You know a site has jumped the shark when earlier they allegedly tried to lure a $200 million buyout and didn’t have takers and now they’ve (also allegedly) hired an investment banker to look for money in the lower $50-100 million range.

Keep the needle spiraling downwards, folks.

At least that could be the story according to CNET for social networking site Friendster:

From September 2003 to March 2004–during the height of Friendster’s popularity–it drew more than 1 million unique visitors per month, according to Nielsen. But since then, Friendster’s traffic has fallen to roughly half that. In September, it attracted 585,000 unique visitors. Friendster recently reconfigured itself as more of a dating or personals site, and it has added features like blogs and photo sharing. According to its Web page, the site has roughly 21 million members.

So if you can’t make it as a social whatever site, just change gears and become a dating/personal site? Please. I pity the sucker company that pays millions for this site. Some readers might remember that Friendster fired one of their developers, Troutgirl, for comments made on her blog about switching to PHP. I didn’t think Frienster was wrong to fire her, BTW, which was the unpopular decision in the blogosphere, but none of us out here knew both sides of the story. We still don’t.

Here’s some questions if one is seriously looking at buying this website that they might explore:

- how many active members are there out of the 20+ million?
- where is the current traffic coming from?
- what existing advertising deals are in place?
- what does the site profitability look like?

Prospective suitors shouldn’t pay more than 10 times any websites current annual profitability unless it is just a super killer idea (which Friendster is not) which means Frienster needs to be making $5 million a year in profit to be worth $50 million. Not a chance. That’s difficult to do when you get to the homepage of the site and the first words site visitors see in font size almost as big as the logo:

“It’s free. It’s easy.”

Wish the same could be said about making $50-100 million dollars!

The value of community is greatly overhyped and overstated. Communities can and do change on the web. Look at the article pointing out how MySpace has risen and Frienster has fallen. Digg is currently on the rise to challenge Slashdot.

With some exceptions — and I don’t think Frienster is one of them — this social networking thing is the dying fad many pundits thought blogging would be.

Did this post make you go hmm?

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