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Facebook Hits 1 Billion Users. What's Next?

Facebook (FB) CEO Mark Zuckerberg announced this week that the social networking site he co-founded in February 2004 reached 1 billion users in September, more than double its user base in 2010 and a 400% increase in users in just six years. Zuckerberg broke the news on NBC's "Today" show and thanked Facebook users in an online letter:

"This morning, there are more than one billion people using Facebook actively each month.

If you're reading this: thank you for giving me and my little team the honor of serving you.

Helping a billion people connect is amazing, humbling and by far the thing I am most proud of in my life.

I am committed to working every day to make Facebook better for you, and hopefully together one day we will be able to connect the rest of the world too."

Related: Facebook Hits a Milestone: 1 Billion Users

One in seven people around the globe have Facebook profiles and just two countries (India and China) have more citizens than Facebook has users. Four out of five Facebook members are outside the U.S. and Facebook's top markets are the U.S., Brazil, India, Mexico and Indonesia. The company had 845 million users when it filed for its initial public offering in February and 219 billion photos have been uploaded to the site.

The Daily Ticker's Aaron Task and Henry Blodget both agree that Facebook's biggest challenge — and the one that has dogged it for years — continues to be the company's ability to monetize the vast amount of information it collects from users. Investors have sold shares of Facebook at a rapid rate since the May 18 IPO because of growth concerns. The stock has fallen more than 40% in six months. Facebook makes about $15 in revenue per user compared to Google that earns $88 per person according to The Wall Street Journal.

Related: Winklevoss Twins' Advice for Zuckerberg: Facebook Should Be More Like Google

More users mean more revenue for Facebook but eventually Facebook will hit the "land of diminishing returns," says Blodget. How much more profit can Facebook generate from its next 6 billion users, he asks, when Facebook's current user base already controls "way more than half of the wealth in the world."

Facebook's mission may be to connect the world and make it an open place but it needs to bring in money to achieve that goal either through advertising, search or charging for special features. Facebook COO Sheryl Sandberg told advertisers this week that management was reviewing "premium services for businesses" such as the one it began testing Wednesday. This service costs users $7 to "promote" a post which will appear at the top of the newsfeed and guarantee that friends see it. Facebook just launched a new e-commerce feature called "Gifts" that allows users to send Magnolia cupcakes, eyeglasses, Starbucks coffee, and other types of gifts to their Facebook friends by simply by clicking a small "gift" icon. Facebook will earn a cut from each gift transaction.

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