Making friendship really pay

PROFILE: FACEBOOK: WHAT’S GOT over 300 million people and appears to have avoided the rest of the world’s recession woes by …

PROFILE: FACEBOOK:WHAT'S GOT over 300 million people and appears to have avoided the rest of the world's recession woes by reaching its fiscal targets ahead of schedule? Not some economically thriving anomaly of a country, as it turns out, but a social networking site that's on the way to having more regular users than the United States has population, writes FIONA McCANN

In case you haven’t clicked, we’re talking about Facebook, now the world’s largest social networking site less than six years into its existence. This week, the site’s chief executive Mark Zuckerberg announced that Facebook now boasts 300 million users from all over the world, 100 million of whom have signed up in the past six months alone.

According to Colm Long, head of online operations for Facebook in Europe, the Middle East and Africa, these are all people who have used the site in the last 30 days, with 50 per cent of that number – 150 million people, in case you hadn’t worked that out – checking into Facebook every day.

And they’re coming from everywhere: what started out as an English-language dominated site largely based in the US has gone on to attract users from all over the globe, and recent translations of the website into Spanish, French and German are ensuring its further expansion. In fact, there are more than 65 translations available on the site, and now some 70 per cent of the site’s users come from outside the US.


Zuckerberg’s own Facebook page contains photographs from a recent trip to Sao Paulo, with a caption that refers to Facebook’s “fast growth in Brazil and our mission to help people around the world share information and stay connected with friends and family”.

Facebook, it seems, has already gone global, and now claims to be for the benefit of all mankind, though its origins may have been a little more elitist than such aspirations might appear.

According to the company’s own factsheet, Facebook was founded in February 2004 by Zuckerberg, who had already hacked into Harvard databases on a previous occasion to create a site called Facemash, which compared photographs of Harvard students and judged them on their relative attractiveness.

He was quickly found out by the Harvard authorities and the site shut down, but Zuckerberg’s notoriety spread around campus, and the instant popularity of Facemash made clear there was a market for the kind of online connectivity Zuckerberg was exploring.

With the help of co-founders Dustin Moskovitz, Chris Hughes and Eduardo Saverin, he went on to set up a social networking site called Facebook from a Harvard dorm room. Membership was initially restricted to Harvard students, but when it spread like wildfire among the college’s student population, it was expanded to Stanford, Columbia and Yale.

The initial concept was a centralised site where users could search for people at their school, find out who was in their classes, look up their friends’ friends and upload their photographs. As the number of users grew, the site developed, with the ability to set up groups and the Facebook “wall” – an individual page for each member where their friends can post comments to be viewed by other friends – added.

By December 2004, there were nearly a million active users on Facebook, though it was still only eligible to members of particular universities in Canada and the US, and employees of select companies. High-school students back then required an invitation to join, but the numbers just kept rising, and on September 26, 2006, Facebook finally opened up to anyone aged 13 or over who had a valid e-mail address.

Facebook was not, however, the only social networking site on the block. Friendster had been around as far back as 2002, while MySpace dates from 2003, and for a long time reigned as the most popular social networking site, even after the arrival of Bebo on the scene in January 2005. So how did Facebook take over?

USERS PRAISE THEsite's simplicity, ease of use and uncluttered interface, but others point to Rupert Murdoch's News Corporation's purchase of MySpace in 2005 as one of the reasons why it lost its foothold. "In one way the downfall of MySpace is that it was acquired by a very traditional company, and that influenced its development," explains communications consultant Damien Mulley. "The people who were running it were all over 40."

In contrast, those behind Facebook are still young, largely in their 20s, and all users of the site. “They understand their own community and they understand the crowd.”

Mulley, who toured Facebook’s Palo Alto headquarters three years ago and met members of its upper management, says even then, those behind Facebook were intent on reaching a wider, global audience.

“They’ve worked very, very hard on that, and every couple of weeks they roll out something new. They’re always bringing in new features,” he says. “They’re constantly adapting and changing to what’s hot out there. If you look at MySpace, it hasn’t changed in years, and there have been no features added.”

It’s paying off: now more than six billion minutes are spent on the site every day, worldwide, with over two billion photographs uploaded every month.

It hasn’t all been plain sailing for Facebook, however, and the site had its own teething problems, as well as its fair share of lawsuits. One long-running suit from the founders of a similar site, ConnectU, who alleged they had employed Zuckerberg to help them with programming, and he’d stolen their idea, was finally settled early last year, though the terms of the settlement were not disclosed.

Another one-time Harvard student also filed a petition with the US Patent and Trademark Office claiming he had first created a site called Face Book, which he had discussed with Zuckerberg before the latter went on to launch his own site. Several countries also decided to block its use entirely, among them Iran, China and Syria. Concerns raised about the amount of time office workers spend on the site has also led to at least one city council in Britain banning the site on its computers after discovering that staff were spending an average of 400 hours on it every month. The site has also been dogged by concerns about the level of privacy afforded the site’s subscribers, with some less adept at keeping their information concealed from the general public, or in some cases, their employers, which might explain the origins of the term “Facebook fired”, used when an employee is let go as a result of their online behaviour on the site.

But the biggest recent controversy erupted earlier this year, when the site moved to change its terms and conditions of use. The change would have allowed Facebook to use and store the data belonging to its subscribers even if they deleted their accounts and removed their information; in other words Facebook would have owned the photographs, posts and profile information of its now 300 million users worldwide and would have been able to sell this content on to whomever they wished.

Facebook users were not amused, and made their concerns felt immediately and all over the internet. The response? Zuckerberg climbed down publicly, and the site reverted to its previous terms of use. “We have decided to return to our previous terms of use while we resolve the issues that people have raised,” read Zuckerberg’s message as the changes were rolled back. A new version of the terms of use was then drawn up with the input of the sites own users.

The result? More users. Since the kerfuffle over the proposed changes, Facebook has added a further 100 million users, and the cash is coming with them.

As part of his announcement that the company had passed the 300 million mark, Zuckerberg also announced that the company is cash flow positive, meaning its revenue now exceeds expenditure.

In May, the company announced a $200 million investment from Russia’s Digital Sky technologies in a deal that valued its preferred shares at $10 billion, while Marc Andreessen of Facebook’s board of directors has said the company is to surpass $500 million in revenue this year.

It may have taken a while to come, but it looks like all that work is finally paying off. “They’ve been patient, really,” says Mulley. “They’ve had a cool head the whole time.”

Not only is the company now making money, largely through targeted ads that appear on users’ Facebook pages post log-in, but it has also just been ranked by Ponemon Institute and TRUSTe in the top 10 of America’s Most Trusted Companies for Privacy, a first for the company and a reflection of how the negative reaction to its terms and conditions change was used to transform its image in a positive manner.

“It’s now the default space for everyone under the age of 30,” says Mulley.

“It’s more popular than e-mail for a younger crowd.”

And it’s not just for spring chickens either: recent figures show the fastest-growing demographic on the site is users of 35 years and older. Which means your mother could soon be requesting your Facebook friendship so she can check out your photographs and read your updated account of “what’s on your mind”.

You have been warned . . .


What is it?The largest social networking site in the world

Why is it in the news?Because it now has 300 million regular users, and is also now cashflow positive

Most likely to say:Let's be friends!

Least likely to say:Let's take this off-line

Full sentence in Facebookish:"He like totally posted on my wall, and then he unfriended me but not before I had commented on his status and shared his link with all my FBFs"

Translation:"We seem to have lost touch"