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When it comes to social networks, I rarely hear about MySpace. Although, recently my mom mentioned it (which is usually a sign that a website has reached its peak).
Of course, the go-to place is now Facebook. And, based on the founder's blog post – Mark Zuckerberg – the growth rate is torrid.
Just four months ago, Facebook had 100 million users; now, there are more than 150 million users.
OK, "users" can be an amorphous thing. But, even if 10% are really inactive, the growth rate is nonetheless stunning (keep in mind that about 75 million users are on Facebook on a daily basis).
Basically, Facebook is benefiting from the power of the network effect. This means that – as more users join the network – the more value that accrues. Hey, why join a social network with few potential friends?
So not only is Facebook putting the pressure on MySpace, but also the thousands of other social networks (I suspect we'll see a brutal shakeout in 2009).
The fact is that Facebook has continued to innovate its platform. For example, the website has a new service called Facebook Connect, which allows other websites to easily use the registration system. This is a win-win. Website publishers don't have to invest in new technology and can also leverage their friend base. As for Facebook, it will add to its network and make it more difficult to move to an alternative services.
However, there are still challenges. Perhaps the most important is monetization. Despite all the growth, Facebook is apparently still having difficulties scaling revenues. Yet, so long as the company continues to add new features, monetization should eventually hit some level of critical mass.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
1-08-2009 @ 1:32PM
BHarrison said...
Well, perhaps it may be because I am getting older ( a very "youngish" 60s, which certainly infers the "age" thing) but how does anyone, or at least the majority of the users, get anything meaningful out of sorting through 150 MILLION other members . . . that has to be awfully time consuming, and a substantial waste of time . . . Ha!
While the internet has a lot of capacity and flexibility, it appears to be so chaotic and swamped with "general information" that takes hours and hours, if not days and days, to sort through. I don't use face book; but it amazes me that there are 150 million "users". Is it somewhat like the old AOL "chat rooms" where people randomly popped in and out to say rather meaningless chatter?
If it isn't sortable by some regional and other categorizations, then isn't most of it just a waste of time. And as the disposable income of the users deminishes during a recessionary times, how profitable will it be for advertisers . . . that is a reality that these types of sites will be confronted with.
I suspect that we have gone through the "boom times" for these types of sites. There simply is not going to be the market to support a lot of these sites during times of deep recession . . . and who is going to have the time to waste on these sites. well, Iguess the TENS of MILLIONS of unemployed people may have the time; but the other people will be looking for productive things to invest their time in.