Why Facebook Is Losing U.S. Users

 http://www.pcmag.com/article2/0,2817,2386884,00.asp

News hit the other day that Facebook may have lost about six million users in the U.S. in one month, according to Inside Facebook, a site that analyzes the social network for developers and marketers.
Facebook has close to 700 million users worldwide, so a loss of six million doesn't sound like much, especially in light of data that suggests the service has been pushing aside regional social sites to conquer large swaths of the developing world, and actually posted a net increase in overall users over the same period.

But a six million user loss is a little more painful when compared to the U.S. user base, which reports say stands around 150 million—or roughly half the population of the country. It's not crippling, but a four percent reduction isn't negligible either. At the same time, the same data source suggests the service is experiencing similar losses throughout the Western world in places like Canada, the U.K., and Norway. Could American audiences finally be turning on the social network?

When asked about the report, a Facebook spokesman told PCMag that, "From time to time, we see stories about Facebook losing users in some regions. Some of these reports use data extracted from our advertising tool, which provides broad estimates on the reach of Facebook ads and isn't designed to be a source for tracking the overall growth of Facebook. We are very pleased with our growth."

Facebook itself may not put a lot of stock in the numbers, but it tellingly didn't offer any of its own. Absent official statistics, industry observers tend to believe the report.

"I think the data to be correct." says Lou Kerner, a social media analyst with Wedbush Securities, a Los Angeles-based investment bank. "As Facebook starts to get near 50 percent penetration in a lot of these countries, the growth starts to slow. A little bit of fatigue sets in. Older people who sign up don't get as much value as younger people do, so they tend not to stick around. They come and they go."

So assuming the data is correct, why is Facebook losing U.S. customers? There are a few possible explanations:

1. Seasonal Changes

One of the simplest explanations for the change is that it's just a normal blip in Facebook's seasonal cycle. Every spring, many college students graduate, and while their Facebook profiles don't get deleted, their Internet habits can change rapidly, especially when suddenly faced with the prospect of selling themselves to potential employers. Inside Facebook notes that "short-term factors" like this may be obscuring overall trends.

"May starts the seasonally slow period for social networks," says Kerner. "Kids have finals and leave school, so they get out of their social networking routine."

2. The Privacy Envelope Has Been Pushed Too Far

This is the favorite go-to theory for pundits, since everybody likes to talk about privacy when Facebook makes headlines. It makes sense on paper: Facebook makes some change or introduces a service that appears to make the site less private or secure, everybody makes a big deal about it, and Facebook (typically) goes ahead and does it anyway. Then everyone starts to theorize when users will begin leaving en masse in defiance.

The theory overlooks the inconvenient fact that through all of Facebook's privacy shenanigans (and there have been many), its user base has grown massively, and the most recent hullabaloo over the site's new facial-recognition abilities is small potatoes compared to controversies of the past. To suggest that the Facebook finally hit the last straw on privacy over the last month assumes users just started caring about the issue.

"I don't think this is a Facebook problem as much as it's a privacy on the Internet problem," says Kerner. "I think more than driving people away, it's stopping people from coming."

3. Facebook's Time Has Come

It's probably inevitable: Somehow, someday, Facebook will start to decline, just like its predecessors MySpace and Friendster. Its users will slowly lose interest, moving on to other networks and platforms (possibly Twitter, or whatever emerges from Apple's iCloud). It seems impossible given Facebook's colossal user base and rapid growth, but it would be far from the first complacent empire that fell.

The problem with the theory is that it completely ignores another, more important statistic: user engagement.
According to Alexa, people visiting Facebook are actually visiting 40 percent more pages per visit than they were just three months ago. That's not the picture of a disinterested populace ready to pack its bags for the 140-character wilds of Twitter.

"Facebook's page views per user have continued to grow very rapidly on a global basis," says Kerner.
"Before you see an decline in users, you see a decline in engagement. Unique users don't become highly engaged and drop off—they use it less and less and then drop off."

So Facebook's users are spending more time on the site than ever, though the overall number of users may be declining slightly, at least in North America and few other places. Still, when your market penetration is as deep as Facebook's, it's going to be difficult to avoid the occasional downward arrow.

Kerner admits, "Facebook isn't for everybody." That's certainly true, though it's just as certain that everybody has at least heard of it. Even if the company launched an all-out marketing campaign tomorrow to try and recruit new users to make up for those who left, I suspect it would have little effect. The people who want to be on Facebook are there, and those who aren't probably never will be (or never should have been).

As for the six million users who left in the last month, they're probably similarly divided: some are just taking a break and will be back, while the others probably weren't the sharing type in the first place. That's not something the social network would like, but if there were a "Live With It" button, it's an easy click.