Value of Social Networking Web-Sites Increasing

March 13, 2008

AOL is buying a large social network called Bebo for $850 million in cash. Something interesting that I have found dealing with social networks is the value put on these social web-sites. MySpace was bought in 2005 for $580 million by News Corp. MySpace is reported to be worth more than $15 billion like Facebook.

Bebo is number 3 on the above list, which shows strong recognition of this company.

I think a large factor in determining the value put on these companies is the amount of users using the service. One thing I do not like particular is the advertising on Facebook now is all the applications. I don’t mind some of the applications such as the hockey pools, but most of them are annoying. As well companies are competing on what markets they are in. Certain social networks dominate certain markets. Such as Facebook having a large portion of the North American market. 

I just find it interesting how the value of these social networking web-sites are worth so much. I can see how marketing companies would love getting advertisements on these web-sites, as the traffic is really high on a daily basis visting social networking web-sites.  But are they really worth hundreds of millions and billions of dollars?

Mitchell Watts


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