$10bn buys a lot of company; Harley-Davidson, the 108-year-old motorbike icon, is worth just shy of $10bn (£6.2bn). The Deutsche Börse is hoping to pay about that for the New York stock exchange.

It's also the price tag now hanging around the neck of Twitter, the loss-making five-year-old microblogging site that is being heralded as either a superstar of a new era of communication or the frothiest example yet of a new dotcom bubble.

Google and Facebook are both reportedly courting Twitter. Although talks are at a very early stage the price tag of between $8bn and $10bn seems firm.

Just two months ago Twitter was valued at $3.7bn after raising $200m in new financing. But in the interim the investment world has gone crazy for all things new media. Companies spouting the buzzwords social media, platforms, community and content are attracting offers not seen since the dotcom boom at the turn of the millennium.

Facebook, the daddy of them all, is said to be looking at an initial public offering that would value the firm at $50bn – more valuable than Rupert Murdoch's News Corp empire and nearly as much as Boeing.

Just like the last dotcom boom, there's certainly a lot of froth out there. Cheezburger, a collection of humour sites that's big on pictures of cats doing silly things, recently raised $30m from venture capital funds.

Skullcandy, makers of iPod accessories and headphones that come with big colourful skulls printed on them, is planning to raise $150m from an initial public offering.

And why not? Far less glamorous firms are rolling in it. Snap Interactive, which makes dating applications for social media sites (such as Facebook) is now valued at $114m. It reported income of $1.7m for the last three months. CrowdGather, which is a "network of community forums," is worth $70m, even though it made a loss of $711,272 in the most recent three months.

Richard Holway, the chairman of TechMarketView, said this time things are different. "In the last dotcom boom, all ships were rising," he said. This time it's just the social media firms that are attracting valuations from 'crazyland'.

"Back in 2000 everything was overvalued; that's not true now. Facebook has a fantastic business model, a lot of the advertising dollars spent on Google will eventually move over to them, I think. LinkedIn has a business model too."

But with Twitter, he admits, "It's hard to see what their business model is."

Twitter now has more than 175 million users. Its revenues last year are said to have been $45m, although they are expected to more than double this year. But that's a tiny sum for a $10bn company – especially one that is losing money.

And for all the buzz around Twitter, it is still a minority interest. Just 12% of internet users in the US use Twitter, according to a recent survey by the Pew Research Centre. Facebook is used by 62%.

But hype is a subject that both Facebook and Google know more than a little about. Google saw off all-comers to become the dominant web firm of the second wave of internet companies. Likewise Facebook has beaten its competition into submission and now claims 600 million active users – almost twice the population of the US. The two firms smell gold in them there tweets.

Josh Bernoff, analyst at Forrester, said it was clear people were getting carried away by their enthusiasm for social media. "But I'd stop short of calling it a bubble," he added.

"You can't just sprinkle social goodness on the top of a company and expect it to be worth 10 times as much." But he believes the impact of social media firms is real and will be long-lasting.

"What people forget about the first dotcom boom was that under all the froth there were a lot of very successful companies. Amazon, eBay – real companies. Facebook has made a permanent change in the way people interact. There is real value there."

He said the same was true for Twitter, because the company has changed how people communicate and will continue to do so. But Bernoff has two reservations: can they keep up their phenomenal growth, and can they make any money? He was sure that Twitter would continue to grow, but the jury is still out on how much money it can make.

And that is the $10bn question.

Social media success stories



Facebook

The social network phenomenon founded by Mark Zuckerberg has more than 600 million active users, almost twice the population of the United States. The company's last round of investment suggests Facebook would be valued at $50bn. Its success has created a whole new ecosystem of businesses using social media.

LinkedIn

The business network is likely to be the first of the social media companies to go public. Analysts value it at over $2.5bn. LinkedIn claims 90 million users and says it adds one every second.

Groupon

In December Google made a $6bn offer for the online discount company. Now the Chicago-based business is pushing ahead with plans for a stock market float that could value it at $15bn. Groupon is by some calculations the fastest growing company in history. It has more than 50 million users around the world and its revenue has reached more than $1bn a year.

Zynga

More than 300 million people like to tend the virtual farms and cities set up by Zynga, a social gaming company. Analysts value it at $5.8bn.