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I worked at a Computational Population biology lab where we studied social networks. I had the idea once of how to value the amount of money a social network is
by zitterbewegung 6y ago
I worked at a Computational Population biology lab where we studied social networks. I had the idea once of how to value the amount of money a social network is worth. I also quit Facebook this month and I don't intend anything below to support any of their actions and also below is some quick calculations. The easy answer would be to say that the social network is worth whatever its net revenue is.
A lot of ways people can value social networks in general would be to first to value the network effect Facebook has.
"Metcalfe's law states the effect of a telecommunications network is proportional to the square of the number of connected users of the system (n2). "[1]
The next issue would be to attempt to price the individual user. Applying Metcalf's law could give you some kind of metric.
One way to do that would be to look at Facebook's S-1 and see how much revenue they get per user. Their net income from the first quarter of 2020 is $4.9 Billion dollars. Also they had 2.6 monthly active users.
So doing the math is (2.6 billion) ^2 people / $4.9 billion dollars which is $1.38 per user[2] . Assuming everyone is connected to each other (which is unrealistic) we have an upper bound of $3.5 billion dollars.
I think someone did more analysis on how to actually apply this here.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3356098 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3356098
[1] https://en.wikipedia.org/wiki/Metcalfe's_law https://en.wikipedia.org/wiki/Metcalfe's_law
[2] https://www.wolframalpha.com/input/?i=%241.38+*+2.6+billion+ https://www.wolframalpha.com/input/?i=%241.38+*+2.6+billion+
[3] https://www.wolframalpha.com/input/?i=%241.38+*+2.6+billion+ https://www.wolframalpha.com/input/?i=%241.38+*+2.6+billion+
[4] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3356098 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3356098