Facebook's Changing Fortunes

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Facebook says it's doing much better than the comScore statistics suggest. Its review of page views shows 30% growth over the same period, to 16.5 billion hits. The huge difference between the comScore and Facebook numbers may stem from differences in the way college networks are measured and in the weight they receive. comScore is sticking by its data and methodology.

Facebook also says its total registered users, which include anyone who has signed up for the service, grew 9% to 11 million in September. Deitch says "more than half" of registered users use Facebook every day. But it doesn't track "active users" the way comScore does. That number, which is less encouraging, counts the number of people who enter Facebook from outside the network in any given month.

Skyrocketing Valuations

It may seem like an arcane dispute, but it matters a lot when it comes to valuing a company that has been in play. Such issues are often resolved by examining the number of users, the volume of traffic, and their potential worth to advertisers over a period of years. Facebook was in talks with Yahoo several weeks ago, but those discussions broke down over a number of issues, including price.

Facebook has made a flurry of changes in recent months. In addition to the news feeds, it expanded its membership from college students and alumni to the general public. On Oct. 31, it launched a new feature that will allow people who view pages at other sites to press a button to "share" the content with other Facebook users. The content also will appear on the Facebook profile of the person who initiated the share. Facebook has teamed up with a long list of "share" partners, such as Barron's, Sports Illustrated, Marketwatch, The New York Times, The Wall Street Journal, PhotoBucket, People, and The Onion. "People share interesting content on the Web and on Facebook all the time. Now we're making the sharing process more efficient by giving people a simple structure to do it in," Zuckerberg said in a statement.

The valuation of Web sites is taking off. Google (GOOG) is paying $1.65 billion for YouTube (see BusinessWeek.com, 10/23/06, "Ballmer: They Paid How Much for That?"). Analyst Jordan Rohan of RBC Capital Markets created a stir a few weeks ago when he said News Corp.'s (NWS) MySpace could be worth $15 billion within three years (see BusinessWeek.com, 10/2/06, "Why Online Video Sites Are Hot Targets"). If Facebook lives up to its potential, it could someday be worth a fortune. But if not, that nine-figure payday would look awfully good in retrospect.

Rosenbush is a senior writer for BusinessWeek.com in New York.