With the popularity of Facebook, bebo and MySpace, companies are trying to find ways to leverage social networking. However, it can be expensive to build out a strong platform.

Well, things are getting easier; that is, Ringside Networks has launched an open source server to build social networks (it's in the beta mode).

True, there are other systems on the market. However, in the case with Ringside, it allows for seamless integration with other sites, such as Facebook. In other words, it will help companies migrate users to their own platform.

What's more, Ringside allows companies to keep their own branding and the look-and-feel of their own websites.

Oh, and some of the co-founders of Ringside -- Bob Bickel, Rich Friedman and Mark Lugert -- were instrumental in the development of JBoss, which turned out to be one of the most successful open source projects in tech history.

To get some perspective on this, I talked to David DePaolo, who operates WorkCompCentral.com. He has known about Ringside for some time. His take: "It makes sense that someone would start this up as they have with other technologies, and just in time. As technology progresses, we find that it is not all about the technology and patents, it's the application of that technology to a specific market."

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

A big trend over the past few years has been Web 2.0 (despite the fact that I'm still not sure how to define this malleable thing). However, there haven't been any IPOs in the sector. What's more, the M&A transactions have been muted, except for some outliers, such as Time Warner Inc.'s (NYSE: TWX) $850 million deal for Bebo.

Despite all this, venture capitalists continue to pour money into Web 2.0 deals. According to a report from Dow Jones VentureSource, there was about $1.34 billion in investments last year (across 178 transactions). In fact, this was an 88% spike over 2006.

Sounds good, huh?

Perhaps not. If anything, we may be seeing a weeding out of the weaker players and a bigger focus on the winners. After all, Facebook snagged about $300 million in funding. There was also a $44 million infusion for Ning as well as a $49.25 million deal for MyStrands.

It's always interesting to see what online audience and traffic measurements have to say about overal web use; traffic, number of users, website loyalty, etc. Now that Time Warner Inc. (NYSE: TWX) AOL is acquiring the UK-based social networking site Bebo.com for some $850 million, the site measurement companies are showing their own data. Notice that every one generates a different result.

When you look below, you'll see that all web measurement tools and methods generate different results.

Time Warner Inc. (NYSE: TWX) doesn't look like it is slowing down on the deal front for AOL. Just when everyone is wondering if AOL will be sold, AOL has announced that it is paying out $850 million to acquire the social networking site Bebo, "a global social media network which combines community, self-expression and entertainment to enable its users to consume, create, discover and share content."

Bebo is also one of the leading social networks in the U.K. and is supposed to ranked number three in the U.S. Its users view an average of 78 pages per day.

Bebo has a total membership of more than 40 million worldwide. The press release notes that together with the AIM and ICQ network, AOL will have 80 million unique users in the world of social media.

For $850 million in cash as the purchase price, AOL probably just added a serious site that it can convert rapidly into advertising profits with Platform-A (Advertising.com and more). Its giant ad platform that still ranks number one on many ad metrics.

So while $850 sounds like a lot, it may well prove to be a bargain ultimately for AOL.

MAJOR PAPERS:

• Within two weeks a merger between Delta Air Lines Inc (NYSE: DAL) and Northwest Airlines Corporation (NYSE: NWA) is expected to be announced. Not far behind may be one between UAL Corporation's (NASDAQ: UAUA) United Airlines and Continental Airlines Inc (NYSE: CAL), the Wall Street Journal reported.

WEB SITES:

• Bloomberg reported that Berkshire Hathaway Inc (NYSE: BRK.A) Chairman Warren Buffett forecast that the dollar's value is likely to decline if policies remain unchanged and said he believes a credit crunch is not under way.
• Tech Crunch reported that either Google Inc (NASDAQ: GOOG) or News Corp's (NYSE: NWS.A) MySpace is likely to announces a social space acquisition in the near-future. According to industry sources, the acquisition could be in the $1B-$1.5B range and may involve Bebo.

Bebo is the largest social network you never heard of, and Yahoo! (NASDAQ: YHOO) has locked up exclusive rights to sell display ads on the site's UK and Ireland sections. That will add 11 million unique users to the Yahoo! ad network. Bebo said its is interested in Yahoo! handling its business worldwide. That would bring Yahoo! a total of 38 million users to add to its display arsenal.

Yahoo! management told Reuters: "It's a core step for us in building up the largest and most effective advertising network. It's a big deal." Bebo says it picked Yahoo! because of its ability to target display ads based on things like user behavior.

While the deal is clearly good for Yahoo!, it merely pushes it further into the slowing market for display ads. Industry experts expect internet advertising to rise 25% in the current quarter, with the fastest growing part being text ads in search results. Display is expected to lag well behind.

For Yahoo!, Bebo is a good deal in the weak end of the online market.

Douglas A. McIntyre is a partner at 24/7 Wall St.

MAJOR PAPERS:

• William Ackman's Pershing Square Capital Management, whose firms holds about 15% of Ceridian Corporation (NYSE: CEN), doesn't like the proposed $5.3B sale of the company to Thomas H. Lee Partners and Fidelity National Financial Inc (NYSE: FNF), and says he's going to find higher bidders, according to the Wall Street Journal.
• The Financial Times reported that British bank Barclays PLC (NYSE: BCS) has drawn up plans to sweeten its $86B all-share offer for Dutch bank ABN Amro Holdings (NYSE: ABN), by substituting cash for some of the shares it is currently offering for ABN.
• Beginning today, Apple Inc (NASDAQ: AAPL) is embedding its iTunes internet music download service in the British and Irish social networking site Bebo, reported the Financial Times.

OTHER PAPERS:

• The New York Post has learned that a private-equity firm owned by the Dubai government is close to buying Barneys New York from the Jones Apparel Group (NYSE: JNY).
• The New York Times reported that the Wall Street Journal is set to "shake up its newsroom" by reassigning and replacing several top editors.
• Golf equipment maker Callaway Golf Company (NYSE: ELY) is suing Fortune Brands Inc.'s (NYSE: FO) Acushnet Co, for allegedly violating five Callaway patents for golf clubs, reported the Los Angeles Times.

The British newspaper, The Telegraph, reported rumors over the weekend that Yahoo! (NASDAQ: YHOO) may be taking another run at purchasing the social networking site Bebo, for as much as $1 billion. Bebo, launched in 2005, has become the MySpace of the U.K., with a reported 25 million members, mostly young people.

News Corp (NYSE: NWS) bought the 500 pound gorilla of social networking, MySpace, and its 100 million members for a paltry $580 million in 2005. That's $5.80 per member, compared to $40 per member in the conjectured Yahoo! deal. Ouch.

Bebo has been the subject of speculation for the past year, and is rumored to have fended off offers from BT Group plc (NYSE: BT) and Viacom (NYSE: VIA). The site can afford to wait, as it has access to capital, via backing from Benchmark Capital.

Last year, Yahoo! offered $1 billion for another popular site, Facebook, but was rejected. The Telegraph reported that a Bebo co-founder would prefer to take the site public. I think, though, that by taking the time to prepare an IPO, Bebo runs the risk of missing out on the gold rush currently taking place. I hesitate to use the word bubble, but with billion-dollar deals a daily occurrence, and the fickleness of the consumer in this market, the time may never be better for the founders to cash in.

Yahoo, on the other hand, has been all too quiet while its competitors glom onto properties, and I expect it to pull the trigger on a newsworthy acquisition soon.

MAJOR PAPERS:

• Google Inc (NASDAQ: GOOG) and online services company Salesforce.com Inc (NYSE: CRM) may form a partnership to better compete with Microsoft Corporation (NASDAQ: MSFT), reported the Wall Street Journal (subscription required).
  

OTHER PAPERS:

• The U.K. Times reported that Warner Music Group Corporation (NYSE: WMG) is expected to offer EMI Group (OTC: EMIPY) a "£100 million sweetener" to try and keep the company from accepting an offer from private equity.
• According to The Observer, Royal Bank of Scotland (OTC: RBSPY), along with its partners Fortis and Banco Santander Central Hispano (NYSE: STD), hope to "table" a £47 billion offer for ABN Amro Holdings (NYSE: ABN) this week.
• The Observer reported that a private equity consortium is considering a $15 billion offer for Virgin Media Inc (NASDAQ: VMED).
• Cadbury Schweppes ADS (NYSE: CSG) is planning to return £5 billion to shareholders through a special dividend or share buyback, according to The Observer.
• The Sunday Telegraph reported that UBS AG (NYSE: UBS) will offer to buy out the pension schemes of some of the leading FTSE100 companies next week.
• Yahoo! Inc (NASDAQ: YHOO) may be looking to acquire British social networking site Bebo, the Sunday Telegraph reported.
• The Bollywood film producer, Eros International, is expected to announce a partnership with Google Inc's (NASDAQ: GOOG) YouTube, the Sunday Telegraph reported.
• Teva Pharmaceutical Industries Limited's (NASDAQ: TEVA) Copaxone will face generic competition for the first time, but will not see an impact immediately, Ha'aretz reported.

WEBSITES:

• The Orange County Register blog looked at a transcript from IndyMac Bancorp Inc's (NYSE: IMB) first quarter conference call, where the CEO Michael Perry said: "When you see that delinquency number in the press of 13% subprime delinquencies, it's hugely understated. It is absolutely hugely understated. And the prime delinquencies are overstated. The subprime delinquencies are more like 18, 20, 22% delinquencies and that's where I think you're going to see the problems."

Boasting a market cap of $19 billion, WPP Group (ADS) (NASDAQ: WPPGY) focuses on the communications needs of major clients and produces multi-million dollar ad campaigns. To protect its franchise, the company is moving into social networking and video. Its most recent deal is a strategic investment in VideoEgg.

VideoEgg is a privately-held company that provides editing tools and an ad network that serves 15 million videos a day. The company has distribution deals with more than 60 online communities, including Time-Warner's (NYSE: TWX) AOL, Tagged, and Bebo.

According to a recent Jupiter Research report, about a quarter of adult Internet users in the US regularly visit social networking sites. Users create profiles, meet new friends, and share videos.

This represents a big opportunity for brand advertisers. "Social networking sites are extremely interesting to brands because the audiences are filled with users seeking membership in particular interests," said Robb Hecht to me in an interview. Hecht operates media consulting firm IMC Strategy Lab.

Things have been kind of crazy in the dot-com world lately. Apparently, there have been mega offers for sites like Digg, Bebo, and YouTube. And, of course, MySpace snagged $900 million from Google.

But there also appears to be some inflation with domain name prices. John Gotts, a big-time domain name buyer, has committed $2.8 million for Wiki.com. Actually, wikis are pretty hot right now, especially with the success of Wikipedia, which I recently wrote about in Bloggingstocks.com.

Kind of crazy? Maybe not. Traffic is getting expensive. Portals like AOL.com and MSN know they can charge top dollar. The thing about a domain like wiki.com is that lots of people are likely to type it in. It can be a great advertising vehicle.

Part of Gotts' master plan is that there are tons of people that would love to have personal wikis. So, let's say I want my own. If the URL is Taulli.wiki.com, it's a lot easier for me to remember, right?

Actually, I did just that. And it took about 20 seconds to set up. Also, in the setup, they asked me for my zip code. That's pretty smart – given that the business model is based on advertising (in other words, there can be local ads).

The site uses a technology from MindTouch, which focuses on wikis for major corporations. Also, there are certainly lots of wiki systems on the market, such as Near-Time and Jot.

So, I interviewed brand expert Lynn Altman. She has a firm called Brandmaker Express and has a new book coming out, Brand It Yourself: The Fast, Focused Way to Marketplace Magic. According to her: "Frigidaire...Kleenex...and now the Wiki. Turning your product name into a generic descriptor (or vice versa) is one of the most coveted results a marketer could hope for. Thanks to improved browser technology and the likes of Google, the value of these descriptors intensifies. Today, we use the address bar as a navigation tool, knowing that the keywords we type in will lead us to what we seek. And unlike the bricks and mortar marketplace where consumers see brands next to one another on the shelves, the browser does the searching-and often the navigating-for you, and the higher up your homepage can come back on that list, the better. In this scenario, a generic website could become more valuable than a specific brand site. If a 'wiki' does indeed become a descriptor of this pumped up, next generation 'blog,' then to John Gotts' point he has made a very savvy business decision. Let's just hope that he gets his money's worth before something else becomes the new 'wiki'."

For social networking, it's all about critical mass. If you can reach a level like MySpace, you just might be able to get $900 million from, say, Google.

But, the cool thing about capitalism is competition. Big-money deals have a way of attracting a lot of attention. Of course, a swarm of competition is gunning for MySpace (for example, every day, I get about two to three social-networking pitches from PR people). The list has been growing ... Facebook, Xanga, Bebo, and on and on.

Well, the competition is not just local. It's global. Look at the latest splash: Cyworld, which is a wildly successful teen social networking site from South Korea. In fact, it basically owns the market in its homeland.

While MySpace has a clunky -- almost retro -- 1996 look, Cyworld is on the cutting-edge of coolness. Interestingly enough, the appeal is to girls.

The business model is to essentially create a virtual economy.

In the Web 2.0 world, the formula is pretty simple for pumping-up a valuation to nose-bleed levels. First, you need an inexplicable name for the company.  Next, users need to generate the content, so you can call it a UGC (user generated content) play. Oh, and make sure you use a cool programming technique, such as AJAX.  Finally, if you want a bonus, add video to the mix.

Profits?  Revenues?  Of course not.

Well, the latest rumor is that a new-fangled Web 2.0 play, Bebo, did a "just say no" to a $550 million buyout offer.  Allegedly, the suitor was BT.  Yes, that BT.  The company that makes money selling crusty stuff like telephone services.

This week, Hitwise published its list of top social networking sites. No doubt, the guerilla is MySpace, with nearly 80% marketshare. The #5 on the list is Bebo, with about 1% of the market. 

Assuming $550 million is an accurate offer, investors are valuing social networking in excess of $500 billion. That's several Google's.

Actually, it was not long after that BT said it has no clue about this latest Web 2.0 rumor.  But, in the Web 2.0 world, such niceties are a minor inconvenience. It's now mostly about cashing-out.