I never understood why some companies like Handheld Entertainment and Go Fish were publicly traded. With easier access to capital comes the fact that your premature business gets nailed by shareholders, especially if your underlying premise - that distribution trumps content - is faulty.

[Disclaimer: both companies were or are distribution partners of WatchMojo.com]

GoFish is now worth $10.61M, ZVUE (formerly known as Handheld Entertainment) is worth $10.16M. Revver, never publicly traded but armed with $13M in VC money sold for less than $5M to Live Universe, Brad Greenspan’s company.

WatchMojo.com is worth more than those three companies combined, not because any stock ticker or term sheet says so, but because if value is ultimately derived by demand and supply, there’s no competition. It’s not even close. With every passing day, the value of content soars whereas distribution fizzles unless you are # 1 or # 2.

GoFish has changed models and is no longer a UGC platform, but rather, a kids’ ad network. Two years ago, UGC was in; last year, it was ad networks. Something tells me GoFish might very well prevail, but it’s hard to focus and execute when your stock price is out there for public consumption and rejection.

ZVUE went on a shopping spree and financed itself via private investments in public equities (PIPEs), which is always a dangerous tool. Maybe that is why the company’s stock is languishing. I thought of buying some shares but there remains downside risk, even though the stock has fallen from $7 to $0.40.

Not a day goes by where you don’t hear about a new roll up fund. Today Austin Ventures launched one, backing former Razorfish CEO Jeffrey Dachis.

For the past few months, I’ve talked to two investment groups about doing a video rollup and the names of such companies always come up as would-be targets. I’m not sure the upside is there, even at distressed prices.

Last year Ross Levinsohn and Jon Miller contemplated doing the roll-up, but the numbers did not add up, partially because online video is very nascent. So Messers Levinsohn and Miller instead merged with ComVentures and began to invest in online video startups.

This year, when Revver was on the auction block, I considered making a run for it, but I could see that there were and would be dozens more of such companies for sale as the market weeded out the second tier aggregation/distribution sites.

The temptation was there, but ultimately I stuck to my guns: I much rather own content instead of distribution. This is counter-intuitive to the Valley mindset but not to big media. Distribution is great, but it’s not exclusive or defensible per se in online media.

Even in traditional media, look at what is happening to ABC, CBS or NBC (even FOX). They lost market share to HBO, MTV, ESPN etc.

Then enter new media where everything is a click away.

Especially online, distribution is a commodity, and ZVUE and GoFish were commodities to shareholders. The public market is more correct in recognizing that than private investors, many of whom who suffer from herd mentality and are a bit, shall we say, behind the times.

Consider recent history:

Lycos, Excite et al. all had massive distribution at one point, now they’re distant runner-ups. Even Yahoo! is seeing erosion in market share to the new wave of distribution outlets, namely vertical publishers and massive social networking sites.

So instead of owning distribution, we at WatchMojo.com instead partner with them: YouTube, Hulu, MySpace TV, Veoh, etc., why compete with these massively funded strong brands when we can tap into their networks and build our business on their platforms?

I think with time and experience, even private investors get this: this morning Web 2.0 uber investor Fred Wilson conceded content might be a better bet than aggregation. That sure sounds like something I’ve been saying for some time. I doubt Fred is giving content businesses a consideration, I surmise nothing will change that… however, online, where everything is a click away, you cannot build defensible positions in distribution or aggregation, but you can with content.

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