Facebook (news, site) might be the Internet's billion-dollar baby, but the social networking giant is not exactly a Goliath in the land of the rising sun. In Japan, which is considered to be a highly wired country, Facebook's user base is at just about 2 percent of the population. The reason: privacy.

You might think that social media use is directly proportional to the Internet penetration rate in any region. However, this is not exactly the case in the Asia-Pacific region, as we earlier pointed out. Social media adoption among enterprises and end-users in the region is nuanced, particularly given differences in culture. In Japan, use of social networks is actually growing at a fast rate. However, it's just Facebook that seems to be on the losing end, and this is because of strict rules on identity.

Even with Facebook implementing privacy features, such as limiting access to profiles, photos and other content, Facebook's insistence on using real names doesn't fare well with the Japanese, who would rather go online under pseudonyms. Case in point: Facebook has only about 2 million users in Japan, or less than 2 percent of its population. To take this in perspective, Asian Facebook users total about 112 million.

The Preference for Pseudonyms

The online culture in Japan is characterized by the use of nicknames or pseudonyms. This doesn't mean there are no popular social networks, though. These include social networking and gaming sites such as Mixi, Gree and Mobage-town, each of which has about 20 million users or more. Their fundamental difference with Facebook, though, is that Facebook's terms of service requires that users log in with their own real names and identities.

If Facebook wants to make it big in Japan and get a big slice of the pie in that market, then it might have to think of creative ways to attract this market. For one, Facebook could relax its policy on using one's real identity. Or, it might want to focus on marketing the social network as something different from the usual community.

Facebook founder Mark Zuckerberg has promised that this issue will be addressed, although Facebook is pressed for time, as its competitors in the country are already seeing decent growth. Mixi and Gree feature similar photo- and media-sharing functionalities. Gree and Mobage-town have also started offering third-party applications and mobile apps, some of which are going the "freemium" route, meaning the apps are themselves free, but in-app download of content is charged.

Finding Long-Lost Contacts

Even Twitter has started gaining popularity in the country, with about 10 million users as of mid-2010, according to Nielsen. A Japanese-translated version of Facebook is available, although users struggle with the apparent difficulty in the interface. Still, Facebook is confident that it will find its niche in Japan, such as with finding long-lost classmates or relatives. According to Taro Kodama, Facebook's manager for Japan, other community sites "can keep offering the joys of staying remote from real life." However, "Facebook values real-life connections," and so users in Japan are encouraged to use their real name.

Whatever marketing focus Facebook will have in Japan, it will need to get Japanese social network users convinced of the benefits of using one's real name online--and also how to safeguard one's identity while doing so.