How can a company like myspace and face book be worth a billion with out generating revenue.?

I think the reason the Myspace and Facebook are both such huge money makers is - yes - due to the advertising, but even more in the sense that the target market is so well defined.





If company A is trying to sell cute pink shoes, then they're going to hawk the ads at some who would be into cute pink shoes (a generalization, i know); say, a teenage girl. If company A were to pay for advertisements anywhere else, they can't really guarantee that the teenage girl will be there, nor can they guarantee that the teenage girl will be coming back to the site again.





With these social networking sites, the target audience is way too well defined (Look at all the stats you give them), and not to mention how addicting these sites are. People keep coming back, again and again, to network with their peers, and in turn, see the same ad over and over. Does it have an affect? Sure it does!





I just can't imagine that Facebook is worth 15 billion dollars. Everyone called Zuckerburg crazy for not selling at 1 million.

How can a company like myspace and face book be worth a billion with out generating revenue.?
Have you never heard of the tech bubble? Do you remember pets.com? Internet sites can do that...until a crash.
Reply:myspace makes about 20 million a month in advertising and they keep it all. that is why they are worth so much.


there is another less famous version called yuwie that takes most of that money and pays it's users (you and me). here's a link.


http://r.yuwie.com/jalbright
Reply:Selling ads = revenue
Reply:with out revenue there is no company


they can be by providing service
Reply:Members = advertisement sales = rupert murdoch............
Reply:Well, I agree with the answers posted. The primary revenue channel is current probably advertising. BUT, here's what myspace and facebook are starting: they are starting off a genre of social networking over the internet. As, this networking mechanism grows, so does the consumption capacity over this channel. So, really the worthiness of these companies is currenty through banner ads; but the futuristic value they carry, is what's perceived to be even higher.
Reply:they get paid by advertisers, example, Banner on top of page that says comfort the emo kid and win a Ipod.
Reply:because advertisers see that these websites attract millions of people and with this type of traffic, advertisers pay BIG BUCKS to these companies to advertise.