Where next for LinkedIn?

Over the past few months, we've seen Microsoft take a bite out of Facebook, rumours circling about the future ownership and direction of MySpace, while more recently Digg being subject to fervent speculation. None of these had low price tags attached to them.

If a global economic downturn and a general tightening of belts among money lenders were supposed to have a negative impact on further acquisitions and deals, then nobody remembered to tell those snooping around the Web 2.0 market. This is illustrated by the latest ongoing target of takeover rumour - the professional social networking service, LinkedIn.

The difference

LinkedIn is quite different to many of the big name social networking services, given the stringent way it limits itself to being a professional tool. Users are invited to sign up and befriend business contacts. Key information you're expected to provide includes a potted career CV, with hints of what kind of challenge you're looking for next, rather than your favourite bands and top movies. Furthermore, people can recommend one another, with the idea being that the site can act as a shop window for your skills and expertise, and a place for you to seek out fresh opportunities and business contacts.

The service itself is quite enduring, in contrast to some in the market, having being founded at the back end of 2002 (by former PayPal Executive Vice President Reid Hoffman, who is still working for LinkedIn), before its live launch in the spring of the following year. Since then, it's quietly built up a membership of more than 17 million users, with a particular growth spurt in the last twelve months. That's less than the kind of numbers captured by MySpace and Facebook, but crucially, those 17 million people sit in one of the most lucrative market demographics. As a result LinkedIn is one of the few services of its ilk to be showing a profit. Equally, its potentially high-spending user base has been on the radar as a takeover target.

That said, LinkedIn isn't a universally adored service, with the restrictions placed upon what you can and can't do when you're signed up for the service a real bugbear for some. This is very much a service where you come in, connect with people, hunt out business opportunities and contacts, and head back out. There's no chance of a game of Scrabulous here. And while LinkedIn's team has tried to add new features, it's still quite a prescriptive service by comparison (although it's now been confirmed that third party companies are to be allowed, Facebook-style, to write plug-in applications for the service, which should ultimately resolve this issue over time).

Yet this hasn't stopped a flurry of potential suitors being attracted to the LinkedIn service, and it's not hard to see why. Even on top of the points mentioned thus far, there's the inescapable fact that LinkedIn is still growing, and at speed. Visitor numbers have increased by more than 400 per cent over the course of the past year, and over the next four years the reported potential is for a more-than-25-fold increase in traffic. Whether that projection is optimistic or otherwise remains to be seen, but it's more definite that millions of professional users are coming to LinkedIn every month, and there's still plenty of headroom for growth.

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