A 2013 Experian Marketing Services survey found that consumers in the UK, U.S. and Australia spent an average of 16 minutes for every hour on the Internet on social media sites. After social media are entertainment Web sites where consumers spend an average of 9 minutes for every hour.
Social media certainly has changed the habits of people and even the profitability of tech and social media companies, which have emerged on top of the heap in the corporate world.
In a report prepared by Arden Partners for Audioboom Group PLC (LSE: BOOM.L), citing data from Bloomberg and based on the top four publicly listed social media companies, their average value per user was placed at $101.10.
The highest value belongs to market leader Facebook at $132, followed by Linkedin at $110.20, Twitter at $88.6 and Pandora at $73.50.
For Audioboom, Arden believes the London-based company's value should be at the upper end of the scale because of the high gross margin the firm is expected to reach, lower content acquisition costs, length of time spent on site for every user and the unique nature of its content as well as the high barriers to entry.
Audioboom, which offers a Software as a Service platform that allows straightforward upload or download of content, has positioned itself as the global leader in spoken audio content, or the audio equivalent of the YouTube, the most popular video sharing site.
Taking into account the current smaller scale of Audioboom vis-à-vis the other social media giants, Arden proposed to value the Audioboom user at $24, which is a 75 per cent discount of the peer group.
Because of its limited funding to date, Audioboom's focus is on delivering content partners and a new user interface slated for launch in September 2014. Once the interface has been rolled out, Audioboom would shift its focus on growth in users and monetisation.
Arden valued Audioboom at 8 million monthly active users (MAUs), while its registered users is 2.4 million. The larger MAU figure is because of the inclusion of users who click on embedded players in Audioboom partner sites.
Among the users of the Audioboom platform are news organisations such as BBC, Telegraph, Guardian, Le Monde and The Washington Post; sports channels such as Sky Sports News, talkSport, AFL and ESPN; and entertainment sites such as NME, Empire, Kerrang and Comedy Central.
Taking into account Audioboom's rapid expansion - with more than 800 content providers as of May 2014 and 300 added monthly - Arden forecasts that by 2016, the company would have 7 million registered users, which would result in a valuation of $175 million (£103 million).
And further considering the 25 per cent share vis-à-vis peer group of Audioboom would yield a current valuation of $110 million (£65 million).
For the same year, Arden projects that Audioboom would earn $3.4 million (£2 million) from advertising (banner and audio), while revenue share from premium content would be at $2.7 million (£1.6 million) and freemium (where users subscribe to upload more content) at $4.75 million (£2.8 million).
The report stated that Audioboom expects to attract investors because of its relatively low cost of content acquisition compared to Spotify, which has to pay copyrights holders, resulting in a 23 per cent gross margin for Audioboom.