A blog post in response to last week's newspaper reports that MetaCafe, the online video sharing web site, was about to be purchased for more than $200 million, made me cringe.

It led with this headline:

Metacafe Acquisition: $200 million is a Steal

I know that the headline of your post greatly affects readership, so I excused it and read the article. In there, I found a comment that seemed as hype-worthy as the headline:

But let’s face it - YouTube went for $1.65 billion, making Metacafe worth at least $600-$700 million. They’d be stupid to sell for $200 million, if that rumored price is correct.

Stupid is not the word I would have chosen. Conservative. Prudent. Smart. One of those might have been my choice.

If you're working from the point that YouTube was sold for about $1.5 billion after the media companies received their share, then how does MetaCafe stack up?

On a market share perspective, it's not even in the same ballpark. Prior to the removal of its most compelling content, YouTube's market share stood at 46%. MetaCafe is at about 1%. By that measure, without even factoring in the bonus that should be ascribed to YouTube for being the market leader, MetaCafe should be valued at $32.6 million.

On a traffic basis, ComScore said MetaCafe's site drew 16 million visitors in November. The research firm said YouTube drew 81 million in September, only a few weeks before Google agreed to buy it. So on that basis, each YouTube visitor was valued at $20.30. On that basis, each MetaCafe should be valued at $325 million.

There are other metrics such as what MetaCafe was valued during its $15 million second round of funding six months ago. To me, it adds up to a sale price for MetaCafe a lot closer to $200 million than the $700 million that some are speculating.

As the leaked Yahoo-Facebook documents this week show, there are many metrics and comps that go into an acquisition price. Ultimately, it's a negotiation which is why MetaCafe reportedly hired Lehman Brothers to shop them.

But, it's not as if buyers don't have choices. There are literally hundreds of online video sites out there. And I don't think it helps MetaCafe's case that it suddenly put itself up for sale a few weeks after traffic to its site spike enormously just before the YouTube-Google deal was announced.

In its favor is the fact that MetaCafe is near the top of the heap based on its growth, market traction and unique technology. Still, that doesn't mean is should hold out for anything near YouTube money.

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