CLICK on Michael Birch’s page on Bebo, one of Britain’s favourite social-networking sites, and you will learn a little about the newly minted millionaire.

Birch is 37, he calls London his home town, he likes Lily Allen, Pink Floyd and The Beatles. He drinks Guinness, Old Peculiar and London Pride and his “other half” is Xochi Birch.

However, there is no mention of the fact that last week Mr and Mrs Birch made an estimated $600m (£295m) from their 70% stake in Bebo when the company was sold to the AOL division of Time Warner for $850m in cash.

Perhaps that’s not too surprising. On the day of the deal Michael Birch hadn’t visited the site for three days, he hadn’t commented on his blog for 187 days and 447 days earlier he posted this: “It’s been only 502 days since my last blog post, and after all that time, I still have nothing more interesting to say than this.” Xochi hadn’t commented on her blog for 353 days.

This is the Birchs’ sixth internet business and they are not expected to remain with the company. By the looks of it, the couple, who have homes in London and San Francisco, moved on some time ago.

But AOL is betting that Bebo will prove as big a draw to Americans as it has to Britons. In the process its executives are hoping that Bebo can help AOL reverse years of what some are predicting is terminal decline.

Bebo is Britain’s second most popular social-network site – after Facebook – and has 40m users across the world.

In America it has yet to make headway against Facebook and MySpace, part of News Corp, ultimate owner of The Sunday Times. AOL hopes it can use Bebo to catch up in an area that many analysts argue it should have led in.

That AOL is a brand in trouble is old news. The internet giant has been on the skids almost since the day of its historic takeover of Time Warner in 2000.

The company was once the preeminent name on the web – the Google of its era. AOL still attracts 112m visitors a month and had revenues of $5.2 billion in 2007. But those revenues were down 33% from 2006 and now Microsoft plans to take over rival Yahoo, putting extra pressure on the company to prove that it is a brand that has a future.

What intrigues analysts is that Bebo looks cheap in comparison with the valuations placed on Facebook and MySpace.

News Corp spent $580m to buy MySpace in 2005. The site is No 1 in America and analysts value it at between $5 billion and $10 billion. Last October Microsoft bought 1.6% of Facebook, valuing the company at $15 billion, although analysts estimate it is worth less than that.

Jeff Lindsay, analyst at San-ford Bernstein, said that the problem with social-network sites in general and Bebo in particular is demonstrating that they can generate money from all those users. “One big factor is the maturity of their advertising,” said Lindsay.

News Corp is one year into a $900m deal with Google to advertise on MySpace; Facebook has Microsoft’s backing; but until this week Bebo didn’t have major support.

Lindsay said that, without that backing, growth prospects in the United States – the world’s biggest market – look uncertain and these uncertainties are reflected in the price.

“They could have held out for more money but it looks like the Bebo people wanted to do a deal,” he said.

Buying Bebo doesn’t solve AOL’s problems, said Mike Masnick, founder of the influential tech industry analyst Techdirt. “It’s too little, too late. AOL is a property in decline that has failed to leverage its best assets,” he said, claiming that the purchase was “opportunistic rather than strategic”.

Masnick said the real tragedy for AOL is that it should never have needed to buy Bebo in the first place. AOL had all the makings of a social-network site like MySpace or Facebook, he went on. The company introduced millions of people to the internet and pioneered message boards, chat rooms, video and instant messaging.

“They have all sorts of information on people - who their friends are, their likes and dislikes - and they have a communications platform [e-mail and AOL Instant Messaging]. All the core components were there but they never did anything with them,” said Masnick.

The news of the Bebo purchase came a few days after Jeff Bewkes, Time Warner boss, once more hinted that AOL was up for sale. At an industry conference Bewkes said: “It’s our obligation to get AOL into the strongest combination and fit.”

AOL chief executive Randy Falco said on a conference call that the Bebo deal would be “game-changing” for the struggling internet pioneer. “Bebo will be the cornerstone of our strategy to transform online experiences for advertisers, media companies and consumers,” he said.

AOL still pulls in a lot of money in advertising. Ad revenues totalled $2.2 billion in 2007, up 18% from the previous year, but the pace of growth is slowing quarter by quarter.

“Most people think Yahoo and Microsoft are going to get together,” said one former AOL executive. “At AOL the attitude is that we have to invest in something or there won’t be anything left.”

Masnick said that if Microsoft and Yahoo do get together, it could be a plus for AOL. “Integrating those two companies will be difficult. There will be problems and AOL of all companies should know that,” he said.

However, Masnick had little faith that AOL would seize the advantage or make Bebo a success. “I imagine that eventually they will be sold off as they get weaker and weaker and someone buys them for the [web] traffic,” he said.

Maybe Bebo should have bought AOL.

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