A recent post on real estate 2.x stirs up the old question about Zillow’s business model once again. According to an anonymous commenter on that site (who lays out a lengthly calculation) “every man woman and child on earth must visit Zillow 2.0 times EACH per year” in order for Zillow to be profitable enough to pay back its investors.
Clearly, following that logic, advertising can’t be Zillow’s only planned revenue source. Now you have Yahoo’s CFO warning of a slowdown in advertising sales, and their stock drops 11% in response. Zillow has repeatedly said they are a media site – but I just don’t buy it. To bet the future solely on advertising revenue would be suicidal, in my opinion.
Of course there’s potential licensing fees from its partner deals, but even that seems limited since they’re just giving away their API. Some have even fretted about Zillow’s potential entry into the real estate brokerage game, but I doubt that’s likely to happen – I’m sure they don’t want the hassles.
What’s a site like Zillow to do?
WebHomeUSABlog brings up an interesting point that maybe Zillow’s endgame isn’t profitibility after all, but rather acquisition by one of the big three Internet giants (Google, Yahoo, Microsoft). I suspect this is the most likely exit strategy Zillow’s executive team is gunning for.
So, just out of curiosity, I thought I’d throw the question out to the crowd. If Zillow were to be acquired – who’s going to do it?