Why Facebook is now the number one social network in the world, and why this matters

“At first we were worried about MySpace, but then we realized that people use it differently from our site,” an employee at social network Facebook told me over a year ago. What he meant is that Facebook is a place for people to put their real lives online, providing factual information about themselves and having trusted interactions with their friends. Meanwhile, rival MySpace is more of a place for people to live out their fantasy lives online, borrowing celebrity photos for their profile pictures, adding far-fetched biographical information and such — MySpace uses the term “self-expression” to describe this behavior.

These cultural differences are, of course, not true across the board but are generally obvious to anyone who uses both social networks. And they’re a huge deal, even though most coverage I’ve seen doesn’t acknowledge it.

Facebook’s global user numbers have boomed from around 40 million monthly unique visitors in April, 2007 to 115 million unique monthly users this past April, with 62 million new users coming from outside the US.

Compare that to MySpace, which counts 73 million of its global users in the US and is now globally a close second to Facebook, having hardly grown anywhere over the past year. In fact, another traffic measurement firm, Nielsen Online, says that MySpace had 4.7 million U.S. visitors in April, down 30 percent from last year. [Note: This is a bizarrely low number, although the BBC and WebProNews are citing it -- I'm looking for confirmation from Nielsen. I'm sticking with comScore numbers for now.]

Taking a deeper dive into Facebook’s growth in regions around the world, it’s important to note that in many places MySpace has never been dominant. For example, another social network, hi5 — which has an interface more similar to MySpace’s, has been the market leader in Spanish-speaking Latin American countries for years. And while hi5 is still growing fast, Facebook has been busy catching up to it in a matter of months, especially after Facebook released a Spanish-language version of its site in March.

How Facebook is keeping it real

Facebook’s growth is global in more ways than one. While it continues to have a relatively white collar, college-based user population in the U.S., it has seen uptake across all demographics in other countries. For example, when the site took off in Canada in the winter of 2007, two-thirds of the entire city of Toronto quickly joined, not just the rich kids. Facebook employees tell me they’ve seen the same pattern in every country outside of the U.S.

Facebook started as a college campus hit in the U.S., with students using the service to share information like which dorm they lived in, what movies they liked, and who they hooked up with. If they provided fake information, their friends from across the hall would simply leave comments saying so on their profile pages. Facebook built this real-world community aspect into its site through local and regional networks that you join when you sign up — an idea it has gradually expanded on as it opens up to more and more people in the U.S. and around the world.

Now, put yourself in the mind of the average user in another country. You’re joining because you want to hang out with friends around you, or maybe friends who have immigrated to other countries, or maybe you want to meet new people in other countries because you’re human and you’re curious about people in general.

Let’s say a friend who lives near you invites you to join. You see your friend’s real information, you mimic that by providing your own. You start using the site and you see that basically most other users have also added their real information, confirming that you should continue to provide real information on the site. Facebook also asks you to join a local network — which most new users seem to do — and you immediately get access to a bunch of other people a lot like you.

Now, let’s say you start looking around the site. You go to the profile page of a worldwide icon like English soccer club Manchester United, and see real users from around the world leaving comments. Or say you’re using a flirting application and start flirting with real people, also from around the world. In either case, you friend these people because you find you have something in common with them, and would like to see their full profiles (on Facebook, you normally have to either friend people or be in their network to see their full profiles). They friend you back, and pretty soon you, the new user, has a large Facebook friend list that gives you a direct view into who people really are, everywhere.

Facebook users in many Middle Eastern countries and Facebook users in the US have been busy making friends and overcoming larger political and religious differences, as Facebook chief executive Mark Zuckerberg has noted — and as I have personally seen.

Meanwhile, join MySpace, and you’ll encounter bewildering user profile pages dedicated to sub-segments of American pop culture that you don’t understand or care about, that won’t help you easily find old friends and new ones. Even though it lets you state things like what school you’re in and where you live within your user profile, the site didn’t grow based on these definitions, and beyond American high school users on the site, local networks are weak-to-nonexistent.

Blogger Andrew Chen noted the culture issue in an April post looking at Facebook’s worldwide growth rate, although he attributed the difference more generally to Facebook’s relatively simple, “utilitarian” interface and not to the distinct user behavior that the interface and site evolution have together bred.

So, in this context, Facebook’s growth and MySpace’s lack thereof may help explain why MySpace is launching a new, cleaner interface, which you can read about here. However, the changes, which include simpler site navigation options at the top of the site, better search, and more options for profile editing, don’t appear to impact how users perceive the site.

MySpace will likely continue to be a leading social networking destination, especially for people looking mainly for self-expression. It, and other social networks, have already ceded the real world to Facebook, though, and I don’t see them doing anything to change that.

Okay, so what are all these users worth

Social network advertising — which is generally comprised of ineffectively targeted banner ads — isn’t making that much money, and so far, neither have virtual gifts and various other monetization ideas. MySpace has had more trouble making money than it had hoped, as it made slightly less than the billion it was aiming for this past year. However, it’s shown promising progress in targeting ads to users based on user’s own profile data (example: If you’re a MySpace user who likes shoes, you’re more likely to see ads for shoes).

Facebook, which is valued at $15 billion, expects to make up to $350 million this year, but that’s at least offset by costs incurred through its growth. It has been looking at fleshing out everything from targeted ads to video ads.

But the fact that monetization methods for social networks haven’t fully evolved yet is no reason to view this segment pessimistically. Web market analysis firm eMarketer released a report last month in which it revised long-term revenue projections for social network advertising downwards from its earlier report. But the report is based on what the firm’s analysts read in the press and what they hear from companies. A large chunk of the projections dip is likely based on the one-off report about MySpace not meeting its own high expectations

With the vast majority of social network revenues coming from US users (it’s currently the most lucrative advertising market in the world), it goes without saying that social network companies are dependent on growing out their US user bases quickly.

And MySpace might be right to focus so heavily on the U.S. market for now. On the other hand, entrepreneurship involves taking risks to be early to new markets and nail them before your competitors. There are plenty of economies currently growing much faster than the U.S.’s, and as social networks catch on in those countries, social network advertising will grow. So, gaining a global user base now is actually a land-grab among social networks, especially for the largest social networks, all of which have substantial funding to back them up as they continue to grow.

If you were a social network, would you want tens of millions of international users now, even if you figure you probably won’t make money on them for years? I would.

[Comscore image via Techcrunch.]


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  1. […] about exchanging personal news and information among friends, according to a thoughtful analysis in VentureBeat.com, though somewhat biased toward Facebook. The distinction goes back to the two sites’ origins. […]