Fred Wilson created this chart to display the traffic of some of the major social networking sites. Fred Stutzman has posted an argument as to why the Facebook numbers might be misleading. While I am not sure I agree fully with Fred's explanation, I agree with him that Facebook has a winning model.

The chart shows increase in users. MySpace has shown a dramatic increase in users. However, its general nature makes it hard to determine whether users will be loyal, or if they will turn to the next big thing. On the other hand, Facebook has one primary audience, college students, and a number of secondary audiences, everyone else. As Fred's research and theories demonstrate, Facebook is an extremely valuable tool for college students. His data shows that in both 2005 and 2006, virtually 100% of UNC-Chapel Hill freshman chose to participate in the Facebook. Furthermore, there is plenty of reason to believe that this is not unique to UNC. This would mean that the Facebook has already maxed out on new users in their primary target market. While this might impede growth at the rate MySpace has shown, this is excellent as it means that Facebook cycles through new primary user groups every four years. Furthermore, given their complete market dominance over college students, it would be very difficult for a competitor to take take their primary business away.

The one place that I feel Facebook is vulnerable to competition is on the Academic side of their services. If course management software either integrated better with how students study and work, or integrated better with other datasets and resources on campus, then students would come to rely on them more. I will be discussing this idea further in my Master's paper.

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