Facebook at Age Five

To date, no one has come up with a reliable algorithm for "coolness," (which might explain why Facebook fought the buzz behind Twitter by, um, copying it). But for academics like Stutzman and others increasingly turning their attention to social networks, there's a name for what happens when everyone joins the same site at the same time, perhaps rendering it uncool: "context collapse." That's the term used to describe a series of awkward events like when your boss or parents friend you, or someone posts a picture of you that you don't want your colleagues seeing, or when an elementary school bully from your past starts commenting on your status updates. As these activities cascade, social media research has shown that people begin to shy away from their online persona and begin aggressively limiting the information that appears about themselves. Not surprisingly, users begin to stress out about their tangled social scenes and abandon the network all together. "What needs to happen—and what's going to happen—is that there needs to be more granular privacy settings," says Nicole Ellison, who researches and teaches on social media at Michigan State University. "So I can share a status update, but one I only want to go to my high school friends."

Facebook has been augmenting its privacy settings to allay these fears, and earlier this month, the company announced a new tool that will better control who can see what. Still, Facebook's view is that the more information people consume on the site, the more useful the site will be, so the company is focused on brainstorming ways to go far beyond 250 million users. But the next growth hurdle will be harder to jump than those they've faced in the past five years, because after opening the site to college students, then anyone in the United States, and now, anyone in the world, what's next? "Our team asks that question a lot," says Facebook's Gleit. "My job isn't done until literally everyone in the world is on the site."

Right now, her team is working on the smaller things to help the site reach everyone, which include making the site easier to join by eliminating instant e-mail verification. Facebook is also constantly testing new strategies, like suggesting people you should be friends with to make your network more useful. "One of the reasons we've grown so much is because of how much emphasis we put on user-trust and privacy, and that's definitely distinguished us from the competition," Gleit adds.

The paradox of the social network is that trust—the very lifeblood of the site's growth—may be the same thing hindering its financial success. Recently, the company faced a series of heavily-publicized battles when users were turned off by Beacon, an initiative by the site that targeted advertisements at individual users without their consent. After many Facebookers protested, discussions arose over what information Facebook owns about each of their users, and a new privacy code was established on the site. As the network rolls out more features, it's likely similar issues will come up. An upcoming one will allow users to search friends' pages for their ideas—whether places to eat or auto repair shops—of how you should be spending your life. "If they can figure out a way to monetize our interactions without violating our trust," Stutzman says, "then maybe they've got a chance of being the next Microsoft or Google."

It's an exciting prospect. Facebook has the largest cache of user-created personal data on the Internet, and the idea this could be used to create a new kind of social network, one where your friends' provide you with information you need (as opposed to information you want) is an interesting idea. In its best form, you could turn to the network if you were planning a trip to, say, Mozambique, and wanted to figure the nicest hotel to stay at, the best restaurants to visit and the right attractions to see. The next five years, for Facebook, will likely be about testing this idea—moving the site from a social space to a service space; this search function is currently in testing. And the company insists that despite the added expense of servers and other infrastructure needed to expand its user base, it should be profitable by the next decade.

To get there, Facebook will need to connect its members with its advertisers. Its long term ad strategy includes signing on major advertisers like Coca Cola or The Gap, but those deals are a long way off , say insiders familiar with the site's ad strategy. For now, Facebook is reliant on local advertising, which is often cheaper and lower quality. (Teeth whitening discounts, anyone?)

Still, Facebook's ad plans could be a gamble with a huge payoff. It's a bet currently being taken by the site's employees and investors. Last week, longtime employees were given a chance to unload their stock options to Digital Sky Technologies, a Russian company that has invested more than $200 million in Facebook. Those eligible have about a month from now to decide whether or not they want to cash in. Whether or not that internal drama tells us anything about Facebook's prospects for the next five years is unclear.

Regardless of whether the site ever turns a profit, it has changed the rules of friendship and the meaning of networking. But five years from now, whether we talk about Facebook in the present or past tense will ultimately be up to one group of people: our friends.

© 2009