How much is a tweet worth? The question has an almost koan-like quality. And yet at a time when the ranks of billion-dollar social-media companies keep growing (Instagram being the latest), it’s a good time to ask about the value of the services they provide. That is exactly what Rob May, co-founder of Backupify, did in an entry on his tech company’s blog.
May’s calculations were straightforward and fairly back-of-the-envelope. He derived his first number, value per user, by taking the valuations of various social-media and cloud-computing companies—Path, Instagram, Yelp, Pinterest, Foursquare, Twitter, Dropbox, LinkedIn (LNKD), and Facebook—and dividing them by the number of each companies’ users. (May calculated with active users when the number was available, total users when it wasn’t.) Then, in a second calculation, he took the number of individual things the companies’ users had created (the total number of tweets, for example, or all the Yelp reviews ever written) and divided that number into the company’s valuation or, in some cases, its annual revenue.
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