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For second time this year, Photobucket is saying MySpace is blocking photos and videos hosted by Photobucket. Back in January 2007, when the first such incident happened, it ended up amounting to saber rattling.

Fox Interactive Media soon explained it was merely trying out a new filter to prevent security breaches on MySpace. Now, it is happening again. MySpace is apparently blocking Photobucket videos. The blocking (or outage) began at 10.30 P.M. Pacific Time, and this time it seems to be pretty serious. This time Photobucket is taking the battle to the keyboards, rallying their users and asking them to put pressure on MySpace. So much for the claim that they were the third-largest video site behind YouTube and MySpace!

Regardless of who is to blame, this widget squeeze, if that is indeed the case, exposes the soft underbelly of all these start-ups that have pinned their hopes on the MySpace ecosystem.

Well, it seems like there is a toll to pay to get access to MySpace. Google paid hundreds of millions of dollars to get access to FIM’s playground. It is not surprising to see Rupert’s lieutenants play whack-a-mole with start-ups with little to offer in terms of monetary compensation.

The Photobucket team should be able to sense how deep the crisis is for them – the users can take their videos elsewhere, for instance to MySpace videos or YouTube. Look what happened to Revver — which got blocked from MySpace because it was showing ads on videos – they seem to be running uphill since then.

The blockage isn’t good for Photobucket for other reasons – they are rumored to be for sale, seeking $300 million or more. That price dropped, I bet!

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