[Shoe]

[ QUOTE ]
i read a great article in the economist about this. they were of the opinion that it is very much overvalued at 10billion.

the main issue comes from the different kind of network externality. in a typical network (like a software or mobil phone platform), the more people who use it, the more valuable it is.

but with friendster, the individual accounts don't get more valuable after they have a certain # of friends. in fact, they can get LESS valuable since the extra information isn't worth nearly as much or whatever.

im quoting from memory so sorry if i get the logic wrong (not a network guy myself).

the bottom line is that facebook doesn't offer a new product...it just offers fantastic features...

Barron

[/ QUOTE ]

Great post, pretty much sums up a lot of what I am thinking but not able to put into words very well [img]/images/graemlins/wink.gif[/img]

Do you know which issue of the economist this was in? I must have missed that one.

One thing to add, is that while myspace/facebook are extremely popular right now, they have yet to prove they are able to stick around long-term. They are definitely more susceptible to being a "fad" site where a majority of the user base can easily migrate to whatever happens to become the next fad. (By no means am I suggesting this site will disappear overnight -- just eventually its coolness factor is going to wear off and/or if a "better" social networking site is created it won't take long for that to become immensely popular and steal a lot of facebooks users).

I'm not sure if I am wording that correctly, and am by no means suggesting facebook is going to go away anytime soon. But sites like these have very low barrier to entry and if they catch on, grow like absolute wildfire. That being said, I think facebook is a great improvement over myspace, but there is still a lot that could be improved upon.

Also I can't imagine they are making anywhere near enough money to be valued at $15 billion. I think Microsoft is just willing to overpay in attempt to prevent the competition from getting even farther ahead of them in this area.