If your children are spending all their free time on social-networking websites, don't worry. It is actually a "positive" thing, says Michael Birch, the founder of Bebo, one of the leading global brands in this new sector.

Birch, a 36-year-old Briton based in San Francisco, argues that having children glued to these websites means that they are watching less "mind-numbing" TV and play fewer "mindless" computer games. It also teaches them valuable skills. "It's fun, helping them learn to communicate, develop social skills, learning a lot of creativity. They are becoming mini-publishers, creating videos and other stuff," Birch says.

But is it safe? Bebo has appointed a full-time child-safety officer, who works with the Home Office and the police. But Birch feels that "scaremongering and sensationalism" in the press, about paedophiles using these sites to meet and groom children, has not helped. Children just need to follow the "common sense" that is used in the real world - the "don't talk to strangers" mantra turns into "don't meet up with people you don't know" in the online world. Parental supervision is necessary, he says.

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The other worrying issue is cyber-bullying. Birch points out that the internet means that, for the first time, parents can actually see the bullying going on and have a record of it. Conversely, they need to make sure that their children are not using the web to be bullies.

Bebo, which only launched in July 2005, is already the second most popular social-networking site in the UK, just behind MySpace. And with 25 million users worldwide, Bebo provides some serious competition to MySpace, which leads the field with 100 million users. In the US, Bebo is reckoned to be the number-three player, behind MySpace, and Facebook, which is popular among university students.

Should traditional media companies feel threatened? You bet. Rupert Murdoch was so worried he paid $580m for MySpace last year.

A report by the media regulator Ofcom found that the average 16-to-24-year-old watched an hour's less TV a day than older viewers last year because they were spending more time on the net. Social-networking sites are used by more than 70 per cent of young internet users and 41 per cent of UK adult users, Ofcom said.

Bebo has a reputation as a site for younger kids, but the majority of its users are, in fact, over 16. In the UK, 28 per cent of them are over 35, while an astonishing 40 per cent of MySpace users in this country are over 35, according to data from Nielsen/NetRatings.

Birch says that teenagers tend to be early adopters of new technology but, as usage spreads, audiences become much older. So it is not just teenage and kids' media that will suffer, and television is just the initial victim, Birch warns.

"Consumers are spending a lot more time on these sites, to the detriment of television. And, with that time, go the advertising opportunities. The experience is becoming more like television anyway, with the upsurge in videos being put onto the sites."

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Emap recently announced that it was stopping the celebrity gossip title Sneak because so many of its teen audience were spending time online.

Compared with traditional media, the cost-base for Bebo and other such sites is just fantastic. "You don't spend money on marketing. If you artificially generate the community, it's not a real community at all. And you're not paying for content, as that is generated free by users," Birch says.

Bebo carries just a few banner ads and they are enough for it to break even. It would be profitable if it stopped investing in infrastructure to grow. So far, it has not really even bothered to develop the business side of things.

Birch insists that social-networking sites are not a passing fad. "There's a real utility to it, like phones and text-messaging. It serves a real purpose. Social-networking sites have replaced e-mail for many people."

He must be pretty sure, as he has reputedly turned down mega-bucks - $750m (£400m) some say - to sell out to the US media giant Viacom. Birch says he was "delighted" by the recent Google/MySpace deal, as it legitimised the advertising business model that is relied upon by social-networking sites, which are free to use.

That Google/MySpace deal did more than just validate the model. It provided Murdoch with a tremendous return. Google agreed to pay $900m to put its ads on MySpace and some other News Corporation websites.

But the social-networking business is not a one-way bet. Friendster was the first of this generation of community sites and used to be easily the biggest of them. It is now a very distant player. Birch says: "You need to get the product just right, to make it better, more addictive, and more fun, than the others."