Facebook: big but poor

It’s become almost a cliché to illustrate the reach of social media by comparing Facebook’s number of active users with the population of different countries. The comparison certainly looks striking. Facebook has more than 200 million active users according to its own statistics. If it were a country would make it the fifth biggest in the world, ahead of Brazil and behind Indonesia.

But look at finances and the story is very different. Facebook doesn’t publish revenue figures, but for 2008 it looks to have been somewhere in the range $265-$350 million. Looking at the IMF’s figures for GDP in 2008, that would put Facebook in as the 177th richest country. Given that the IMF only has figures for 179 countries, that’s not quite as low as you can be – but very close.

Only Tonga, Sao Tome and Principe and Kiribati come in lower.

There are two lessons to draw from this. First, questions over how Facebook can make money from its users are unlikely to go away. On the up side, that is a strong incentive for Facebook to continue to innovate as it searches for money. On the down side, it would be foolish to assume that Facebook’s current range of free services (particularly for corporates) will be around and free for ever.

Second, social media is big and growing in importance. But there’s also a lot of unsubstantiated hype around – hence the frequent mentions of the population comparison without any reference to the financial one. So keep your critical facilities sharp and make sure you understand the realities rather than just surfing the hype.

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