Facebook Passes 200 Million Users, Still Looking for Revenue

Facebook now has 200 million users, giving the social-networking site a "population" bigger than Russia. However, the company still remains focused on growth as opposed to revenue, even as social-networking sites such as Twitter and YouTube look for ways to more effectively monetize their relationships with their users.

Facebook now has 200 million users, giving the social-networking site a "population" even larger than nations such as Russia.

"Growing rapidly to 200 million users is a really good start," Mark Zuckerberg, CEO of Facebook, wrote in an April 8 corporate blog posting, "but we've always known that in order for Facebook to help people represent everything that is happening in their world, everyone needs to have a voice."

Playing up the mega-networking aspects of his company, Zuckerberg added: "This is why we are working hard to build a service that everyone, everywhere can use, whether they are a person, a company, a president or an organization working for change."

When it comes to business and the enterprise, however, questions about connecting and empowering the planet may be secondary to considerations of social networking's ability to generate revenue.

Twitter has already begun to monetize itself through two channels: the launch of sponsored sites, starting with the Microsoft-sponsored ExecTweets, and commercial accounts with expanded features for businesses. ExecTweets has already been launched; the paid accounts will start later in 2009.

Other social-networking sites are demonstrating a certain degree of revenue growth. Despite a public admission by Google CEO Eric Schmidt that his company was still trying to figure out the best way to monetize YouTube, which in turn led some to conclude that the popular video-sharing site would forever remain a revenue sink, YouTube's ad-sales rate has increased from 6 to 9 percent of its content over the past year, despite the economy.
AdAge attributes at least some of YouTube's U.S. gains to content agreements with Disney, CBS and other companies, which provide extra leverage with advertisers.

Within a business context, Facebook's 200 million users could be gauged not by how well the site engages users, but whether such a massive number foretells the future generation of proportionally massive revenue.

"Obviously the popularity of social networking as a concept and the primary means by which the younger generation is communicating is not at issue," John Byrne, an analyst at TBRI, said in an interview. "The issue is how that trend can be monetized."

"Two hundred million is indeed a large number," Byrne added, "but 200 million [multiplied by] pennies per customer in an online advertising revenue still [equals] not much revenue."

Google CEO Eric Schmidt once said, with regard to YouTube, that the "holy grail" of a perfect advertising model hadn't been discovered yet. Still, companies such as Facebook and Twitter continue to experiment with techniques to generate even more significant revenue streams, using their ever-increasing number of users as a test bed.

Even with all their efforts, according to Byrne, "that code has not been cracked yet."