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Planet Facebook – Is Social-networking Site a Phenomenon or a Fad?

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By Scott Duke Harris

RISMEDIA, June 26, 2009-(MCT)-Is Facebook a phenomenon – or a fad? Even as it has grown to more than 200 million users and become the global leader in social-networking websites, many people see it as just a nifty way for people to share information and images among far-flung friends and acquaintances.

But admirers say Mark Zuckerberg’s 5-year-old startup is poised to fulfill hype as the next big thing – that it will power online social interaction the way Google drives online search. Facebook is aggressively moving beyond the home page to pursue its mission to become a “social utility” that helps people “connect and share.”

To typical users, Facebook may seem a stand-alone website – a vehicle for people to renew and revitalize personal relationships, to post comments and photos, and perhaps play games. But more than 10,000 websites now recognize a service called Facebook Connect, which enables users to use their Facebook ID and password to move fluidly between sites where registration is required.

The service also adds new social functions to those other sites. For example, a person who posts a video on YouTube can also share it via Facebook with a single click. And Facebook has global reach, having been translated into 50 languages, with 40 more in development, the company says.

Every new Facebook user, every “friend” added, every business that starts a page, every Web entity that recognizes Facebook Connect – all add to the critical mass behind Facebook’s momentum. From a business perspective, the connections enhance the value of what Facebook calls the “social graph” – its ever-expanding map of human relationships – even while skeptics wonder about its ability to turn its popularity into profit.

How important is Facebook? Shouting over live rock at a recent Facebook party at a San Francisco nightclub, Mark Pincus, founder and CEO of fast-growing online game maker Zynga, likened it to Netscape, the browser startup that launched the dot-com boom in 1995.

Separately, Joe Greenstein, co-founder of Flixster, a site that lets film buffs share reviews and comments, suggested that Facebook Connect represents the 21st-century upgrade of e-mail. If Google ignited the so-called Web 2.0 business era, Facebook may be ushering in Web 3.0, he said. The opportunity, Greenstein said, “is theirs to lose.”

Those assessments contrast sharply to some other notable perspectives. A year ago, Internet mogul Barry Diller elicited laughter at a business conference by dismissing Facebook as “a Princess phone” – a communications fad. Similarly, Rupert Murdoch, whose News Corp. empire includes Facebook rival MySpace, was once quoted as calling Facebook “the flavor of the month.”

But while Facebook doubled its user base in the past year, MySpace has been slipping. While Facebook only recently surpassed MySpace in U.S. users – both have about 70 million each, according to comScore – Facebook appears far more successful in holding users’ attention. A recent study by Nielsen Online found that the total amount of time Americans spent on Facebook in April increased to more than 233 million hours, a nearly 700% increase over April 2008. MySpace, meanwhile, endured a 30% decline.

In April, News Corp. hired former Facebook executive Owen Van Natta to take over as CEO of MySpace. This week, Van Natta announced plans to cut about 400 jobs from MySpace’s “bloated” work force.

Facebook’s own lofty aims were underscored during a spring news conference where Christopher Cox, vice president of product, delivered a presentation that included a portrait of the communications theorist Marshall McLuhan, known for saying, “The medium is the message.”

Cox said he thought of Facebook as simply as a website for college students in October 2005, when he first bicycled from Stanford University to visit the startup’s modest office in downtown Palo Alto. Facebook, which Zuckerberg famously founded at age 19 in his Harvard University dorm, was 20 months old then and lacked many features it has today. The startup had about 40 employees, including perhaps a dozen engineers. Cox, then 22 and about to start graduate studies in Stanford’s artificial intelligence program, said he didn’t consider himself a serious job candidate.

But as one of Facebook’s top technologists started drawing dots and lines on a white board and talking about “the social graph” – the first time Cox had heard the term – he found himself transfixed by Facebook’s ambitious vision. “Who do we communicate with?” Cox said. “Who do we trust? This is the value Facebook is creating for people.”

Cox soon withdrew from Stanford and joined the yearlong project building Facebook’s “news feed” that streams comments among Facebook “friends.” Initially controversial, it’s now a signature feature.

Facebook has grown to more than 800 employees and about 200 engineers, attracting a recent investment that valued the company at $10 billion. In May, the operation vacated 10 offices in downtown Palo Alto to consolidate in a spacious building vacated years ago by Agilent Technologies. Other employees are scattered around the world.

Even as the globe has lurched into recession, the Facebook economy seems to be booming. In the two years since Facebook opened its platform to outside developers, more than 300,000 Facebook applications, or “apps,” have been created – games, quizzes, digital gifts and more. The successful apps boost users’ engagement with Facebook – sometimes called “stickiness” – but do not directly provide revenue.

Piggybacking on Facebook has been profitable for several startups. Zynga, which according to some reports is raking in annual revenues of $100 million with the poker game Texas Hold ‘Em and other games, has grown from 45 employees to more than 250 in the past year, Pincus said. About “70%, perhaps 80%” of Zynga’s growth, he said, could be attributed to Facebook.

Flixster’s growth also illustrates Facebook’s role as a driver of Web innovation. Founded in January 2006, Flixster.com ?was attracting about 4 million monthly unique visitors when Facebook opened its development platform. Fearing competition, Flixster quickly built its own Facebook app. That app’s traffic quickly surpassed visitors to Flixster.com.

More recently, Flixster built an app for Apple’s iPhone – and it’s activated via Facebook Connect. “It’s the glue,” Greenstein said.

The success of Facebook’s development platform has inspired a trend: Google, MySpace, Twitter, Bebo, Yahoo and the Apple iPhone have all opened up to outside developers.

©2009, San Jose Mercury News (San Jose, Calif.).
Distributed by McClatchy-Tribune Information Services.

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