Soon Facebook Growth Will Be About Users Clocking In More Time
MELISSA BLOCK, HOST:
This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.
AUDIE CORNISH. HOST: And I'm Audie Cornish. With all the coverage of Facebook's upcoming IPO, you might be wondering how the company makes so much money. Facebook's revenue depends entirely on its users, how they use the site. And the growth of new users in the U.S. is slowing down. As NPR's Laura Sydell reports, that means Facebook is trying to keep you logged on longer, playing games, watching movies, planning trips and so on.
LAURA SYDELL, BYLINE: So I did a little math with an analyst and here's what we came up with. If Facebook is valued at $100 billion and you divide that by 845 million users, that means that each one of us has to be worth $125 apiece. So where's Facebook going to get that money. It's got to get it from eyeballs on ads. So the strategy for Facebook is to keep people around longer so they look at more ads.
Facebook is following Justine Honge, a junior at Duke University, as she walks across campus with her iPhone in her hand.
JUSTINE HONG: So I can open the app as I walk to class or whatnot and, you know, see if there's a campus editorial from the campus website that's been getting a lot of comments or a national news story that, you know, my friends have been sharing a lot.
SYDELL: Facebook has apps for games, shopping, video, movies, chat. Last year, it integrated the music service Spotify. That's a feature that has Facebook user Liam Passmore logged on even longer.
LIAM PASSMORE: One of the elements of Spotify that really attracted me is the ticker on the side of Facebook. You can see what your friends are listening to on Spotify.
SYDELL: Here's an example. It started when Passmore was at the roller rink the other day and a song came on that he liked.
(SOUNDBITE OF MUSIC)
SYDELL: Passmore was a little surprised when his friend's 9- and 12-year-old kids told him the name of the singer.
PASSMORE: And they said Selena Gomez, and I screamed, oh, no, because, you know, that's Justin Bieber's girlfriend.
SYDELL: However, the 54-year-old thought, I want to share my amusement.
PASSMORE: I went to Spotify and played it on my Facebook account to let people know I was listening to Selena Gomez so they could comment back.
SYDELL: Passmore's story would certainly make Facebook executives happy. He's spending more time on the site and that is exactly what Facebook needs, says Michael Pachter, an analyst at Wedbush who follows the company.
MICHAEL PACHTER: Because ultimately, it's an advertising model and ultimately, the longer you're on the site, the more information they have about you, the more they can advertise directly to you. So, clearly the more engaged the user, the more profitable that user will be.
SYDELL: Pachter says one strategy the company is starting to use more is to connect more with popular websites, so when you sign onto your favorite newspaper site or game site, you can do it with your Facebook sign-in, says, Justin Smith, founder of Inside Network, which is dedicated to researching Facebook.
JUSTIN SMITH: Facebook's strategy will be to increase penetration amongst many of the most popular websites, you know where people are spending their time, instead of only being available when people come to Facebook.com.
SYDELL: A lot of people think it would make more sense for Facebook to build its own phone or develop its own mobile operating system. The caveat for Facebook's strategy of becoming a portal to everything on the Internet is that many users like Duke student Hong aren't signing up.
HONG: Because I think it gets to be a little bit scary when you're sharing a lot of information via your Facebook account.
SYDELL: But with new pressures from Wall Street for growth, Facebook is certainly going to try hard to lure Hong and other users deeper into its universe.
Laura Sydell, NPR News.
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