Facebook status update: We're profiting

The home page of Facebook displayed on a laptop screen.

TEXT OF STORY

Kai Ryssdal: If you were too busy keeping up with the health-care debate to log onto Facebook yesterday, you may have missed this tidbit. CEO Mark Zuckerberg announced that the social-networking site is now bringing in more cash than it's shelling out. I turned to one of my Facebook friends, Stacey Vanek-Smith, to explain how.


STACEY VANEK-SMITH: Facebook has 300 million members who spend six billion minutes on the site every day: updating their status, chatting and requesting and dumping friends. But up until now, the social-networking giant hadn't really figured out how to cash in on any of it. So news that Facebook is finally making money, is huge for the sector, says tech industry analyst Rob Enderle.

ROB ENDERLE: Social-networking sites have found profit incredibly elusive. And it makes it look like they've got a business plan.

Enderle says staying lean is a big part of Facebook's success. The company has almost no overhead. And that's part of why Facebook's newfound money-making isn't necessarily so significant, says Morningstar Analyst Larry Witt. Facebook reportedly expects to pull in $500 million from ads this year. Witt says that's seriously small potatoes.

LARRY WITT: Facebook currently earns about $1.50-$2 per user. Yahoo is probably closer to about $15 per user.

Google? Around $50 per user. To get into that league, Witt says Facebook has to figure out how to cash in on its best asset: the huge amount of information it has on all of us -- where we live, where we work, and who our friends are.

I'm Stacey Vanek-Smith for Marketplace.

About the author

Stacey Vanek Smith is a senior reporter for Marketplace, where she covers banking, consumer finance, housing and advertising.

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