In October 2007, the Wall Street Journal ran an article toying with the possibility following Microsoft’s investment in Facebook that MySpace could potentially have a valuation upwards of $65 Billion!

That would make it the 2nd largest internet company behind only Google and ahead of such Internet behemoths as Ebay, Yahoo and Amazon. In addition, MySpace would have a valuation almost on par with Time Warner and News Corp.

Interestingly, a valuation of $65 Billion would convert to a $357 per registered user. Currently MySpace generates $8.57 per US subscriber in ad sales and $.90 for international subscribers.

So if you had the chance to pay $357 for essentially $9 in advertising revenue would you? If so, what kind of things would motivate you to make such a bold move?

We’ll help jumpstart your analysis. Let’s start off with looking at the size of the user community. First off, MySpace.com is the largest social network site with about 185 million registered users and the site reportedly attracts new registrations at a rate of 230,000 per day. The majority of MySpace users are between 16-25 with about 25 percent of users registered as minors (aged 14 to 17 — you need to be at least 14 to register). The bulk of their traffic is in the English speaking world. They are making efforts to expand in China and acquire markets in Russia, Poland and South Korea.

They have launched a version of a service for cell phones in an effort to expand their market share. They’ve also announced plans for a new platform for their services. The improved platform advertises greater use of widgets along with the ability to differentiate what kind of friends people have (e.g. friends, family, or business contacts).

In terms of growing ad revenue, MySpace currently offers online concerts and media events for sale to its users. Between 1/3 to ½ of the available space on the profile page is devoted to ads of various types. New movie trailers, electronic gadgets, and musicians are interspersed with the user’s personal information. The ads compete with the users material for the attention of whoever is viewing the page. The number of ads is likely to increase, since MySpace signed a $900 million deal with Google in 2006 to place their ad program (AdSense) on MySpace pages. In addition to the advertising deal, there are buttons on the site that allow the user to purchase additional advertising space. Although some users complain about the excessive advertising, the numbers indicate that they continue using the service despite their complaints. In terms of advertising cost, rates are calculated in terms of cpm (Cost per thousand exposures). The rates for cpm at MySpace have increased from $1 to $2.5 per thousand, with a $50,000 minimum.

So would you make that investment? Stay tuned… we’ll see how the market shakes out. In the mean time, we’ll go back to discussing how to properly utilize Social Media to grow your business.

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