Very interesting article.

“The market knows the price of everything, but does it know the real value of Facebook?”

The market doesn’t know the price of everything, it only knows the price of things for which people are willing to exchange money or something valuable.

And what is the “real” value of anything? Everyone in the world has their own non-market valuation of Facebook, or anything else.

Jo Coghlan says the real value of Facebook is that “it's becoming easier for individuals to partake in the capturing and documenting of history… It has more value to the many that are struggling to be heard in far-away dictatorships, than any value listed on the NYSE.”

Well that's part of it, but it's not the whole real value of Facebook to people, is it? In fact it's only a small part of the value that people attach to Facebook.

According to Jo's theory, the value on the stock exchange is a sub-set of the value for individuals in more easily partaking the capturing and documenting of history, which sounds right. A snap at the price!

The problem with a stock exchange valuation is that it anticipates a financial return. This might possibly clash with the public's perception of its value to them, which has less to do with money, as demonstrated by the examples the author provides of its use in the Middle East recently.

The problem that the float will have is that the barriers to entry are quite low, technically speaking. There are so many ways that communities can communicate, and make themselves heard (Twitter, for example) that monetizing users is not going to be straightforward. One wrong move that upsets the patrons, and it becomes another MySpace.

It will be most interesting to see the business model that is put together to justify its offer price.

Jo this is all a bit narrow in context.

Markets are composites. You mention the NYSE, they are just “investors”. Customers are the users of the end product and some of the customers may be “protestors”.

There is also a broader community of interest called “stakeholders”. These include suppliers, regulators, channels, products (of other software and hardware components), and competitors. All are investors in one way or another and the value as Peter Hume suggests, is determined by each entity in terms of either return on investment or product/service benefit.

Facebook is just another form of communications like mobile phones and computers with internet access. Each technology has a different market depending upon the perceived benefit to the end user.

As for “individuals partaking in the capturing and documenting of history”, we are talking about “events” not history. In this application we are talking about people living under regimes that do not have free or independent media, it has become a form of media itself. Therefore its application is for political ends. I doubt that the Arab Spring has other than marginal impact on investment; it’s just another “market segment” for Facebook and is probably transient.

Personally, I would like to hear much more from you on the motivation behind the majority of Facebook users, social implications and privacy implications.

I heard someone tell me they had over 900 Facebook “friends”? I think he actually believed this. What does it say about the interpersonal skills of users? What impacts are we having on the social values of an entire generation? Are we creating a generation of “twitter” mentality in which everything is trivialized? These subjects would I’m sure be of more interest to OLO’ers than minority applications for those trying dislodge dictators, useful though that might be.

While not disputing the importance of Facebook "to protesters in the Middle East", I feel it's essential to highlight that Facebook - like its new school counterparts such as Twitter and old school stalwart, the mass media - is far from an altruistic enterprise that allows to users to "navigate around the revenue raising devices and options (such as buying virtual credits for games)."

Facebook's number one revenue raiser is people signing up for a free account.

No other multinational has access to the extensive, intimate and immediate details of 500+ million people disclosing – at times inadvertently - their data, likes and dislikes, interactions and relationships.

Data warehousing and data mining are what makes Facebook money.

And yes, the market can place an ever-increasing value on this especially as Zuckerberg & Co continue their ventures into business partnerships and mobile apps such as Places and Deals.

Perhaps a question that should be asked is, 'What is the value of the privacy and security of Facebook users?'

I think the article and replies are simply trying to be too "complex" about the matter

Facebook is worth what people are prepared to pay for it

So, to the investor, it is likely worth something like the PE Ratio multiplied by the advertising revenue stream less the operating costs. on the basis users do not pay for their facebook "pages".

now that "valuation" will be subject to the bullish nature of the investor community, which does change form time to time.

I further doubt its "popularity" would be so broad if users had to pay for their pictures and comments (I know I would rip down the pages of videos and family snap shots of the lovely Mrs Col Rouge which I have up there, if Mr Facebook were to demand we cross his palm with silver or CC numbers.

As for the "worth" of facebook particularly to the downtrodden masses of the middle east.... their "value" is mute since I guess none of them have the where-with-all to make a viable offer for facebook and even if they did, they lack the "basics" to actually run it.

Facebook, like almost everything else both on and off the internet is not an exercise in altruism but a commercial venture subject to the vagaries of market and popularity... pretending it is something else is just a folly.....

The sort of folly most commonly associated with leftard "alternate" thinking

Facebook may be large, but there are others. China’s social network sites are estimated at nearly 400 million users and growing rapidly.

Facebook was not that difficult to develop, and many have cloned the system in PHP.

A question is “Why do Australian academics so often act in total awe of US software and US internet systems?”

Why can’t they for once write about something developed in this country?

Do they have such a minimal regard for the Australian public they think anything developed in Australia is inferior?

I think so.