Web 2.0 = Hype 2.0?

Facebook, a social networking tool aimed at high school and college students, has made waves by demanding a $2 billion selling price. That's a price tag that's too rich for News Corp, which recently bought the similarly-themed MySpace and is still shopping for Web 2.0 technologies.

Said Ross Levinsohn, president of Fox Interactive Media, "We're certainly not paying $2 billion for Facebook... If the price was right I'd be interested in it. It's a great site and I know the guys there well. But I don't know if they're up for sale." Indeed, there have been conflicting stories about Facebook's status. One report stated that Facebook turned down a $750 million buyout offer as too low, while others deny the company is for sale at all.

Such reports are eerily reminiscent of those circulated during the heyday of the Web 1.0 bubble, when anyone with a bit ot tech savvy and a shred of a business plan was commanding epic prices for startups. Granted, Web 2.0 companies are more grounded in reality, but if Facebook is any indication, they seem to be falling prey to the same hype that ultimately doomed their predecessors. Question is, will the bubble burst or gently deflate? Perhaps the best scenario is for investors like Levinsohn to hold the line, willing to invest in promising technologies while not letting valuations climb out of control.

Sources: Techdirt, Reuters