Futuríveis

Sony thinks video sharing has the makings of a respectable business--and then some. Earlier in the week it agreed to spend $65 million to buy Grouper. File this under the heading of "Everybody wants to be like Rupert (Murdoch, of course)," whose $580 million acquisition of MySpace last year is looking smarter by the moment. If Sony is right about Grouper's growth prospects, the acquisition will more than offset management's current embarrassment over the exploding laptop battery fiasco that's led to big product recalls by Dell and Apple Computer.

No doubt Grouper puts up impressive numbers. The traffic tracking firm HitWise rates it No. 8 in the category. But Grouper has never turned a dime of profit. Similarly, YouTube, which was founded 18 months ago, remains in the red.

That has not fazed entertainment industry analysts from predicting YouTube could fetch as much as $1 billion in a buyout. The eerily familiar argument is that this is about eyeballs and traffic and generating a user base. Profits will come later. (For YouTube's sake, I hope so. The company's reportedly burning through $1 million a month.) With a 43 percent share of the online video market, the company commands the kind of reach that makes advertisers drool.

But might they also be drooling because they're taking hits of leftover dope from 1999? The fear is that this is just Napster redux, a case of a successful Web site ringing up enormous traffic on the strength of infringing content. Remember that at the zenith of Napster's popularity, nearly 2.8 billion files were being traded on the service by more than 26 million people globally. (Insiders say the real number was closer to 40 million.)

...