Page last updated at 09:08 GMT, Wednesday, 4 February 2009

Facebook clocks fifth birthday

By Maggie Shiels
Technology reporter, BBC News, Silicon Valley

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Facebook founder Mark Zuckerberg spoke to the BBC in October 2008

Facebook is giving its 150 million users a mystery virtual gift to celebrate its fifth birthday.

The gift shop's presents usually range from cuddly bears to a pint of beer and from champagne to a four-leaf clover.

Founder Mark Zuckerberg said, "In the spirit of celebrating connections between people, we encourage you to use this gift to give thanks to [those] you are connected with on Facebook."

In the battle for online friends, Facebook is now the world leader.

In a blog post, Mr Zuckerberg acknowledged the company's work in achieving its place as the biggest social network to date.

"Building and moving quickly for five years hasn't been easy, and we aren't finished.

"As we celebrate Facebook's 5th birthday, we continue to work hard to evolve Facebook and make it as simple as possible to communicate with and understand the people and entities that matter to you," wrote Mr Zuckerberg.

In the blog he has also taken a trip down memory lane and shared old images of how the site has changed since it was launched in 2004.

'Pet college project'

For a company that started in a dorm room, Facebook's rise has been regarded as impressive with its 150 million active users beating rival MySpace's 130 million users.

Facebook screen shots through the ages
Facebook says more than 3 billion minutes are spent on the site each day

"They've gone from a pet college project to a global communications platform," said Jeremiah Owyang of Forrester Research.

"It's a place where you can communicate with people you actually know. It's different from other places on the web where those people may not be truly your friend - like on MySpace where there are a lot of celebs and fictional characters created by PR companies.

"Facebook is about people you really know and trust and it has great crossover appeal to your real life, family and work," said Mr Owyang, who is conducting research on the future of social networks.

In his blog, 24-year-old Mr Zuckerberg said, "The culture of the internet has also changed pretty dramatically over the past five years.

"Before, most people wouldn't consider sharing their real identities online. But Facebook has offered a safe and trusted environment for people to interact online, which has made millions of people comfortable expressing more about themselves."

Professor B J Fogg, who ran a course called the "Psychology of Facebook" at Stanford University, told BBC News: "Facebook has changed how people view the world. Today, a friend from any country is just a few clicks away.

"Facebook brings the world together - one trusted place," said Professor Fogg.

The 'in' thing

It was back in February 2004 when Mr Zuckerberg launched "The facebook", as it was then known, from a Harvard dorm room. With the aid of some friends, the aim was to help students keep in touch over the internet and get to know each other better.

Facebook
The average user has 120 friends on the site

Within 24 hours, 1,200 Harvard students had signed up and soon after that the network was quickly extended to other colleges and universities.

By 2005, an internal study showed that around 85% of students in the network had a Facebook account. Another survey by Student Monitor revealed that Facebook was the most "in" thing after the iPod.

At the end of 2005, Facebook hit the UK and today the site is translated across 35 languages with another 60 in development.

When Mr Zuckerberg filed letters of incorporation for Facebook, he listed his job description as "Founder, Master and Commander Enemy of the State."

'Walled Gardens'

Today more than half of the 150 million unique users are not at college and the fastest growing demographic is 30 years old and above.

HAVE YOUR SAY
Facebook allows me to share pictures and news with friends across the world and back home in Australia
Gem, East Anglia

Everyday more than 15 million users update their status to tell their friends what they are doing. They also show off photographs, upload videos, chat, make friends, meet old ones, join causes, groups, have fun and throw virtual sheep at one another.

"Social networking is nowhere as big a deal as it's going to become. Right now Facebook is the predominant social network, the one the other social networks want to be," seasoned analyst Rob Enderle of the Enderle Group told BBC News.

"As this space evolves, people are going to be living with these social networking tools. They are going to become the new walled gardens and form a more central role in people's lives."

Facebook boss Mark Zuckerberg, BBC
Mark Zuckerberg started the site to help students connect

But who will lead the pack? There is a plethora of social networks but Facebook and MySpace are constantly pitted against one another for supremacy.

"MySpace is like the messy teenager's room whereas Facebook is where people will find their mum, cousins and friends hanging out. It's like a hub," brand consultant Phil Edelin of Wolff Olins told BBC News.

However he said Facebook still has a long way to go to prove itself.

"We have been through the phase of enjoyment and self-indulgence on the site. It needs to innovate as a brand.

"It's been through the faddish phase and is now in a sticky phase. But there are so many other social networks, it needs to stay true to its brand and innovate and create," said Mr Edelin.

It is a sentiment that Mr Zuckerberg seemed to acknowledge in the birthday blog posting.

"The challenge motivates us to keep innovating and pushing technical boundaries to produce better ways to share information," he wrote.

'Investing in vapour'

The perennial question for Facebook has been how to monetise the site and cash in on its 150 million users who critically spend more than two hours each day on-site. Analysts Neilsen compared that figure to the 90 minutes users spend hanging out on MySpace.

As the pressure mounts on the Facebook team to make money, the job becomes harder amid the present economic downturn.

Market research company eMarketer predicted that US advertising spending on Facebook will fall by 20% to $208 million (144m).

Despite the focus on the bottom line, Mr Zuckerberg has so far seemed in no particular hurry to come up with a business strategy that will translate into dollars and cents.

If you want to reach and influence everyday people, you've got to understand Facebook
Professor Fogg

"We've thought about a number of different things, but that's not something we've figured out. It's pretty clear that we haven't figured out the optimal way for us to do this yet."

Forrester's Mr Owyang suggested that for the moment, time is on Facebook's side.

"They are not in a rush and they don't need to be. They have capital backing and they need to make sure the experience is good and that people are really hooked into the system and then turn on the monetisation," said Mr Owyang.

Mr Enderle however said he believed the clock is ticking fast.

"At some time the economic model has to grow with the rest of the firm.

"Investors will want a return on their money and in this market, investing in vapour can be very difficult. Their time is up for doing this without making money.

"They need to develop a business model soon before they find their funding sources start drying up," warned Mr Enderle.

Professor Fogg sees things from a completely different view.

"Facebook has changed the game for all consumer-facing companies. If you want to reach and influence everyday people, you've got to understand Facebook.

"In the past five years, Facebook has shown us the future.

"The genius of Facebook isn't the technology or the interface. Facebook is winning because it puts friends first. Our relationships shape our online experience. No technology is better than our friendships," said Professor Fogg.

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