marketers, webmasters and spammers. Internet marketers and webmasters are long known as ad blind (their eyes and brains are “trained” to ignore ads.) Spammers? They have no other interest than submitting their links as many as they can and care nothing about quality (let alone reading news tips or viewing ads.)

I understand Yahoo! decision because I used to own a couple of small social bookmarking sites. I sold them cheap, simply because it’s difficult to make something out of the sites and it’s a real work cleaning up spams from the sites and thwarting site management problems.

With the pressure of uncertain economic situation, businesses of all sizes are letting go their unproductive assets, in order to keep their productive ones – it’s just logical and common-sense, I suppose.

Maybe, just maybe, this is an opportunity for brave entrepreneurs and investors to grab the undervalued assets? Businesses – in the right hands – can perform differently; this could be the case of Delicious.

Please share what you think about this recent development by commenting on this article.

Ivan Widjaya
On social media bubble burst and online business divesting