Backuplify: Social Network Economics, What is Your Data Worth?

Social networks continue to develop at an unstoppable pace: Pinterest, as a newcomer, quickly surpassed LinkedIn and Google+ to become the third largest social network after Facebook and Twitter; Instagram was acquired by Facebook at a sky-high price of US$1 billion; Path received US$30 million in financing, with a valuation of up to US$250 million; Foursquare also announced not long ago that it has 20 million users and the number of check-ins has reached 2 billion...

Regardless of whether this field is as bubbly as many people worry, as a user of social networks, are you also curious about how much value your status information creates for these companies? How much is a Twitter message worth? How much is a Yelp review?

Compared to enterprise data cloud services like Google Apps, it is relatively difficult to calculate the value of user data on social networks. The well-known online data backup service Backuplify took a roundabout way and used the public data of these companies (including company valuations, number of users, etc.) to make estimates, and obtained some interesting data. (Due to major changes in several companies recently, the data has changed)

What is the average value of each user?

This data is obtained by dividing the public market value or valuation of each social network by its number of users (active users are preferred, otherwise total users are used).

• Path: Driven by the acquisition of Instagram, Path successfully obtained $30 million in Series B investment, and its valuation soared to $250 million, which made Path's average user value soar from $12.50 a few weeks ago to $125.
• Instagram: Facebook's acquisition doubled Instagram's market value from $500 million to $1 billion. The number of Instagram users also increased to 40 million with the launch of the Android version and the acquisition. The average user value of Instagram increased from $18.52 before the acquisition to $25.
• Pinterest: Valuation: $500 million, average user value: $28.09. Instagram’s acquisition will certainly have a significant boost on Pinterest’s valuation.
• Foursquare: $600 million valuation, average user value $40. Apart from Path's incredible data, Foursquare can be said to be the most valuable of the small social networks.

In addition, Yelp's average user value is $22.21, Twitter's is $71.43, LinkedIn's is $104.46, and Facebook, which is about to go public, is $118.34.

Using the value per user we calculated above, we also estimated the number of users each social network would need to reach a market cap of $10 billion. Twitter and LinkedIn have already reached this number, Facebook is 10 times more valuable than this, and Instagram has also reached this number after Facebook acquired it (it’s worth noting that Instagram’s value is 1/10 of Facebook’s, which is perhaps a clue to how eager Facebook is to acquire Instagram); for smaller social networks, they still have a long way to go (of course, Path’s rocket-like growth makes it more variable).

How much is a single piece of information worth?

The value of a single piece of information on each social network is also quite interesting. Each Twitter message is worth $0.001, each Facebook status share is worth $0.024, each LinkedIn career information search is worth $0.124, each Foursquare check-in is worth $0.4, each Path message is worth $5 (this is a very amazing figure after adjusting based on the latest data, it was only $0.5 under the old data), and each Yelp review is worth $9.13.

Ranking of single information value: e-commerce social network > private social network > public social network

It is easy to understand that Yelp has the highest single data value. After all, each business review can be said to directly bring direct value to Yelp, businesses and other users; and it is also conceivable that the value of private information is higher than public information. Of course, this is a very rough data, and the information shared on social networks such as Facebook, Twitter, and Path cannot be considered a commodity in the usual sense.

The greater significance of this data is that it makes us realize how much value each user contributes to the social network they choose to use for free. When we share photos on Instagram, share status on Facebook, and check in on Foursquare, we are not only communicating with friends, but also continuously driving the value of these companies. This problem is even more obvious for those small social networks. When you upload a picture to Instagram, have you ever thought that you are creating value for Facebook?

Instagram's acquisition is undoubtedly great news for Kevin Systrom, his employees, and investors, but for me, it makes me hesitate to use small services that don't have an obvious way to make money. For Path, which I personally like very much, it's hard to imagine how it can make money. If it is acquired by a social network (or eventually shut down, like Kevin Rose's aborted Oink), then the information I originally created because of trust in Path will either go into the hands of third parties that I may not like, or become worthless when the service is shut down.

These data also give us another revelation: the valuations of many social networks are undoubtedly obviously inflated. Perhaps only when this wave passes, we can truly know how valuable social networks are.

Source: Geek Park