Wednesday, June 27, 2007

Social Networking at an All Time Buzz

The words couldn't be out there more: MySpace, LinkedIn, Friendster, Bebo, Facebook. All of them are useful sites. All of them are addictive sites. But what are they really worth? Yesterday we talked about the demographics of MySpace versus that of Facebook. Today, we're going to talk about the value. Yesterday a few pieces of news turned our heads toward this social network phenomena again. LinkedIn, as broken by Reuters, could be planning an IPO "as early as next year." The site claims to have about 12 million users and expects $100 million in revenues by next year. Then, the guys that started it all, Chris DeWolfe and Tom Anderson, the founders of MySpace asked Rupert for 50 million bucks for the both of them for two years. Again, many speculate that this request was to cash out at the height of the social networking revolution. So far no news as to whether Rupert will grant this request. And just to throw it in the mix, Facebook is still independent although rumoured at at least one billion dollars (and I guess given the more educated demographic with more disposable income, possibly worth it, given the $580 million spent on MySpace).

All of this money being thrown around for user generated content platforms. Is this the height of the social networking that we've seen prevalent since Friendster days? Why are these guys looking to cash out? MySpace is nearly saturated with users, coming up on 200 million. Do they think that social networking has maximized its growth? An interesting book that I read lately is The Cult of the Amateur where the author talks about how all of this user generated content is ruining us. Is this what the owners think? Do they want to be distanced from their creations?

Regardless of their reasoning, every new website out there now has some type of social network component. The ability to not only gather information, but to find like minded people regardless of geographic boundary is extremely valuable. But upkeep to these sites is a major task at hand. Again, we'll keep an eye out on how these social networks continue or don't continue to grow.

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