For Facebook, the first half billion were easy

Analysts say social network will likely have have a much harder time reaching the billion mark

Facebook may have secured its place at the top of the world's list of social networking sites with yesterday's announcement that it passed the 500-million user mark. But industry watchers think that signing up the next 500 million Facebook users may be a lot harder.

Facebook is easily the dominant social networking site, eclipsing traditional rivals like Myspace along with multiple emerging competitors. But at the same time, 2010 hasn't been an easy year for the company, dealing with users angered over the site's privacy policies and controls. Just this week, a survey showed that in general, Facebook's legions of users are unhappy with the site.

The privacy issues were among those cited by analysts in suggesting that Facebook may have a tougher time gaining its second half billion users.

"Five hundred million is an amazing feat that no one would have predicted from Facebook's Harvard dorm days," said Hadley Reynolds, an analyst at IDC. "They've obviously cracked the code on social networking by making it more fun and more useful and more integrated into life than any of their predecessors.

"But from here it gets tougher," he added. "Their growth will slow, and if they continue to make inept changes in their product and their policies, they could make it slow down faster."

Brad Shimmin, an analyst at Current Analysis, noted that Facebook needs to fix its privacy problems before they become too big a hurdle for the company. Until now, simple old-fashioned peer pressure has kept users hooked on Facebook despite their frustrations with the site.

"It's all about this participation drive that people have," said Shimmin. "When you have five of your 10 best friends asking why you're not on Facebook, eventually you get on Facebook. All the problems, all the application issues, all the privacy issues ... if enough people are participating, you'll just put up with it. If your objective is to connect with your peers, you'll forgo some safety."

Basically, analysts say, there's a threshold of unhappiness that has to be met before people leave Facebook. And that threshold simply hasn't been met yet for most of the site's users.

However, if the current frustration and dissatisfaction isn't stopped by Facebook, users could become more open to adopting a new social network. And while Facebook has no serious rivals today, a popular new social network could appear on the horizon at any time.

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