The news that LinkedIn, a networking website for business professionals, has secured a new round of investment valuing the company at over $1 billion has made the online world take notice.

Money talks, particularly in economically uncertain times. Investors announced yesterday they are ploughing in an additional $53 million into LinkedIn, based in the same San Francisco suburb of Mountain View as Google, to help support its global expansion - in London and across Europe in the coming months.

A $53 million investment may not sound a lot but then the social networking website Facebook garnered huge coverage last October when it sold a 1.6% stake to Microsoft for $240 million. That minimal outlay valued Facebook at an astonishing (some might say unbelievable) $15 billion, just three years after it was founded.

Now, LinkedIn is not the next Facebook - not least because it is aiming for a niche audience of business people, rather than mass appeal. But that very reason could be a pointer about the

future of online networking. As Kevin Eyres, LinkedIn's European managing director, is keen to say: "We don't see ourselves as a social network. LinkedIn is a place where business gets done."

It is plain that the global rise of online networking is a phenomenon. More than100 million log on monthly to each of the top two, Facebook and Rupert Murdoch's MySpace.

But there is great caution, too, about the data. Is it really possible 14.4 million different individuals log on to Facebook each month in the UK? Surely there are a lot of multiple identities.

And let's not forget about sites such as Friendster in America and ITV's Friends Reunited, whichhave tumbled almost as fast as they rose.

Leaving those caveats aside, long-time industry analysts think the big three of Facebook, MySpace and Bebo will be around for some time - all three are allied to big media companies.

However, in the words of Murdoch, monetising that vast audience is not easy. Many are students and teenagers who won't pay for services. So the websites rely heavily on advertising - with mixed results, as a report published today by Jupiter Research confirms.

The report's author, Nate Elliott, says it's partly because Facebook et al are still refining the way they help advertisers target specific niche communities: "Social networks need to find a way to make advertising work better. These sites are having a hard time trying to justify the enormous expectations and valuations." Another reason may be that a social network is just that - where teenagers and students exchange gossip, set up dates, swap photos or download music. It's a tricky environment as marketeers don't want to be intrusive. And teenagers are fickle, too, always looking for the next hot site.

Entertainment companies who want to promote a film, for example, are finding social websites useful. But it may be less attractive to other firms that want to promote their brand or communicate in a less risqué environment.

In contrast, the rise of LinkedIn is interesting because the ethos is about business networking - and less about idle chatter. In a memorable tale earlier this year, Bill Gates reportedly gave up on his Facebook page, after getting too many gossipy requests from people wanting to be his friend, and swapped over to LinkedIn.

Attracting users from the world of work makes sense. Business people have a long-term incentive in a site that might improve their career; it's a more trusted environment; and users may be more willing to pay a subscription. Analysts say it's not dissimilar to the market for news on the web. While general news sites find it difficult to charge, a high-end business audience is willing to pay a premium.

So LinkedIn currently has a relatively small 7.6 million users a month. But it is less reliant on advertising because it is easier to charge fees for "premium" services. These include letting corporate recruiters search for certain types of candidate, and giving professional introductions to some members. According to Eyres, these bring in a roughly similar revenue stream as its sources of advertising: traditional display ads and classified-style job postings.

Looking ahead, more new players are bound to emerge. Analysts at comScore identify a website called Ning as a rising force. Marc Andreessen, one of the pioneers of the Netscape technology, is behind it. Ning allows people to create their own social networks, which have an edgier feel.

Some think this trend could be the way forward. Chris Watts, head of Target Digital, a communications agency specialising in entertainment, currently buys advertising space on sites such as Facebook and Bebo. "They are still delivering the numbers," he says. "But I believe the social networking websites sector will fragment and people will join their own [niche] networks."

But Elliott at Jupiter Research adds there is great potential for the big players: "Just because they still have a way to go to improve their business models doesn't mean they aren't profitable. Social networking will be very profitable for those sites that work it out."