Facebook demiseSince the birth of the Internet, all of the Web's dominant companies have had one thing in common: Eventually, they all faded into oblivion.

Prodigy and Netscape are now a distant memory; MySpace becomes more irrelevant by the day; and AOL (parent of DailyFinance) and Yahoo! must constantly struggle to keep their footing in a shifting online landscape.

And then there's Facebook. Seemingly invincible Facebook.

Gangbuster Beginnings

Since it started in 2004, the company has been on a tear to dominate the Internet. And that's exactly what it's doing. According to Internet researcher Hitwise, the company accounts for around 25% of page views in the U.S. right now -- that's five times more page views than Google (GOOG), a company most Internet users go to every day.

Facebook seems unstoppable. But the same could have been said of its predecessors.

MySpace started just a year earlier than Facebook and passed Google as the most-visited website in 2006. Today, it has fallen to 138th place and was purchased in a fire sale by a group of investors that includes Justin Timberlake.

Internet companies rise and fall hard, so why should Facebook be any different?

Short answer: It's not. The company already faces several threats to its dominant position. What remains to be seen is how Facebook handles the threats.

The 'Next Facebook' May Already Be Brewing in a Cramped Dorm Room

The biggest threat to Facebook comes from entrepreneurial college students across the country. Remember, Google, Facebook and Microsoft were all started by college students, as were a slew of other Internet companies.

What's going to keep users engaged in Facebook when the next social-networking hotshot comes along? Sure, you have hundreds, maybe thousands of pictures on Facebook's server, but you can just leave those there like you did with MySpace.

Big Fish Make Bigger Targets

When you're small it seems like you can't do anything wrong. Your product is shiny and new, people are eager to try it and get all of their friends to follow along.

When you become the establishment -- as Facebook has become -- you take heat for every change you make. Any slip-up can turn into the thing that leads to your downfall.

As Facebook heads toward the public markets, it is already skating on thin ice because of privacy issues. This week, the headlines were about employers asking for job applicants' Facebook passwords. Earlier this year, the concern of the moment was Google's privacy statement changes. If Facebook isn't careful, it could overreach privacy boundaries and alienate customers.

At the same time, the company needs to increase revenue, and the way to do that is by using consumer information to target ads to its users. That business model relies on loyal Facebook users openly sharing private information. They have to trust the company to protect that data. Too many ads -- or worse, overly personal ads -- and Facebook will alienate its loyal users and handicap its revenue stream.

Apathy, Defections Have Already Begun

First your uncle asks to be your friend, then your mom, next thing you know Grandma has a Facebook page and Facebook has become "so 2010."

Such is the life cycle of every "cool" thing -- Zubaz, Crocs, and MySpace. They were cool for a while, but when everyone adopted them, they weren't so cool anymore.

Twitter has stolen some of the "shiny new thing" attention from Facebook. So has LinkedIn. Defections start with consumers who have been users for years. Already we're seeing some long-time users start to tune out Facebook just as the whole world is starting to tune in.

Will Facebook's coolness last? That depends. Outside of Google, there aren't a lot of companies that are Internet-based and don't provide physical products that have had staying power.

If Facebook can slow down its aging process and avoid becoming a punch line, like so many Internet companies before it, it might buck the trend. It has a better chance than most of its predecessors, but the risks remain high.

Motley Fool contributor Travis Hoium manages an account that owns shares of Microsoft. The Motley Fool owns shares of Microsoft, Google, LinkedIn, and Yahoo!. Motley Fool newsletter services have recommended buying shares of Google, Yahoo!, Microsoft, and LinkedIn; and creating a bull call spread position in Microsoft.

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103 Comments

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Cat

It's already happening with their female demographic now that they've discovered Pinterest. Pinterest is more interesting and a lot more fun. As they continue to enhance their features and "pinning' becomes the norm on the web the only people left on Facebook will be teenagers and abandoned Facebook Pages. Why should a company spend any time on Facebook when they can provide cool product images for people to pin on Pinterest and drive brand engagement in a much more creative format. Facebook is boring.

April 05 2012 at 2:07 PM Report abuse rate up rate down Reply
shindig123

I CAN REMEMBER WHEN YOU HAD ADS ON TV THAT ONLY WAS A FEW MIN. A HR. NOW IT'S MORE ADS THEN PROGRAM. I WILL SAY SOME OF THE ADS ARE FUNNY BUT OVER AND OVER IT MAKES ME MAD AT THE CO. THAT RUNS THE AD . IF YOU HAVE THE TIME,COUNT THE MIN. THAT ARE ADS IN ONE HR. AND HOW MUCH OF THAT HR. IS PROGRAM.

April 01 2012 at 10:14 AM Report abuse rate up rate down Reply
frank1946

FaceBook gets boring over time.........................SexBook is a different Story !

At my Age.................I'm Sorry for being so Honest.

April 01 2012 at 12:30 AM Report abuse rate up rate down Reply
1 reply to frank1946's comment
bggdg

Oh, to be 13 again!

April 01 2012 at 2:30 PM Report abuse rate up rate down Reply
drbyrdvision

Social Network will change as you know it . I know what's new coming down the pike.

March 31 2012 at 4:04 PM Report abuse rate up rate down Reply
1 reply to drbyrdvision's comment
bggdg

Yes, I can tell you are quite the "insider"!

April 01 2012 at 2:30 PM Report abuse +1 rate up rate down Reply
3 replies to bggdg's comment
needhamf

no wander my space is screwed up, timberlake owns part of it
then facef### yea its soooooo dam screwed up it a wander it still here

March 31 2012 at 4:13 AM Report abuse +1 rate up rate down Reply
sgtdjusmc

ofcourse it will fade..why i dont buy stock...only one i can see not fading is linkedin because it is more of a professional networking site

March 31 2012 at 2:56 AM Report abuse rate up rate down Reply
jgmrealestate

Check out my projected blog/ comment 1 month ago I said that there is no way this will be able to be sustained as the IPO tanked and people are quite finiky about this module forever. Oh it will be a tool to be used but technology is going elsewhere with the social networking and the privacy acts.,,, enough of the Facebook and Tweeter crap,when big time politicians have to use it to sell and get their networking done and when whackos use it for negative services and convenient uses,, its time to say enough already.

March 31 2012 at 2:33 AM Report abuse rate up rate down Reply
Haris

Facebook was very time consuming so I'm glad it's gone lol. In my opinion the only social media website that will stick around for a long time is YouTube. Twitter will eventually fall in 4 or 5 years.

March 31 2012 at 2:05 AM Report abuse rate up rate down Reply
1 reply to Haris's comment
bggdg

Is Chrysler also the only airline that will stick around?

March 31 2012 at 9:05 AM Report abuse rate up rate down Reply
facethetruth1128

Grammar check, HP. Hire some editors or teach your writers to use the easily accessible grammar check within their software. There is no excuse for a news outlet to continually put out articles that are littered with mistakes.

March 31 2012 at 1:27 AM Report abuse rate up rate down Reply
spaceplanning

You could say somthing when wou write.......
Lame Travis Hoium

March 31 2012 at 1:11 AM Report abuse rate up rate down Reply