There once was a time that Myspace’s $600 million price tag was laughed at. That debate is dead. Now its not a question of a billion but how many billions. The number $15 billion was being tossed around over a year ago. Its no surprise now that Facebook now also likes that 11-digit number, Microsoft agrees.

Its the tail end of 2007 and Myspace’s traffic has peaked. But who cares? Social networking is here to stay.

Social networking sites are very powerful tools if you know how to use them. Web entrepreneurs have raked in countless millions of dollars simply by providing third party graphics and layouts. Others have used social sites to funnel growth into their own start up sites, with phenomenal success.

Its simple, social networking sites are a destination. Snuggling up to that source and you end up with a stream of visitors. How important is Google to your site? In the right markets, social networking sites can be just as powerful.

How To Do It

Unlike Google, social networking sites are not search engines. If you want to throttle their power, legally, you need to use permission marketing and viral marketing (think of it as link bait.)

Over two years ago I placed a simple Myspace button on one of my community sites — much like the RSS buttons on blogs. Visitors added our site’s profile to their friends list and it spread. Our site’s profile had plenty of graphics and links, every single one went to our site. It was a free, fast, and easy way to build a forum userbase ; It was also a passive, soft sell approach that didn’t piss anyone off.

Social networking promotion can be that simple. If your content engages your audience then a little work will take you a very long way.

Lets take this one step further. You don’t even have to try to get social networking traffic. If users are sharing your site’s links with their friends, a good percentage are going to do it through a social networking site. For a quickly growing core, social networking has replaced e-mail and instant messaging as the internet communication medium of choice.

Facebook is the next leader, catch this train now

Facebook provides a complex API you can use to build applications that interact with the site. Facebook’s owners are enthusiastic about bringing new features aboard. And yes, they are very open and accepting of commercial goals. This has opened the floodgates for aggressive Facebook API tactics. This same traffic, Facebook could sell for tens of millions of dollars. Your cost? Give people what they want.

I was a bit skeptical of Facebook at first. Their closed system means there is no graphics & layouts after market. Rumors of a non-converting audience made things look even worse. But Facebook isn’t just a bunch of bored college freshmen. The site has gone mainstream; Facebook’s astounding compounding growth rate is making Myspace look very small. And the traffic does convert.

Where you tempted to give Second Life a try? Forget it. Why build an island 10 nerds a day will see when the same effort will put you in front of 1 million? Whether you are a Fortune 500 company, Web 2.0 start up, brand marketer, or just a plain old web publisher, leave the skepticism behind: you need to be paying attention this.