Image from the "Anthrax" page of MySpace

The renowned Wharton Business School dives in to the tangled web that is Web 2.0 valuations. In its Knowledge @ Whartoin Newsletter the school tries to make sense of why MySpace is reportedly worth 15 billion dollars just a year or two after it was bought for $500 million.

22 year old Mark Zuckerberg, the founder of Facebook.com, turned down $750 million from Viacom - reportedly holding out for $2 billion. So where are these valuations coming from? According to the story's author, Google is used as a rough benchmark. Currently valued at 55 times earnings, Google is the Internet's gold standard. Facebook would have to have profits of $16 million to legitimize a price of $900 million, the amount Yahoo is now offering for the property.

Are these properties part of a new new Internet bubble? Maybe, maybe not:

Social networking sites may be risky for their founders and the venture capital firms that fund them in the early years, but they don't appear to be pumping huge amounts of risk to the marketplace the way tech firms did in the late 1990s. "If you have a little bit of money invested in this and you're already invested in other things," says Percival, "frankly the risk is not as big as you think."

Recalling the first dot-com bubble six years ago, Fader notes, "We all look back and laugh and say we will not go through that exercise again, but this could easily be a case of history repeating itself."