Social capital as real capital?

I posted this on a course blog, but it's not public so I'm reposting it here.

I just ran a silly experiment to see what dollar value people somehow attach to social capital. Technorati offers a utility to generate a dollar value to see what "your blog is worth" - again, a silly number, but perhaps an interesting way to view the abstracted concepts that compose "social capital".

My blog is worth $125,327.88.
How much is your blog worth?

I think I'm almost ready to retire. Technorati says my blog is worth over $125,000 US.

Of course, it's a completely silly and relatively arbitrary dollar value. There's no way anyone would pay me anything for my blog. That's just plain ridiculous. BUT, the calculation is based on the value of the website when it was purchased by AOL back in 2005. Loosely, what it's doing is calculating the "value" of a Technorati rating (which includes the number of websites linking to a site, and their value, etc… in a similar way to Google's PageRank algorithm) and then calculating the value of a given website (usually a blog) based on that base value. The description from the blog post that Technorati used to create the algorithm:

In acquiring Weblogs Inc., AOL has now provided us with some numbers traditional media are willing to pay for a blog. Looking at the numbers above, one can try to guess at the value of a link from an external site. a single link on the weblogsinc network represents 0.002258559942180087 percent of the overall network.

At the different rumored price points from AOL, it looks as follows:

Link $25 million value 30 million value 40 million value
1 $564.64 $677.57 $903.42

I don't know if those values are based on any real rationale but it's nice to dream up the value of one's blog based on this.
Should we now assume that traditional media companies are willing to pay between $500 and $1000 per site that links into a blog?
Not quite. The incremental value is in the size of the network and the underlying tools. Jason and Brian have been working on developing a blog authoring technology, called BlogSmith, that sits at the core of their network and one has to believe that AOL saw some value in the software too. However, one can easily say that blog valuations are going to be easier to make after this deal since it provides the first yardstick in that space.

So, it's a calculation of what "traditional media" outlets would pay for a website based on the number of links tracked through Technorati. Not a real world representation of "social capital" but maybe a simple, concrete way to think about the abstract concepts (even though the dollar values are insanely inflated).

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