I already had trouble wrapping my head around a $3 billion valuation from Zynga back in February. But the latest big number is just inconceivable. SecondShares, which is run by former private equity analysts to determine how much private equity companies would be worth if they went public, pegs the value of this social games company at $5 billion, approximately 75% above its current trading in illiquid secondary markets for private companies.

Several factors are used to determine a private company's valuation, including prices for employee stock options. Of course, private company valuation can be squishy under any circumstances, but fast-moving social media companies with penchant for secrecy make the process more difficult.

The fact that eBay (EBAY) is PayPal's largest merchant isn't exactly surprising. The auction market is huge, and it's also the online payment company's parent. Yet, the word out of the 2010 Media Summit in New York last week is that Zynga, the social media games company, is the second largest merchant for the payment environment. Social games are growing rapidly, bolstered in large part by the rise of Facebook, which now boasts around 400 million users.

As social media companies realize they need to move to the next level -- from adoption to revenue -- the virtual goods market has emerged as a substantial revenue stream, and Zynga's environment appears to have been designed to capitalize on it. According to an estimate by Citigroup (C) analyst Mark Mahaney, PayPal took care o$500 million in virtual goods payments last year.

News Corp (NYSE: NWS)'s MySpace is getting into the online game business in the hopes of attracting and keeping more users. The largest social networking website will announce a deal with online game company Oberon, which provides games to a number of large web properties including Yahoo! (NASDAQ:YHOO).

According to The Wall Street Journal, "the companies plan to incorporate features into the MySpace games area that allow users to socialize by inviting friends to participate in multiplayer games and to chat while they are playing." This kind of online activity is much smaller than playing games on video consoles, but it is growing more quickly.

What appears to be happening here is that MySpace is beginning to turn itself into a portal not terribly different from Yahoo! or MSN. It already offers video and music services. It also has instant messaging and other communications features like a partnership with Skype.

The movement into the portal space is smart. The bear case on social networks is that it is hard to pin down the activities and demographics of their audiences, making marketing on the sites difficult. Offering services that provide magnets which draw MySpace users to one activity makes it easier for advertisers to push messages to those users based on their behavior.

Being a portal may not be the business that it used to be. But it still appears to be better than being a social network, at least from an advertiser's viewpoint.

Douglas A. McIntyre is an editor of 247wallst.com