An Empirical Study of Valuation and User Behavior in Social Networking Services

Social networking services (SNS) have emerged as an extremely popular platform for social interactions. During the past decade, the usage of SNS in the private sector has seen an exponential growth. This has not remained unnoticed by businesses, which have increased their focus on this multibillion-dollar market. SNS such as Facebook and Twitter have enjoyed huge success due to a large user base and attention from the business sector. The value of a specific SNS is dependent on a number of key characteristics, such as the number of users and the amount of content produced. In this paper we present empirical data used to estimate network value and model user behavior in SNS. The data used are from the most common SNS today, including Twitter and Youtube. We provide an overview of how the number of users and content produced influence the total valuation of a SNS. We also develop analytical models capturing the network effects in SNS. The analysis provided can be used to estimate both value and user behavior of future SNS.