When Rupert Murdoch swooped in last year to buy MySpace, paying $580 million, Wall Street suddenly perked up to the idea of social networking. It was a bit late, as is so common with things related to the internet.

MySpace may be the largest social networking site, the one getting the headlines, but it's just one in what has become an increasingly  fast-growing sector. New players are entering the market, it seems by the day, and a number of sites are experiencing rapid growth. Networking sites are like virtual bars, where users post their profiles and interact with others sharing similar interests.

Just two years old, Facebook.com, a site for high school and college students, is now on the block, and BusinessWeek Online reports that its owners have just nixed a $750 million offer. They're holding out for as much as $2 billion.

If this seems like 1999 all over again, with wild offers flying about, it is not in one key regard. This time they are for ventures that have already proven their worth.

Still, social networking is a pretty recent thing, really only exploding as the internet has matured. That's because the activity pretty much requires a powerful internet connection. To grow, the sites needed people to migrate from dial-up to broadband.

Which explains their huge growth just in the last year. Facebook had 10.5 million unique visitors in the U.S. in February, up from 2.8 million in February 2005, an increase of 271 percent, according to comScore Media Metrix.

MySpace has grown even faster in the U.S., clocking 37.3 million unique visitors in February from just under 9 million in February 2005, a growth of 318 percent, according to comScore Media Metrix.

“That’s a boatload,” says Bob Ivins, managing director at comScore Europe. “It is great to see a site like this just take off because it talks to me about the huge opportunity that still exists on the web.”

Yet not all networking sites are prospering, and that makes it a tricky proposition for investors. What site's in, and which are not, can change in a heartbeat, or better, with the fluidity of the social whims and fashions of teenagers. 

One early site, Friendster, has been more or less flat over the past year, with about a million unique visitors in the U.S., while Bebo.com has seen the number of unique visitors in the U.S. fall to 1.2 million in February from 6.1 million the year before, according to comScore.

What drives the growth of successful sites, and the rapid downfall of those on the decline, is what Ivins calls the network effect. People join because their friends join, so the more people who join one site the more reason for others to follow. And vice versa.

“If your friends aren’t on it, there is no value,” says Ivins. “The ones that aren’t growing will probably be left behind, unless they are for a very specific community of people.”

Says Ivins: “I think these types of communities will be around forever.” But whether the current biggies maintain their position is another question.

 

Meanwhile, elsewhere on the internet during the week ended March 19, Microsoft, Yahoo, Time Warner, Google and eBay were once again the top five parent companies, according to Nielsen//NetRatings.

GUS Plc was the top advertiser for the fifth straight week, followed by Verizon, Netflix, United Online and InterActive Corp. News Corp., a top five advertiser last week, fell all the way out of the top 25.

The top five advertising sites during the week were Yahoo, MySpace, MSN, AOL.com and ESPN.com, knocking iWon.com out of the top five to No. 9.

Usage was essentially flat for the fifth straight week, with average computer sessions per person even at 16 and average domains visited per person flat at 39. Average PC time per person dropped 1.9 percent, from 16 hours and 55 minutes to 16 hours and 36 minutes.