Remember back in April when we reported that Friendster, one of the first dedicated social networking sites, was to unequivocally delete all user profiles photos, blogs, messages, groups and whatnot by May 31?

The site’s owner, MOL Global, at the time said that Friendster would be repositioned as a social entertainment destination site where people could swing by to play games and enjoy music, and that it would leverage Facebook Connect.

This morning, Friendster relaunched as yet another social gaming portal, indeed powered by Facebook Connect (interesting comments over at Hacker News). I’m not seeing anything music-related at this point, but it’s always possible that those plans are still in the works.

If you still have your Friendster login credentials from back in the day, you should still be able to get in with your ancient user name and password.

The site lets you play a number of casual games (I counted about 20) and invite your Facebook, Gmail, Hotmail, AOL or Yahoo contacts to play together.

Friendster also offers an API to help developers deploy games on the network.

Coincidentally, the relaunch comes as Google just launched its answer to Facebook and Twitter, which have become the dominant social networking services after the demise of Friendster and MySpace.

Update: also on the same day, Myspace gets acquired for a measly $35 million.

Well, Malaysia’s MOL Global now has somewhere around over $100 million in Facebook stock at the current secondary market valuation of around $31 per share. Until now, no one except insiders even knew they had any Facebook stock at all.

But they do, and here’s how they got it, and it reminds me a lot of the Red Paperclip.

MOL Global bought Friendster, you may recall, in late 2009. They paid $39.5 million for the company, but with adjustments for things like Friendster’s cash in the bank it was actually somewhat less.

Then, in July 2010 Friendster entered into a big partnership with Facebook. Later it became clear that MOL had sold Friendster’s portfolio of 20+ social networking patents and patent applications to Facebook. The reports at the time said MOL got around $40 million for those patents. That $40 million was in cash, advertising credits and the payments deal reported in July according to articles written in August of last year.

That was actually incorrect, we’ve heard from multiple sources.

In addition to other deal consideration, MOL also received 700,000 shares of Facebook stock in the middle of 2010 as part of that deal. And now, nearly a year of crazy growth and a 5-for-1 stock split later, those 700,000 shares have turned into 3.5 million shares. And those 3.5 million shares are worth around $109 million at the current secondary market Facebook stock price that values the company at $70 billion.

Meanwhile Friendster is still around, although parts of it are being shut down and MOL is focusing on relaunching it in Asia.

Not a bad outcome for Friendster in the end. It’s just too bad that none of the original investors or employees got a piece of the Facebook shares. Fortes fortuna adiuvat and all that. MOL crushed it, and the Friendster investors broke ranks too soon. If only they could have held out a few months more, Facebook would have come calling.

Before MySpace and Facebook, there was Friendster, a pioneering social networking website for consumers. First launched in 2002, Friendster attracted tens of millions of users over the years, but it never quite grew into the online juggernaut it could have been.

Having raised close to $50 million in venture capital, Friendster was acquired by Malaysian payments company MOL Global at the end of 2009 for a reported $40 million.

Fast forward to today, and it looks like Friendster won’t be so much about sharing with friends anymore. In a message to registered members (hat tip to @Mazi), the company is asking all users to install a custom application to export all their profile data, as most of it will be unequivocally deleted on May 31, 2011.

On the help forum, Friendster encourages all users to use the ‘Friendster Exporter’ app to download or export their profile information, friends list, photos, messages, comments, testimonials, shoutouts, blogs and groups. Options include porting content to Flickr or Multiply.

On May 31, Friendster will move to wipe out all photos, blogs, comments and groups uploaded or created by its users. The company will, however, keep all accounts alive, along with user friends lists, games details and basic profile information.

Friendster is making the changes under the guise of reinventing themselves as a service focused on “entertainment and fun” (which sounds exactly like Myspace when they started feeling the Facebook heat for real):

Our improved site is designed to create new profiles that allow you to connect differently with people and do things differently than other networking sites. Basically, the new site will complement your existing online presence in other social networking sites.

The new Friendster should be going live in the coming weeks and focus mainly on Asian users.

Just last week, MOL Global / Friendster CEO Ganesh Kumar Bangah told ZDNet that he’s under the impression social media sites are increasingly being made irrelevant because the global social graph is increasingly dominated by Facebook.

He added that, as a result, Friendster will be repositioned as a social entertainment site for people to play games and music, and that it will leverage Facebook Connect.

Coincidentally, it’s been exactly a year since TechCrunch founder Michael Arrington wrote The Age Of Facebook, noting that the social network’s dominance had only just begun.

I wouldn’t exactly call Friendster a casualty of Facebook’s steamroll, but clearly, Friendster the social network as we knew it will be no more by the end of next month.

Social Networking in Web 2.0: Plaxo & LinkedIn

In my last post, I discussed the origins of social networking online, beginning with CompuServe, Prodigy, the Well, then the rise of AOL, Geocities and Yahoo Groups. Next began the era of “spam-based” networks of which Plaxo (founded in 2002) was the king.  Co-founded by Sean Parker (yes, the same one who worked with Mark Zuckerberg in the early days of Facebook), it encouraged groups of people to email everybody in their email address books and “connect” on Plaxo so that when any of their contact information was changed online it could by synchronized with everybody’s local computer version and thus we could all stay in touch.

There was a backlash against the Plaxo spamming yet it paved the way for everybody who came after them to get users to drive viral adoption and we’d throw up our arms and say, “oh boy, here goes another social network that my friends are going to spam me about” mentality that made it acceptable for everybody who came afterward.

And come after they did.  While Plaxo never figured out what to do with us once we were all connected online, LinkedIn did.  They formed us into networks of networkers.  It was suddenly now not only about whom I was connected to, but who they knew and how I could get access to them.  We suddenly all wanted intros.  It added a new dimension to online social networks … business networking.  And they encouraged us to part with a lot more data about ourselves making LinkedIn our virtual resume.

And importantly Web 2.0 ushered in the era of “participation” – we all know that.  But less considered is the fact that the success of the Web 2.0 companies versus the Web 1.0 ones were enhanced because they coincided with hardware that allowed us to capture more content instantly – namely images and video – otherwide Web 2.0 might have been a lot less differentiated.  Suddenly we were all creating blogs on Blogger.com, Typepad & WordPress.  We started uploading images of ourselves to our blogs.

But the masses didn’t want to blog.  They wanted to publish pictures of themselves & their friends, share them, communicate with others, stay connected, have common experiences, find people to date, etc.  As I’ve said, it’s the same shit as the 1980′s – I swear.

Modern Social Networking: Friendster, MySpace & Facebook

We all know Friendster was the trailblazer in this category allowing people to create personal pages and connect to other people in a LinkedIn style but without the “business” and with a little more interactivity (let’s face it, for the longest time most users “friended” people on LinkedIn but then never really did much else).  But Friendster’s computer systems couldn’t keep up with the explosive growth (reportedly due to the complexity of the security model set up to control connections, privacy and authenticity of users) so MySpace was hot on the heels and swept up the market in a very rapid ascent.  Friendster was DOA.

And there it was – MySpace was growing at the exact time we all had cheap digital cameras, smartphones with cameras and new, cheap video cameras like the Flip that allowed us to create video.

Except that MySpace didn’t handle images or video well.  Luckily Photobucket & ImageShack did.  So users put all their photos on Photobucket & their videos on YouTube and shared them with their friends through MySpace.

Fox bought MySpace for $580 million and then did a deal with Google worth more than the purchase price to serve up ads.  For a nanosecond Rupert Murdoch seemed like the smartest guy on the Internet.  Google acquired YouTube for $1.65 billion, which at the time seemed laughably high and now seems prescient.  Google turned YouTube into one of the most valuable future Internet properties.  MySpace would have liked to own YouTube but didn’t have the public stock valuation to purchase them at the price that Google did.

MySpace later bought Photobucket for $250 million + $50 million earn out.  It did not have the same success as Google’s acquisition and MySpace sold Photobucket 2 years later to a relatively unknown Seattle-based startup called Ontela for a reportedly $60 million.

Murdoch seethed at these “startups” getting rich off the back of MySpace.  The conventional wisdom at Fox’s headquarters is that MySpace had “made” both YouTube & Photobucket by allowing them distribution.  MySpace vowed not to create anymore million dollar successes off of their backs that Google could then acquire.

So Fox ludicrously set up a quasi internal innovation center called Slingshot Labs.  The goal was to create innovations outside of MySpace and then MySpace would acquire them at pre-agreed prices based on how well they performed.  This was Politburo-style innovation and was laughable. I literally snortled when I heard that they were going to do this.  It was obviously a scheme set up by young entrepreneurs to line their pockets and some big-company executives who didn’t understand innovation.

Enter Facebook.  It had grown stratospherically from 2004-2007 to 100 million users, which actually was slightly smaller in December 2007 then MySpace was.  Facebook was everything that MySpace wasn’t.  It was: up-market, exclusive, urban, elite, aesthetically pleasing, ad-free and users were verified.  MySpace was: scantily dressed, teenaged, middle-America, design chaos and on ad steroids.

But the critical distinction in the direction of both companies was that while MySpace was putting up moats to keep outside companies from innovating and making money off their backs, Facebook took the opposite approach.  It launched open API’s and created a platform whereby third-party developers could come build any app they wanted and Facebook didn’t even want (yet) to take any money from them to do so.  So along come companies like Slide, RockYou & Zynga who wanted to build apps across all the social networks but were green-lighted the hardest by Mark Zuckerberg.

It was at that moment that a 22-year-old Mark Zuckerberg completely schooled the 75-year-old Rupert Murdoch.  Within the next 12 months Facebook users doubled to 200 million while MySpace stayed flat at 100 million.  The lesson was learned over 30 years in Silicon Valley: you create ecosystems where third-parties can innovate and thrive and you become the legitimate center of it all and can tax the system later.  Ask Microsoft, Autodesk or Salesforce.com – the evidence was there from Seattle to Sand Hill Road.

Facebook went on become larger than even Google and Yahoo! in terms of time spent on the sites.  Slingshot Labs was unsurprisingly closed within a short period of time and its properties sold-off or dismantled.  Duh.

Social Networking goes Real Time: Twitter

While Facebook was built on the idea that all our information was private and shared only between friend (before they changed this after the fact), Twitter was born under the idea that most of the information shared there was open and viewable by anybody.  This was revolutionary in thinking and worked because as a user you understood this bargain when you started.  Twitter is not the place to share pictures of your kids with your family.

Another Twitter innovation was “asymmetry” because you didn’t have to have a two-way following relationship to be connected.  You could follow people who didn’t necessarily follow you back.  This allowed followers to be able to “curate” their newsfeed with people that they found interesting.  Twitter restricts each post to 140 characters so users often share links with other people – one of the most important features of Twitter.  So this combination of following people you found interesting who share links drove a sort of “news exchange” that mimicked many of the features of RSS readers except that it was curated by other people!

Twitter is much more.  I’ve written extensively on the topic, but in a nutshell it is: an RSS reader, a chat room, instant messaging, a marketing channel, a customer service department and increasingly a data mine.

But what is magic about Twitter is that it is real time.  In most instances news is now breaking on Twitter and then being picked up by news organizations.

The one major thing that Twitter doesn’t have figured out quite yet is that platform thing or at least how to encourage a bunch of 3rd-party developers to build meaningful add-on products.  Twitter seems to have become a bit allergic to third-party developers (or maybe vice-versa).  18 months ago 25% of all pitches to me were ideas for how to build products around Twitter’s API.  Now I don’t get any.  Not one.  Yet the number of businesses looking to build on the Facebook platform seems to have increased.

Given I’m a passionate user of Twitter, I sure hope somebody there will re-read the MySpace vs. Facebook section above.  Lesson learned (to me at least) – let people get stinking rich off your platform and tax ‘em later.  That way other companies innovate on their own shekels (or at least a VCs) and let the best man win.  Close shop to try and control monetization and you can only rely on your own internal innovation machine & capital.  Seems kinda obvious or am I missing somethign?  Rupert?

Social Networking is Becoming Mobile: Foursquare and Skout

The trend that is unfolding before our eyes is that Social Networking is now becoming mobile and that adds new dimensions to how we use social networks.  The most obvious change is that now social networks become “location aware.”  The highest profile brand in this space is Foursquare.  Pundits are mixed on whether Foursquare represents a major technology trend or a fad but undoubtedly it has captured the zeitgeist of the technology elite at this moment in time.  At a minimum it has been a trailblazer of innovation that a generation of companies are trying to copy.

As our social actions become both public and location specific it opens up all types of future potential use cases.  One obvious one is dating where players like Skout are trying to cash in on.  When you think about it, young & single people go out to bars & clubs in hopes of meeting people to “hook up” with.  In a perfect world you’d like that person to be compatible with you in additional to being attracted to them, yet as a society we go into bars and have no idea what it behind any of the people we see other than the immediacy of their looks and whether we can get enough liquid courage into ourselves to talk with them and learn more.

It’s obvious to me that the future of dating will involve mobile, social networks that tell us more about the compatibility of the people around us.  It doesn’t take a rocket scientist to see how big people like Match.com and eHarmony became on the trend of helping us find our dating partners and why this would be improved my mobile, social networks.  How long this trend takes is unclear – but in 10 years I feel confident we’ll look back and say, “duh.”

FourSquare obviously brings up a lot of interesting commercial opportunities.  For years I saw companies pitching themselves as “mobile coupon companies” and I never believed this would be a big idea.  I’m not a big believer that people walk around with their mobile devices and say, “let me now pull out my device and see wether there are any coupons around me.”  I always said that if an application could engage the user in some other way – like a game – it would earn the right to serve up coupons as a by-product.  I think that is what Foursquare has done well.

In the future I don’t believe that Foursquare’s “check-in” game with badges will be enough to hold users interests but for now it’s working well.  I’ve always said that if Foursquare has a “second act” coming it could be a really big company.  In the long-run I believe that check-ins will be more seamless – something handled by infrastructure in the background.  So I expect more and new games from Foursquare in the future.  One awesome features of today’s Foursquare that often isn’t talked about is the ability to graph your friends on a real-time map and see where everybody is.  This is a killer feature for the 20 and 30 something crowds for sure.  Me? When I go out I mostly prefer to eat in peace with my wife and friends without people knowing where we are – I guess we all get old

In the next post I will make some predictions about where social networking is going next.  And only one hint —it isn’t all dominated by Facebook.  Stay tuned.  If you can’t wait you can get a sneak peak in the PowerPoint presentation below.

More news from the social network Friendster. The site, which was acquired in December by Malaysian payments company MOL Global, has struck a deal with Yahoo Southeast Asia. The purpose of the deal is to integrate product features and cross-promote across both Friendster and Yahoo. Both Friendster and Yahoo stand to gain from the partnership as Friendster has a significant Asian audience and Yahoo also has a steady following in the regional area for certain web services.

Friendster, which was sold for just under $30 million, has over 90 million registered users and 90 percent of its daily traffic coming from Southeast Asia today. The partnership will involve a a new social application built by Friendster that will be prominently displayed on Yahoo Southeast Asia properties and a cross-promotion of Yahoo products on Friendster.

Yahoo Search will also feature results from Friendster user profiles and fan profiles, similar to the deals struck with Twitter and Facebook by the search giants. Friendster users will also be able to link their Friendster account to their Yahoo! account to share their Friendster network activity updates and inbox via their Yahoo accounts. So, users can check their Friendster account and send updates directly from their Yahoo homepage. Users will also be able to publish their Friendster network activity to Yahoo Messenger and other Yahoo applications.

The cross promotion between Friendster and Yahoo has already been implemented but the search results and activity update integration will be rolled out over the next few months.

Friendster, which was founded in 2001, has raised over $45 million in venture capital to date, and is sitting on some potentially lucrative IP. Friendster is no longer hot in the U.S. and still has members in the Asia/Pacific region. The social network, which just rolled out a much-needed redesign, appointed Richard Kimber as its new CEO, who used to head Sales and Operations in South East Asia for Google.

The partnership makes sense; and Friendster should be doing everything it can to try to own the user base in Southeast Asia, considering that the social network is performing poorly in other parts of the world.

The total purchase price paid was $39.5 million. But lots of stuff was deducted, totalling $13 million and change:

• $3.7 million in secured debt
• $2.5 million in cash in Friendster’s bank account
• $2.1 million paid to Friendster CEO Richard Kimber
• $1.4 million to other Frienster executives
• $3.4 million to Morgan Stanley and other third parties (lawyers, escrow agents, etc.)

The total to shareholders after the deductions? About $26.4 million. And $3.8 million of that is being put into escrow.

Some shareholders are surprised at the deal. It was just a little over a year ago that Friendster had $20 million in the bank on a fresh venture capital round. That’s when Kimber took over as CEO. Not only is the company worth little more than the money they had in the bank back then, but traffic has dropped from 34 million monthly uniques to just 18 million. Despite that, Kimber got a $2.1 million bonus.

Of course the real tragedy with Friendster is that they spurned Google’s $30 million buyout offer back in 2003. That was before Google went public, and the shares they would have received would be worth far, far more today. In fact, even if they got Google stock at the IPO price, a year later, those shares would be worth around $180 million today.

And here’s something that’s even worse – one source tells us that Friendster turned down a $150 million buyout offer last year, before Kimber was hired.

Friendster outlines some of the changes in a video (embedded below), in which it calls out other social networks (*cough* Facebook and *cough* MySpace) for being plain and boring.

My absolute favorite part of the video: “I mean, if everyone’s there, woop de doo”.

Friendster in the clip says the redesign aims to place more emphasis on 3 pillars: Simple, Fun and Personal. The company also features glimpses of the new website lay-out, which looks a whole lot like Facebook in my opinion, but seemingly mixed with the customization capabilities of MySpace (e.g. it looks like you can change the background color of pages with a single click). Apologies for the blurry screenshot, but watch the video to see it in action.

Friendster, founded in 2001, has raised over $45 million in venture capital to date, and is sitting on some potentially lucrative IP. It’s no longer hot in the U.S. any way you look at it, but it’s most definitely still a big deal in the Asia/Pacific region.

So much so that last year the company appointed Richard Kimber as its new CEO (he used to head Sales and Operations in South East Asia for Google) and has openly started shopping itself to potential buyers in the region over the Summer.

What Friendster isn’t saying is how they’ll monetize this search, and whether Intelius’ scammy privacy services will be offered to Friendster users. Earlier this year we wrote again about Intelius and the myriad of lawsuits and consumer complaints that the company was fighting.

To summarize those posts, Intelius has been accused of tricking users into long term credit card subscriptions via a third party for worthless privacy protection products.

The Friendster press release doesn’t talk about how the service will be monetized, but it looks like the integration may be through a recent Intelius acquisition, Spock.

I’ve emailed Friendster for clarification on whether or not they plan on exposing their users to Intelius’ very questionable monetization practices. Because if they are this desperate for revenue, it’s a sign that Friendster is in very serious trouble indeed.

Friendster, one of the oldest social networks, is actively looking for a buyer and has hired investment bank Morgan Stanley to find a party interested in acquiring the company or at least some of its assets.

According to documents obtained exclusively by TechCrunch, it looks like Morgan Stanley is shopping Friendster around in Asia, which makes sense considering almost its entire user base is located in the Asian-Pacific region. In the main document (embedded below), it says that 75 percent of its registered accounts are in Asia. The docs come from a credible source, are time-stamped ‘July 2009′ and carry a number of interesting nuggets about the influence Friendster still has in the social networking sphere, even if mostly in Asia.

In the summary fact sheet being sent to multiple potentially interested buyers, Friendster claims over 100 million registered users globally and touts its stronghold in the Asian-Pacific region as well as a bright future ahead since a number of its key markets (Singapore, Indonesia, Malaysia, Philippines, aka SIMP) are expected to experience robust Internet user growth over the next few years. The fact sheet also says Friendster attracts over 100,000 new users and 500 million page views on a daily basis, making it a top 20 global website based on user traffic. According to the documents, the company currently has an employee headcount of 105 employees spread out across its global network of offices (Australia, the United States, Philippines and Singapore).

The fact sheet that we obtained shows that Friendster/Morgan Stanley are gunning for a buyer who wants to gain quick access to the Asian social networking scene, emphasizing it would be hard for newcomers to establish themselves given the relationships with local vendors and partners that are needed for such a venture to become a success. Additionally, it touts Friendster’s portfolio of patents in the space (5 granted and 10 pending) and its experienced management team.

More interesting nuggets of information: Friendster is looking to expand its current revenue streams to include—besides online advertising—virtual goods, gaming, surveys, dating, music and classifieds.

One thing we couldn’t gather from the documents, which are embedded below, is the price Friendster is hoping to get. The company is backed by more $45 million in capital venture firms like Battery Ventures, Benchmark Capital, DAG Ventures and Kleiner Perkins Caufield & Byers, along with some early angel investors such as LinkedIn founder Reid Hoffman and Spinner/Grouper founder Josh Felcher.

Our latest model valuing social networks puts Friendster at only $210 million, based on Facebook’s recent valuation of $10 billion. Mostly that is because of the lower spending power of consumers in Southeast Asia, making advertisers value them less differently. That $10 billion Facebook valuation, though, was for preferred shares. If you look at the $6.5B valuation of the most recent sale of common stock, Friendster would be worth only $137M in comparison. Back in 2002, the company turned down a $30 million buyout offer from a pre-IPO Google. (In an interesting twist, Friendster’s current CEO, Richard Kimber, used to head up sales for Google in South East Asia).

We also took a look at the comScore numbers for Friendster in May, 2009 compared to the same period last year, and worldwide unique visitors dropped 45 percent to 21 million (suggesting there is a big difference between active and registered users).

With stats like these, no wonder the company and its investors are looking for a way to cash out.

Also amusing was that a quick search on Twitter turned up mostly messages from US-based users that were deleting their Friendster accounts.

And here are (screenshots of) the documents:

http://viewer.docstoc.com/
PJ Connect – Potential Purchaser CA –

Even on the Web, world dominance must be achieved one country at a time. While Facebook has long been the largest social network in the world, and should soon pass MySpace in the U.S., it is not the largest social network in every country. The map above created by Vincenzo Cosenza resembles more a game of Risk, with Facebook sweeping across the globe from the West.

Using Alexa and Google Trend data, Cosenza color-coded the map based on which social network is the most popular in each country. All of the light green countries belong to Facebook. But there are still pockets of resistance in Russia (where V Kontakte rules), China (QQ), Brazil and India (Orkut), Central America, Peru, Mongolia, and Thailand (hi5), South Korea (Cyworld), Japan (Mixi), the Middle East (Maktoob), and the Philippines (Friendster).

Apparently, Alexa already thinks that Facebook is larger than MySpace in the United States. And Maybe it is, or maybe Cosenza’s isn’t using the best data. But I love being able to visualize market dominance on acountry-by-country basis. I wonder what the map would look like using comScore data, some of which can be found in our recent social network valuation model.

Below is an interactive version of the map.

We’ve now remodeled social network valuations based on current user numbers and Facebook’s most recent $10 billion valuation. The results are dramatically different.

Based on the original year-old model, if Facebook was worth $15 billion (their then-current valuation), MySpace, with far more U.S. users, was worth nearly $20 billion:

Our model takes Comscore data for available countries and regions. We’ve graphed each of 26 well known social networks with the data we have been able to collect. We’ve then calculated the average advertising spend (estimated by PriceWaterhouseCoopers in a recent report) for each person online in each of those countries. For example, in the U.S., the total 2008 estimated Internet advertising spend is $25.2 billion. We’ve divided that by the number of people online in the U.S. according to Comscore (191 million), to get an average Internet spend per person of $132. View the raw data and calculations here.

The U.S., by the way, is only the 4th most valuable market per Internet user, trailing The UK ($213), Australia ($148) and Denmark ($144).

We’ve then multiplied the average Internet spend per user in each market with the number of unique users each social network has in that market, essentially creating a “weighted average” based on the advertising dollars chasing users. If a social network has more users in the U.S., Japan, the UK, Germany, Australia, and other bigger advertising networks, they will have a higher weighted average valuation.

We believe this model is an effective way to rank various competing social networks. It bumps down networks like Orkut and Friendster who have tens of millions of users in markets with very little advertising spend, and bumps up networks with lots of users in higher value markets.

Based on this model, MySpace is by far the most valuable social network. Second place Facebook has just 75% of the value of MySpace (even though it now has more users), followed by Bebo (26% of MySpace value), Hi5 and Amebio. LinkedIn comes in at no. 11, at 6% of MySpace’s value.

The new model takes into account the dramatic rise of Facebook usage over the last year, the massive recent decline in MySpace usage, and less dramatic changes in the other social networks. We’ve also modeled out the various valuations with the old Bebo ($850 million) and LinkedIn ($1 billion) valuations as pivot points. We’ve also added Twitter to the list just for kicks.

The bottom line: If Facebook is worth $10 billion today, MySpace is worth just $6.5 billion. Bebo is worth $1.8 billion, Twitter is worth $1.7 billion and LinkedIn is worth $0.8 billion. Facebook also accounts for 37% of all social networking value points in our model. Another way of saying this: If Facebook is worth $10 billion, the value of the entire social networking industry is $27.1 billion.

Lots of charts and graphs below. The full model is here if you want to look at all the data (I recommend zooming unless you have super vision). Thanks to TechCrunch intern Dan Romero for running the new model.

The company’s new CEO, Richard Kimber, is based in Sydney Australia. Friendster’s old San Francisco headquarters have been relocated as well, and the company now has a small Mountain View office for U.S. employees. Today the company announced that they’ve opened new offices in Singapore and Sydney. They have existing offices in the Philippines. A majority of the company’s employees are now in the Asia Pacific region, and at least 85% of new hires going forward will be based there.

There is a terrific monetization opportunity in the region over the long haul, but the company must be hurting for revenue today. Ad rates aren’t anywhere near comparable to the U.S. and Europe. Luckily the company has a fresh $20 million venture round to see it through.

What were the top social media sites of 2008? ComScore came out with its worldwide traffic stats for November a few days ago (so these don’t include December). They are a mix of social networks and blogging platforms. Blogger, the orange line in the chart above, still rules the roost with an estimated 222 million unique worldwide visitors in November (up 44 percent from November, 2007). Facebook, the blue line, is on pace to pass it soon with 200 million unique visitors (up 116 percent). (Note, though, that this is more than the 140 million active users Facebook itself reports—go figure). MySpace is pretty steady at 126 million uniques. WordPress is a close fourth and gaining with 114 million (up 68 percent). And Windows Live Spaces is down 22 percent to 87 million uniques.

ComScore keeps a list of what it calls “social networking” sites, but these include blogging platforms and other social media sites as well. While the audience for blogs is still showing healthy growth overall, Facebook stands out as the social gorilla taking share from not only other social networks but blogs and other social media as well.

Below are the top 20 sites on comScore’s social networking list. It is really more of a social media site list, which is what I’m renaming it for this post. It is not definitive, but it gives a good lay of the land. (Here is a similar ranking from 2007). Note on this list the stubborn persistence of Yahoo’s Geocities at No. 6, the rise of Yahoo’s Flickr at No. 7, Six Apart at No. 10, and the presences of Chinese sites like Baidu Space and 56.com. The real surprise, though, is document-sharing site Scribd at No. 16, with nearly 24 million worldwide uniques.

Top Social Media Sites (ranked by unique worldwide visitors November, 2008; comScore)

1. Blogger (222 million)
2. Facebook (200 million)
3. MySpace (126 million)
4. WordPress (114 million)
5. Windows Live Spaces (87 million)
6. Yahoo Geocities (69 million)
7. Flickr (64 million)
8. hi5 (58 million)
9. Orkut (46 million)
10. Six Apart (46 million)
11. Baidu Space (40 million)
12. Friendster (31 million)
13. 56.com (29 million)
14. Webs.com (24 million)
15. Bebo (24 million)
16. Scribd (23 million)
17. Lycos Tripod (23 million)
18. Tagged (22 million)
19. imeem (22 million)
20. Netlog (21 million)

Here’s a screenshot of the actual data (as you can see, I rounded above):

Six months ago, OpenSocial was nothing but a list of promised partnerships. But the social network application platform backed by Google has made a lot of progress since then as those partners started to go live with their OpenSocial Apps. First there was MySpace and Orkut, then Hi5, and most recently Friendster. All told, if you add up the various social networks that are now live with OpenSocial, it reaches a total of 350 million users. And it will soon reach 500 million, as four more social networks and services prepare to launch by the end of of September (see chart above).

Google’s Joe Kraus gave me an update today on OpenSocial’s progress. He wouldn’t say which partners would launch next, but by the size of that pink bar in the graph above, one of them is relatively large—about the same size as Orkut. (My guess is that it will be either Bebo or Six Apart). He also mentioned some partners, such as imeem, launched without ever contacting Google (thanks to Apache Shindig) and that at this point only 10 percent of the engineers hashing out the OpenSocial specifications are from Google.

So how many OpenSocial apps are actually being used? There are about 4,500 different apps so far, which have been installed more than 150 million times. I couldn’t get daily active user numbers across all OpenSocial partners, but for Hi5 about 50 percent of members use an OpenSocial app at least once a day. There are 1,800 OpenSocial apps on hi5 alone, which have been installed 66 million times, so that may be representative of OpenSocial usage in general.

In contrast, Facebook, which is open-sourcing its own platform for developers, has nearly 37,000 apps, which have been installed 715 million times. RockYou’s apps alone have been installed 124 million times on Facebook.

Despite the strides it’s made in such a short time, OpenSocial still has alot of catching up to do.

Now Friendster. They’ve hired Richard Kimber, who was Google’s Managing Director of Sales and Operations for South East Asia and had over 1,000 people in his organization, to take over as the new CEO.

Previous CEO Kent Lindstrom will become SVP Corporate Development, says the WSJ. And the company has also raised a new $20 million round of financing led by IDG Ventures. The company has now raised $45 million.

The Friendster story is long and mostly sad. The company was founded in 2002 and owned the social networking world five years ago. They turned down a $30 million offer from Google in 2003 because they thought their destiny was something greater (that stock would be worth many times that amount based on Google’s stock price today). Instead of selling to Google, founder Jonathan Abrams raised venture capital. Friendster eventually raised money from Kleiner Perkins Caufield & Byers, Benchmark Capital and Battery Ventures. Some of the most successful and well known venture capitalists in silicon valley joined Friendster’s board of directors. After a failure to sell the company in late 2005, they recapitalized the company and Kent Lindstrom, one of the founders of Friendster, took over as President.

By our calculations Friendster is the worlds 16th most valuable social network today, although it is the 9th most trafficked website.

It’s time to start comparing the big global social networks on something other than unique visitors and page views. I believe an effective way to value a particular user is based on the average Internet advertising spend per person in the country they live in. The higher the spend, the more value the social network can get out of the user by serving them advertising and other products. That means that, for now, users in a handful of key countries are worth far more in terms of revenue potential than those in the rest of the world.

We’ve begun to build out a model that looks at social network usage by country/region and compares that to available data on total Internet advertising spend in each of those countries. The model is then able to turn an apples-to-oranges comparison into an apples-to-apples comparison. The early results are surprising.

The ultimate financial value of any asset is, ultimately, what the market will pay for it. We have only a few data points to help us: Facebook, Bebo and LinkedIn are worth $15 billion, $850 million and $1 billion, respectively, based on relatively recent valuations (although only Bebo was actually sold completely; Facebook and LinkedIn raised investments at those valuations). The last valuation of MySpace was just $580 million, back in 2005 when it was acquired by News Corp.

Which valuation is most “correct?” It’s hard to say based on the data that’s been available to date, which is mostly just aggregate page view and unique visitor numbers from Comscore and other services. Based on worldwide unique visitors, for example, Facebook recently overtook MySpace to become the “largest” social network.

According to raw worldwide user number, the biggest social networks are Facebook, Myspace, Hi5, Friendster, Orkut and Bebo, in that order. But when you apply the model that we’ve created below, which takes into account where users live, the rankings change substantially. MySpace is by far the most valuable social network based on available data. A competitor like Orkut is worth only 1/20th of MySpace, even though it has nearly 1/4 the number of users.

Properly Ranking Social Networks

Our model takes Comscore data for available countries and regions. We’ve graphed each of 26 well known social networks with the data we have been able to collect. We’ve then calculated the average advertising spend (estimated by PriceWaterhouseCoopers in a recent report) for each person online in each of those countries. For example, in the U.S., the total 2008 estimated Internet advertising spend is $25.2 billion. We’ve divided that by the number of people online in the U.S. according to Comscore (191 million), to get an average Internet spend per person of $132. View the raw data and calculations here.

The U.S., by the way, is only the 4th most valuable market per Internet user, trailing The UK ($213), Australia ($148) and Denmark ($144).

We’ve then multiplied the average Internet spend per user in each market with the number of unique users each social network has in that market, essentially creating a “weighted average” based on the advertising dollars chasing users. If a social network has more users in the U.S., Japan, the UK, Germany, Australia, and other bigger advertising networks, they will have a higher weighted average valuation.

We believe this model is an effective way to rank various competing social networks. It bumps down networks like Orkut and Friendster who have tens of millions of users in markets with very little advertising spend, and bumps up networks with lots of users in higher value markets.

Based on this model, MySpace is by far the most valuable social network. Second place Facebook has just 75% of the value of MySpace (even though it now has more users), followed by Bebo (26% of MySpace value), Hi5 and Amebio. LinkedIn comes in at no. 11, at 6% of MySpace’s value.

Valuation Ranges

The real-world revenue numbers being reported for the big networks supports this approach to valuation and shows a direct tie between monetization efforts and where a network’s users are. MySpace is estimated to have generated $755 million in revenue over the last year. The (now) larger Facebook, with a far higher percentage of users in less lucrative markets, will generate just $255 million this year:

EMarketer estimates that MySpace will post $755 million in revenue in the fiscal year ending June 30. MySpace would not comment on the estimate. About a third of the revenue is expected to come from the Google ad pact. For the year, Facebook is estimated to earn $265 million in ad revenue.

Since we have three recent data points valuing social networks (Facebook at $15 billion, Bebo at $850 million, LinkedIn at $1 billion), we can start to apply valuation ranges based on the model. Facebook’s 10.2 million value points and $15 billion valuation puts a $1,467 value on each value point. LinkedIn is valued very similarly, at $1,325 per value point. Bebo, with lots of users in the rich UK market, appears to have been undervalued at only $241 per value point.

Based on these three publicly available data points we’ve created value ranges for each of the top 25 worldwide social networks. There is a very wide disparity (MySpace, for example, is worth between $3.3 billion and $20 billion, based on which comparable you look at). But it does yield very interesting data. For example, If Facebook and LinkedIn were valued similarly to Bebo, they would be worth just $2.5 billion and $182 million, respectively, far less than what their investors recently paid for a piece of them.

Interestingly, the recent sale of Polish social network Nasza-klasa for $92 million appears to be right in sync with Bebo’s price. The model estimates its value at $91 million based on Bebo’s valuation metrics.

There are some big flaws with the model and analysis in its current state. First, LinkedIn may be in a different class of network, given that all of its users are business focused (no super-poking going on there). As a result, it may be able to monetize users far better than its competitors, no matter what geographic market is being looked at. Still, we’ve decided to leave it in as a data point, with that caveat.

The model itself needs more data. The user numbers are based on April Comscore. We will shortly revise it with the May numbers, although the absolute rankings probably won’t change. More importantly, some big markets are not included yet. The Chinese Internet advertising market, for example, is estimated to be $2 billion in 2008, yet they are not included (mostly because I can’t find data on user numbers for the networks). Also, the Philippines isn’t broken out separately, again due to data availability issues (although the total Internet advertising market in the Philippines is just $3 million this year, so it won’t affect the rankings materially even though Friendster is so strong there). Finally, Russia is currently grouped with “the rest of Europe,” and needs to be separately broken out – it has a large and growing online advertising market and lots of users, so that update may affect the mid-level network rankings.

The advertising spend model is just an estimate and from a single source. I’m less concerned with this data since it doesn’t matter to the model if the estimates are absolutely correct. If the estimates are wrong by different rates in different countries, however, the model will break. If we find better relative data between countries, we’ll update the model with that data. But for now, the PriceWaterhouseCoopers data seems to be pretty good.

Finally, this model doesn’t take into account execution at the company level. Two very similar networks may monetize vastly differently based on methods of advertising and even the brute effort and passion of the employees. This model obviously doesn’t take that into account.

I also note Andrew Chen’s analysis last week which takes a similar approach to this using Google Trends data instead of Comscore. The Google data isn’t granular enough to really dig in to relative values, however, and he was lacking current and deep data on average Internet spend. Still, I agree with his methodology.

As I wrote at the very end of this post, you have to consider the current monetization value of users when comparing social networks. Raw user numbers are pointless without it.

In the U.S., though, which is the biggest advertising market, MySpace is still well ahead of Facebook, with 73.7 million unique visitors in May compared to 35.6 million for Facebook. And that number for MySpace is up 2 percent from April, whereas Facebook’s had 0 percent growth. So it remains to be seen if and how fast Facebook can catch up in the U.S.

As for the second-tier social networks, they have fewer than half as many visitors. Here is the breakdown for May:

Worldwide Unique Visitors To the Top Social Networks

Facebook—123.9 million
MySpace—114.6 million

Hi5—49.6 million
Friendster—38.1 million
Orkut—32.2 million
Bebo—25.1 million

If you try to buy an ad on Facebook, there are certain words that are taboo. Any ads that contain four-letter words are automatically blocked. So too are ads with the names of competing social networks “MySpace,” “Friendster,” “Hi5,” , or “Orkut.” (Curiously, “Bebo” and “OpenSocial” go through just fine, as does “Microsoft,” “Yahoo,” “Google,” and “AOL”).

Okay, so Facebook doesn’t want to run ads for some of its competitors. But why is 3Jam blocked? The startup offers an SMS service that lets people send multiple text messages at once, and it even has a Facebook app that does the same thing.

CEO Andy Jagoe was befuddled when he tried to create a Facebook ad to test a new product, only to find out that the term “3Jam” was also blocked. (The product actually sounds pretty cool: it will be a way to send and receive text messages for free while you are online, and then route them to your phone when you are offline). Says Jagoe:

It seems crazy to think that they consider us competitive. This is kind of weird. It is like censorship.

It does seem weird. What other startup names or products are blocked by Facebook?

New social network traffic figures released by Compete show that Fubar, billed as the “first online bar and happy hour” is the fastest growing social network, having increased its traffic by 3,272,217% over the 12 months to the end of February 2008, placing the network at 14th on the list of top 20 social networking sites (chart as shown).

Year on year MySpace hasn’t grown at all, managing to lose 1% of traffic compared to Facebook with 77% growth.

The other big gainers year on year include Ning at 4803% (sneaking in to 20th place) and Twitter with 4368%.

While MySpace and Facebook are fighting it out for the top spot, back in the second pack some interesting sprints and scuffles are going on that are worth keeping an eye on. Everyone in that second pack (Hi5, Freindster, Orkut, Bebo, Imeem) are about a third to a quarter the size of the leaders in terms of worldwide unique visitors, so I’ve isolated their performance in the chart above (it is harder to see if you include Nos. 1 and 2, MySpace and Facebook).

In January, both Hi5 (No. 3, in red) and Friendster (No. 4, in blue), made moves to pull away from Google’s Orkut (No. 5, in green) and Bebo (No. 6, in yellow). The latter two maintained a more steady pace. Coming on strong from behind is Imeem (No. 7, in purple), which surpassed Multiply (No. 8, not shown). The chart below has most of the stats, except for the last two—Imeem had 17.8 million global visitors in January, 2008, a 477 percent annual growth rate (Multiply had 17.6 million, a healthy 203 percent rise from the year before).

For Hi5 and Friendster, global growth is a major part of their game plan. Friendster, for instance, which dropped off the radar for most of us in the U.S., is now the single largest social network in Asia. It’s top five countries are the Philippines, Indonesia, Malaysia, the United States (legacy members who never left, plus new growth among Asians here), and Singapore. Friendster has kept its growth going by launching fan profile pages for Asian pop singers, launching four new languages since September (Chinese, Japanese, Korean, and Spanish), and letting developers create apps for its site.

So does that mean that Friendster and Hi5 are worth more than the $1 billion Bebo is rumored to have sold itself for? Not necessarily. It depends on the actual composition of their members, click-through rates, and other financial factors. Generally speaking, advertisers like to target their campaigns by geography, and pay less for ads that target populations with lower per-capita spending power than in the U.S., Japan, or Europe. So not all members are worth the same to advertisers, and thus to potential acquirers. But as social networks become saturated here in the U.S., everyone will have to look overseas to keep growing.