Facebook started out roughly five years ago as a social networking site for college kids. Then it expanded to high schools. Now, it's open for everyone, nearly everywhere to join. Today, it has well over 250 million users, using the network in 50 different languages for many different purposes.
Facebook is universally considered a good site, if not one of the best on the Internet. Still, after turning five years old a month ago, Facebook still has never turned a profit. Don't get me wrong, revenues are soaring; Mark Zuckerberg, the genius behind Facebook, projected that earnings would rise 70% this year. On the other hand, the cost of running a social network is not small either. The talent that Facebook must attract, the development it must constantly undergo and the fact that they have to store every photo, video, note and action from every user, even after they delete their account, all contribute to unyielding costs.
They've tried many different advertising models, each to no avail and the number of experiments going on right now is innumerable.
The general problem is that whenever they make an attempt to introduce new advertising, users revolt and create groups that run somewhere along the lines of "I Hate the New Facebook!" or "I Will Not Pay to Use Facebook". And if you don't have users on your side, advertisers sure as heck aren't going to want to give you their money either.
In addition, the developers of this site have made it so lovely and convenient and useful and awesome that barely anyone even focuses on the few ads on the side. And for good reason too; the ads that are normally scattered around the network include mostly the likes of, "I need a man: Install the Zoosk application and meet girls like me!", "Start a Mafia Family" and "Cariacature yourself!". Obviously, these don't cater to the great majority of the population in the world with an IQ over 1.24.
Oh, but what if they reduce costs? Then, there's the same problem, user dissatisfaction. Facebookers are very demanding people; they've been spoiled to an incurable extent. As soon as they even feel like something's worse off than it was before (which basically means any change to the site), the temper tantrums start flooding in. Of course, regular improvements are part of the appetites of the pickiest as well (so basically, you have to improve the site, without changing it...).
All in all, unless they start charging us to use the site, Facebook will collapse just like its rivals.