The claim that websites which link to news stories are somehow harming them has been advanced by everyone from Journal editor Robert Thomson to AP chairman Dean Singleton. As geeks like Google CEO Eric Schmidt and Techmeme founder Gabe Rivera (left) have pointed out, they are blithering dunderheads who miss the point that links generate traffic to their own websites. Meanwhile, the doddering newspaper barons' cleverer lieutenants are trying to get into the business themselves.

The proof is in a new study by Hitwise, an online traffic-pattern tracker. Analyst Heather Dougherty has found that search engines, portals, social networks, and blogs generate about 40 percent of the link traffic to news websites, a proportion that has remained more or less unchanged for the past two years. Here's the chart:

Besides search engines, what generates the most traffic for news websites? Other news websites, it turns out. CNN.com, MSNBC, Fox News, the New York Times, and NBC's Weather Channel rank in the top 10 traffic sources to the news and media category, according to Dougherty's study.

Techmeme's Rivera argues that news organizations complaining about aggregators aren't just wrongheaded — they're hypocrites, too, he told CNET News:

[The] WSJ (a News Corp. property) and NYT (a key AP member) are both themselves news aggregators. Both maintain sections which quote headlines from external sites. So, constituents of these organizations already know aggregation is useful and fair. This knowledge just hasn't reached AP's and News Corp.'s leadership.

The implication: The newspaper industry's real problem isn't that sites like Google News and Techmeme exist. It's that they don't own them.

(Photo via Gabe Rivera)

One could talk about Facebook's fast-growing headcount and farms of servers, spending on which may now have reached hundreds of millions of dollars a year. Or the difficulty it has had at producing what Zuckerberg once predicted would be a once-in-a-century shift in the business of advertising.

But the ultimate arbiter of Facebook's worth is what investors are willing to pay for a piece of it. And as Google has fallen almost two-thirds from its high last fall, Facebook's price, too, has slumped.

Facebook is not publicly traded, but an informal market exists for its stock. Employees who have vested their stock options and others who have gotten their hand on Facebook shares sell them to wealthy investors and a handful of obscure outfits which specialize in buying private-company shares, like MTVLP and Apercen Partners.

The market price is falling fast. We've heard of shares trading for $5.50, which suggests a valuation for Facebook of around $2.3 billion, but that's the highest. There's plenty of interest for shares at prices between $2.50 and $4 — though those are distressed prices. At the low end of that range, Facebook would be worth a mere $1.3 billion — less than a tenth of the price at which Microsoft invested its $240 million last year.

Oh, how the mighty have fallen! Facebook's value has jumped dramatically with every investment, from $100 million in 2005, to $550 million in 2006, to $15 billion in 2007. The drop has been almost as sharp.

Would Zuckerberg sell his company at that price? No. He still has Microsoft's $240 million, plus $120 million from Hong Kong investor Li Ka-Shing; Facebook has arranged to lease $100 million worth of servers, which has spared the cash pile. And Microsoft is still paying Facebook large guarantees in exchange for the right to sell advertising on the site.

It's worth pointing out that Facebook's earliest investors, Accel Partners and Peter Thiel's Founders Fund, have done phenomenally well even at the $1.3 billion price, seeing a paper gain of 10 times their original investments. It's just Microsoft that's screwed, and no one will shed a tear for Bill Gates's billions.

Where Facebook runs into trouble is in raising more cash, or using its stock for additional investments. Like a homeowner whose mortgage is underwater, Facebook executives won't part with shares at a valuation of less than $15 billion; they can't afford to, lest they enrage Microsoft and other investors who put in money at that price. A disagreement over the value of Facebook's shares helped sink an acquisition of Twitter. Facebook CFO Gideon Yu's efforts to charm money from Middle Eastern sheikhs at the $15 billion valuation have also proved fruitless.

So where does Facebook go from here? Given Zuckerberg's fetish for control of his creation, it's hard to see him selling out, especially at these discounted prices. But he faces a swift uphill climb to get Facebook's value up to the fanciful heights it reached in 2007. Just one problem: Will his employees stick around for the long march?

Joi Ito, an early Twitter user and an investor who helped launch the service's Japanese version, said in April that the wireless theory doesn't apply. Early on, Japanese users were 30 percent of the service's base, a percentage that has fallen as it has grown in the U.S. and elsewhere. But they used the site despite its flaws. Though Japan has long been text-message crazy, Twitter didn't have a Japanese SMS service at first. Even entering a message in Japanese characters required a workaround.

Ito thinks that Twitter's simplicity struck an emotional chord in the famously minimalist country:

It got crazy early adoption in Japan from the beginning. One of my theories is that a lot of services in Japan to be either closed or over-featured portals and simple services with good open APIs are not as common as in the US and it attracts developers and users who are sort of sick of a lot of the bloaty Japanese services.

Here's another theory on why Twitter spread: Ito himself. Though he's too modest to say it, the globetrotting venture capitalist is a key bridge between San Francisco and Tokyo. Could it be that Twitter spread in Japan in part because Ito, Web 2.0's trans-Pacific import-export specialist, took note of it, and others followed the trendspotter? We are talking about a social network, after all. People may stay because of their features, but they join because of their friends.

As late as last year, Ito was hedging his bets, favoring Twitter rival Jaiku in April 2007: "I've been helping the Jaiku guys out a bit as an advisor and I'm also a friend of Ev's." (That's Ev Williams, Twitter's founder.) Less than a year later, Jaiku had been sold to Google, and Ito announced he was investing in Twitter. It's not an explanation that coders will like, but Twitter's spread in Japan suggests success really does come down to who you know.

(Chart by Pingdom)

The suits, it turns out. Without Lodwick at the helm, Vimeo's gone from a flatlining also-ran to a fast-growing alternative to YouTube. NewTeeVee reports that Vimeo traffic more than doubled from February to May. Guess Lodwick just wasn't cut out to be a Killer Diller, after all.

That Google may just have landed more search traffic — but that those queries are made by searchers who spend less money online and aren't worth as much to advertisers. You know, people who set their browser homepages back in 1997 and consider Google newfangled — the ever-diminishing crew of hardcore Yahoo searchers.

Think your friends are hot? Let them know by adding them to your 10 Hottest Friends List! Get friends to add you to boost your own Ranking!