Fred Wilson started a great conversation on FaceBook — They’ve got 15MM uniques per month and let’s say, following Fred’s logic, they will be doing 10B page views per month. At a $1CPM (again following Fred’s logic), that would mean they would be doing about $10MM a month or roughly $0.75/user/per month or a little over $9/user/year in revenue. Fred gets to about $500MM in revenues by making some assumptions about increasing the user base by opening up the registration to non-college, non-highschool kids.

But I think the real upside here is on the value of those users — I don’t know the stats on high school vs. college — but you have an incredibly valuable demographic that should be able to be monetized heck of a lot more than $9/user/year. Remember (I started college in 1984) all the free stuff you got during Freshman orientation — all those brands trying to get you at exactly the right time ( I think it was Gillette Atra for me). I have got to believe between CPG companies, financial services businesses, media brands, this is an incredibly attractive demo. Plus throw in Facebook’s ability to target — bundling a package of top colleges, or top high schools, or maybe even top students — and you start thinking that an annuity of $9/user/year is too low.

Another way to think about it lifetime value per user — a $1B valuation implies you are paying lifetime value of a little over $67 for each user of FaceBook. That means you think the present value of all free cash flow you can generate from each user is $67 –(didn’t MySpace sell for $38 a user? A little help?) that number just strikes me as fair, again given this incredibly attractive segment.

I understand the risks of users abandoning the service (see Geocities, see TheGlobe) - but if you can get your heads around that being mitigated — and alma mater affiliation is one of the strongest affiliations out there– it strikes me that with good execution a buyer can drive a lot of value from a purchase price of $1B (see MySpace). The other point is what other alternatives are there to reach this massive, attractive audience.

Check out BuzzTracker Facebook for the latest blogosphere roundup.

Om Malik is calling it Silly-con Valley — what are your thoughts on it?

Welcome to the Participate Media website and blog. We plan to provide regular updates on our business, our projects, and our general thoughts in the industry. We believe we have an additional perspective to bring to the conversation along several fronts:

1) We’re publishers — working with advertisers, existing ad networks, new technologies, the blogosphere every day to drive unique visitors, page views/visitors, and revenue per thousand pages (RPM) to sites we work with. This means we have a pretty good understanding of what works and doesn’t work; what technologies work and don’t work, and how you can actually drive to cash flow by leveraging the three metrics above.

2) We’re also investors — so we think alot about things like uses of funds, scalability, and capital efficiency. We’re constantly thinking about how to grow cash flow.
3) We’re also technologists — we have spent the last 10 years developing internet technologies — most recently BuzzTracker.

4) We’ve spent the last 10 years thinking about and monetizing user-generating content as the team behind Participate Systems (sold to Outstart in November 2004). Participate Systems powered the online support communities behind TiVo, palmOne and a slew of other companies.

But we’re not starting this Blog to “talk” — rather, we are starting this to begin a conversation and to listen to your feedback — on our thoughts, on our projects, and anything else you have in mind. We look forward to hearing from you!