However, Facebook may be different. Its value lies in the website’s wealth of personal data and its requirement that all users provide their real names. This vault of demographic information means that Facebook can post targeted ads with much greater accuracy than most other websites. With every “Like” or musical artist added to a user’s profile, related advertisements may better home in on potential customers.
Still, the value of some social networks has dropped by hundreds of millions after just a few years. MySpace was sold to Rupert Murdoch’s News Corporation for $585 million in 2005. Six years later, Specific Media bought it for a mere $35 million. What happened? The audience dried up. It fell from 70 million unique visitors per month in 2005 to around 35 million today, according to The New York Times.
There have been some success stories. LinkedIn opened to the public at $45 a share last May. The shares reached as high as $122.70 before averaging about $72 per share on Wednesday. Zynga, which makes Facebook games, has stayed consistent since opening at $10 per share on its first trading day last month. Both companies operate based on the amount of information or time consumers provide – which could bode well for Facebook.