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Social networking website valuations aren’t bubbly

Recently, there has been a lot of speculation and debate on many webmaster forums and conferences regarding the valuations of web 2.0 social networking sites, mainly facebook. I have speculated that facebook could be worth one trillion, and while that figure may seem very absurd, few people are willing to accept that facebook could be worth just $15 billion. That number seems so outlandish to most people of the tech industry who still have vivid memories of the 2000 dotocm bubble, and therefore regard these recent valautions to be the manifestations of a second bubble.

However, facebook’s 15 billion dollar valaution is not excessive, and we’re not in a web 2.0 bubble. Instead, we’re in a web 2.0 continuum. The valuations for the top web 2.0 social networking sites will only grow in the coming years, with 2008 being a stellar year.

Also, a lot of naysayers seem to forget that facebook, myspace, youtube have MILLIONS of users, MILLIONS in ad revenue, are very profitable and can be treated as full fledged media companies like CNN or News Corp which have audiences of similar size.
The web 2.0 continuum will begin with google, yahoo or microsoft aquiring another piece of facebook in early 2008. Maybe 2-10% stake will be aquired for billion of dollars. This will make huge headlines and further bolster the valuations of these web 2.0 companies.

I have written how the top websites aren’t at risk for being displaced. What this means is that facebook, myspace, twitter, photobucket, google, youtube and other popular sites WON’T be superceded by newer sites. Why is this important? Because it further gives justification for the ‘high’ valuations of social networking sites. Since these social networking sites aren’t at risk of being displaced they will only continue to thrive.

I have written a few weeks ago how it is no longer viable to create a web 2.0 site due to market saturization. Since nearly all new web 2.0 websites are slated for failure according to my arguments, that will further enable the current web 2.0 leaders to keep growing and apreciating. My post “Why making money online generally sucks” also elaborates on this point.

Overall, the web 2.0 bubble doomsayers will be wrong in 2007-just like they were wrong in 2007, 2006, and 2005. When Fox aquired Myspace for $560 million it was considered to be indicitive of a bubble, but now myspace is worth $10-16 billion and revenue has exploded in that time.

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