The value of Social Media

Mark Zuckerberg is about to join the billionaires club when Facebook floats in a couple of weeks at an estimated value of US$77 billion to US$96 billion. This is after he purchased Instagram for US$1 billion dollars the other week. and after Microsoft bought Skype for US$8.5 billion (which arguably isn’t a social media platform but let’s not split hairs…).

No matter which way you look at it, there is some serious coin being thrown about. Which got me thinking about why. Why is Facebook worth more than the total national debit of New Zealand? Why is the modern day equivalent of a Polaroid camera worth, well US$1 billion more than Polaroid? At the end of the day they are just lines of code sitting on a server somewhere right? And then I though about Niall Cooks 4C’s of Social media, you know the ones about communication, connection, collaboration, cooperation. These purchases have now, for me at least, put a value on these four points. Which then got me thinking, magazines & newspapers communicate, why is no-one buying APN for some obscene amount?

Can it really be as simple as allowing people to talk to people and share ‘stuff’ (the other three C’s) or is there more to it? If that is the secret then why are we not seeing more start-ups being sold? I don’t know the answer to those questions, wish I did.. as I am sure the thousands of developers sitting in garages and bedrooms creating ‘the next big thing’ right now would.

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One Response to The value of Social Media

  1. I’m no expert, but part of the answer to the question is investors are probably paying too much for social media properties. Look at how much Facebook makes (less than you’d expect), then look at the growth potential (again less than you might expect).

    Mind you, I won’t be investing in APN either…

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