Who's pressing your buttons on Facebook?

I send her a message: "Yoko. Is it you? Don't you like Scrabble?" Bless her, she responds quickly: "Yes. It's me. Love Yoko." And to prove it, she attaches a little video clip of herself that shows me she really does care. About me and her 4,991 other Facebook friends.

Vinnie Jones is my friend too. But he's not a fan of the site. "Facebook is crap, boring and used by people as a substitute for real life. Maybe it should be re-named Sadlife.com," he says. Why be on it, then? "Branding. My agent does all this stuff." Then I notice that he lists himself as having graduated from college in 1983. Surely he was a hod-carrying, part-time footballer aged 18? Is this Vinnie a spoof, along with "Kelly Brook", "José Mourinho", several "Pete Dohertys" and an "Anthony Charles Lynton Blair"?

There are real celebrities among the millions of British people who sign into this internet social network every day to communicate with friends, fans and strangers alike. Ronnie Corbett seems like a nice guy. Russell Brand is happy to have me as a friend, but only so he can tell me all about himself. Noel Edmonds, on the other hand, seems grateful for anybody's company. For the household names and brands who need to keep their names in the public eye, the social networking revolution is free and effective.

More than 24m British adults are now surfing social networks like Bebo, MySpace and Facebook, finding that even people like Yoko are their new best friends.

Bebo caters for a largely teenage audience and has 18m users, 11.2m in the UK alone. MySpace (owned by The Sunday Times' parent company News Corporation) connected music fans with their rock and pop idols, growing an audience of 110m (10m in Britain) across the age spectrum. But Facebook is grabbing the headlines, the latest to suck us in - a phenomenal 7m British users, mostly students and younger professionals, have signed up in little over a year, spending an average of half an hour every day checking in.

It's the internet equivalent of a continuous video-conference call between "friends", in which a user presents his or her "face" to the world, sharing as much of themselves as they want to - with photographs, personal information, diaries, plans, likes and dislikes, from the innocent to the downright filthy.

Where postcards, letters, phone calls, e-mails and meetings were once normal methods of communication, Facebook and its competitors have become individuals' own personal town criers, exchanging tittle-tattle, news, ideas, invitations, dates, business and social interaction with virtually unlimited audiences on the web.

Its popularity has spread like a virus in little over a year and become so addictive, so quickly, that surveys claim social-network sites are costing British business up to £6.5 billion in lost productivity. One FTSE-listed company reported up to 30% of its internet capacity is clogged by its social-networking employees. Now two-thirds of British companies are said to be banning or restricting access to such sites. Some are restricting access to lunch hours, sending users home to spend hours after work at their computers when their time was once more gainfully spent actually meeting people.

Even governments are feeling threatened. Syria blocked access to Facebook in November as part of a crackdown on online political activism. Likewise, China has banned video-sharing without government approval, declaring that the authorities will no longer tolerate the "broadcast of degenerate thinking" on the web.

The more excitable prophets say that social networks are changing our lives for ever, for better and for worse. We are in the throes of a social revolution that is evolving so rapidly, few can predict either its impact beyond the next few months, or the fallout in years to come.

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A little basic background, for anyone who's been potholing in Borneo for the past 12 months. Facebook started off as an in-college network for students at Harvard. It graduated to other universities in the US and Britain. Students swapped photographs, formed fraternities, swapped lecture notes, interests, gossip, and inevitably scouted for sexual partners. The students became postgraduates, carried their Facebook activities into the workplace, increasing their circle of friends. And then suddenly, 17 months ago, in September 2006, the site opened up to all internet users.

In little more than a year it has expanded its global population to 62m users. For the uninitiated, here's how it works: register free online, post up a picture of yourself and some other info (as little or as much as you want), then look for friends. You can browse other people's friend lists, or befriend complete strangers. Not least among its many attributes, it allows users to snoop on boyfriends, girlfriends or exes who might be using Facebook to prowl for new conquests. Even parents are using Facebook to police their teenage children's nocturnal activities.

It's quite juvenile: you can "poke" people, or indeed "high five" them, even "butt slap" them - it's all too easy to imagine you're on an American college campus.

Then Facebook offers you "apps" software applications providing additional information and entertainment to keep you hooked. Users can send virtual gifts, take silly quizzes; they can join online groups such as "Am I the Only Person Who Doesn't Like David Cameron?" (2,618 members at last count).

Other apps, some useful, some gimmicky - from playing games to the stock market - are being constantly updated or added, refreshing the users' interest, introducing them to wider circles of fellow Facebookers - and soaking up ever more time that might otherwise be devoted to work or play. You'd think the novelty of its ever-expanding universe would wear off, but the evidence says not - yet.

A recent survey among American college students found that Facebook was the second most "in" thing, with beer and sex, after the iPod. It has grown at a phenomenal rate. In one month, between October 26 and November 25 last year, Facebook's usership grew by 466% in Turkey, 171% in Israel, 109% in France and 87% in China. It grew by 31% in Saudi Arabia, and 24% in Pakistan - and 18% here in the UK.

And it's not only young people who are switching on to the hundreds of social networks available. According to the European Interactive Advertising Association, 26% of Europeans in the over-55 age bracket visit a social-networking site at least once a month. The past year has seen a 12% jump in "silver surfers".

Britain is the third keenest online networker after the US and Canada; the 24m British adults using social networks such as Facebook spend on average 5.3 hours a month doing it. Applications are compelling users to devote this much time to Facebook. So important are they to Facebook's viral popularity that it announced grants of $25,000 to $250,000 to anyone who wanted to develop a Facebook application. In just a few months, more than 14,000 were spawned. Tellingly, 6,000 of these fall under the category "just for fun". The highest-ranking app (Top Friends) has nearly 3m users. By opening up the platform to external developers, Facebook not only acquired new products online to keep users at their computers for longer, but also fostered a burgeoning new industry.

"My 15-year-old son has written three or four apps so far, earning him a couple of thousand dollars. It has unleashed a storm of creativity, entrepreneurialism, commercial thinking and social thinking," says the influential American internet commentator Jeff Jarvis.

Tanya Goodin, from Tamar, a company that advises others on winning customers online, says: "It really sucks you in. Employers worry about it, but as someone running a company where everyone's on Facebook, I don't see any reduction in productivity. It's no different from people going out for cigarette breaks or making endless cups of coffee."

There is something unhealthily compelling about Facebook. "Don't quote me on this," says the head of an online marketing company, "but it's like someone giving you drugs for the first time, saying it's completely harmless."

Critics are not just restricted to bosses frustrated at office time wasted by their staff. Social networking will dilute real-life relationships; we will swap handshakes and hugs for keystrokes, they say. Already the victims have names; Facebook "whores" who can't switch off their computers and Facebook "widows" frozen out by partners' Facebook compulsion.

Nick Gully, clinical director of Sanctuary Therapy Services, predicts that within five years we'll see people diagnosed with social-networking addiction. "It's voyeuristic, competitive, and it links in with status and self-esteem. There is a universal denial that these things are problematic."

Will Reader, a psychologist at Sheffield Hallam University, observes: "Most of us have about 150 people in our [offline] social network, of which 15 are close friends and five your best friends. It's been suggested that social-networking sites are a way of extending these figures. But a person who's being 'poked' recognises that it's cheap. What's important in friendship is costly communication - when someone buys you a gift, or helps you move house, it has cost that person in resources, time or effort."

But people only have a limited amount of time and energy. "Is it impeding our ability to forge new relationships?" asks Reader. And if you pre-select people like you to be your friends, "To what extent are we cutting ourselves off from new experiences?"

A few years ago, Harvard's Robert Putnam analysed the disintegration of American society in his book Bowling Alone. He claimed that communities were coming unstuck because people no longer had enough "bridging capital" - the weaker ties you might have with people outside work or family that break irreparably as we move home, jobs, or simply grow apart.

Which, says Mark Granovetter, a sociologist, perversely speaks in favour of social networking. The knowledge base we grow through friends and contacts diminishes; new ideas spread slowly, endeavour is handicapped and, as individuals, we won't, for instance, find out about better jobs. So Facebook friends, even the most tenuous, have value: they don't have to be our best friends or sitting opposite us to exchange information.

Jeff Jarvis agrees. "I lost track of my high-school buddies. People today won't."

Henry Elliss, from Tamar, is a self-confessed social-networking addict, with 453 Facebook friends. "It's only fuddy-duddies who think it'll kill socialising. Did they say that about the telephone, or faxes? It's building relationships. I wake up in a cold sweat sometimes - if Facebook disappeared, those friends would be gone."

Last week's reports of seven teenage suicide victims who used Bebo have prompted panic about online peer pressure. Others are alarmed at the prospect of paedophiles targeting victims online. But the doomsayers may change their tune.

Rupert Miles, chief executive of publishing for Saga (the magazine for the over-fifties), is an evangelist for social networking. "It's a tremendous force for good," he says. Since Saga Zone launched last February, 31,000 people have signed up. Members advise each other on issues such as bereavement; they organise parties. "Forty people who had started off as complete strangers went on holiday together after meeting through Saga Zone."

But still critics are vocal on issues other than productivity and social isolation. With 24m British adults posting often intimate information on their social network pages - just whom are they letting into their lives?

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Claire, a London student, did little more than post her face and details of her friends and lifestyle on Facebook before she discovered that she had a stalker. Police routinely trawl the site for clues to crimes.

Channel-ferry crewmen posted pictures of themselves apparently drinking on duty and incurred the wrath of employers. A US survey found that 23% of employers reviewed the character of job candidates on social-networking sites; Oxford University disciplined students last year who posted photographs of themselves throwing eggs and flour; an Argos worker was fired after describing his employer as "shit".

Andrew Charlesworth, director of the Centre for IT and Law at Bristol University, warns that "what you may boast about online to your friends may cost you your job".

Famous faces, too, have found themselves embarrassed by social networks. Hugh Grant was photographed cuddling up to a bunch of attractive female students, and someone posted them on Facebook; it naturally made the tabloids. The Tory researcher Emma Clare Pentreath embarrassed herself and the party when a photograph was posted of her "blacked up". Will McInnes, of the social-media specialists Nixon McInnes, warns: "We don't consider that things we paste up online are there for ever, relics that will never go away. If you're pissed at a party, passed out in a pool of vomit, that's an image that will forever reside somewhere."

"These sites allow us to transcend our everyday existence, and we are relationship-seeking creatures." Yet, he warns: "You can rub your profile off it, but there'll always be a trace. The days of anonymity are coming to an end."

"That's just because it's an immature market," says McInnes. "We're being naive. The teething problems will be ironed out. We, as users, will learn better how to conduct ourselves. Social networks will find a balance between being invasive and being helpful."

In the meantime, new companies and big business, rather than Big Brother, have their sights set on social networks. In a converted tea factory in London's East End, two bright young entrepreneurs, Ankur Shah and Gi Fernando of Techlightenment, build widgets - the buzzword for applications.

"We're seeing a lot of start-ups using their seed money to build a Facebook app before a

website, because if they make it engaging, they can build up a good user base," says Fernando. Techlightenment charges from £20,000 for a Facebook app, which takes between four and six weeks to create.

Shah built the "Bob Dylan" application, which enables Facebook users to paste their own words onto the video for Subterranean Homesick Blues. Dylan's record label backed it. "It might not have affected the sales, but it's been good for brand awareness."

In the next 10 years, they predict: "Business will create something for Facebook and something for MySpace, and that will be the bulk of your advertising spend. It's a toy shop."

Shah dismisses fears over apps allowing advertisers to sift through the personal data on social networks to identify and market to potential customers: "So what?" he says. "It's not about forcing things on people. There's a generation now who have grown up with Facebook who don't care about privacy."

Another of his applications is Socialistics, which maps Facebook friends (or your "social graph" as it's known on the site). "Your computer already has your most personal thoughts, your files, so why not reaggregate that information to become relevant to you? If you could tap it, it would make your life simpler and easier. Like, I'm organising an event. At the moment I don't know those people's calendars. Why not? That data's all available. It's not freaky, it's helpful."

When social networking goes mobile, users could head into town knowing that Facebook, through their mobile phone, will tell them which friends are drinking where - and bars, restaurants or brewers could trawl social networks to woo customers, alerting them en route - whether you want them to know or not.

Everywhere, social networks, in spite of concerns about privacy and invasive marketing, are seen as crucial new tools. Chris DeWolfe, co-founder of MySpace, says: "The internet is growing up; more than 40% of MySpace users are over 35. Every major presidential candidate has a MySpace profile.

I can imagine a day where you don't have to raise funds [for campaign mailshots, posters and television slots] to run for local office. You know it's not just a fad when 12% of internet minutes are spent on MySpace. It opens people up to new communities, and that could have a profound impact on the world."

Even in business, fears of lost productivity are being dismissed. John Hagel of Deloitte & Touche believes social networks like Facebook could benefit businesses. "Most applications so far have been relatively lightweight, but over time it will have a profound impact on business. Employers should be looking at how they might connect into this, rather than trying to dictate how their employees connect."

For instance, two combative lawyers on either side of the Atlantic, having checked each other out on Facebook, could find common interests, or an application, that turn a potentially tough negotiation into a rapport between online correspondents.

The media commentator Terry Heaton likens the emergence of social networking to the invention of the printing press. "By enabling knowledge to spread at remarkable speed, social networking will challenge the powers that be."

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Last October, Bill Gates paid £120m for a 1.6% stake in Facebook, valuing it at a staggering £7.5 billion. Not bad for something that gives itself away free and makes no money. Overnight, its 23-year-old founder, Mark Zuckerberg, became a billionaire poster boy for a new generation of Silicon Valley super-nerds. Why?

Because if 62m people are averaging 28 minutes a day on your website, it's a shop window business can't ignore. Till then, many people viewed social-networking sites as something their teenage children did - a toy.

But if Microsoft invests in something, there's a reason. In this case, it was paying to block potential competition from Google.

"What's valuable to Microsoft is audience," says Andy Atkins-Krüger, of WebCertain, which helps companies get higher up search-engine listings. "Facebook has more users than all the world's major dating sites combined," he says. "It has the potential to become people's home page."

In a pristine glass office above Mayfair's art galleries and chichi boutiques, an uncannily smooth-shaven venture capitalist tells me: "Facebook is attractive to advertisers because it's an educated, affluent demographic. And it's very sticky; it's a part of people's day. It had instant viral momentum. Besides a social phenomenon, it is a business - a very viable, ongoing entity."

He would say that, of course: he invested in it. But it's just one of the web-based companies he has put millions into - like everyone else, he's hedging his bets.

Jeff Jarvis, the critic and blogger whom Forbes ranked 14th most influential "web celeb", believes Facebook is worth the multi-billion-pound price tag, and is capable of becoming the new Google, a people-based gateway to everything on the internet. "I think it is worth the valuation." He estimates it is worth up to £150 of revenue per user in "lifetime value".

Already, brand managers and marketing executives are excited that the social networks offer them more targeted ways of reaching customers than banner ads on search-engine sites such as Yahoo or Google.

LinkedIn, a professional networking site for business people, boasts 9m users with an average income of £70,000, which would be attractive to advertisers, from business-class airlines to headhunters. According to the research company Parks Associates, such networks can earn between 25p and £2.50 per year for every unique user, which would put a UK site like Bebo's earnings potential at anything between £2.75m and £27m a year in Britain alone.

Traditional online advertising is inefficient: only 1 in 200 people bother to click on banner ads, and a fraction of those people actually go on to buy. There are more inventive ways to advertise. H&M and Virgin are just a few of the brands that have set up groups on Facebook, which are like clubs that (they hope) their target market will want to belong to.

The drumming gorilla advertising Dairy Milk chocolate attracted an audience of more than a million people on YouTube. It would have cost hundreds of thousands to reach as many people through television. Next came the Wonderbra spoof, featuring a scantily clad brunette. It's funny. It has also increased Wonderbra's sales. Social networks are the next step for the viral marketing of brand names and products.

But what businesses are quickly realising is that the internet is far from controllable - they can woo customers but also easily alienate them. HSBC suffered a PR disaster and were dissuaded from charging interest on their graduate loans by a Facebook group. And once something is out there on the internet that undermines your brand, it's virtually impossible to get rid of it. Google "Killer Coke" or "Somerfield massive" and you'll get the scale of the problem.

Cadbury and Wonderbra may be delighted, but BT, on the other hand, is less happy about its latest internet appearance, in which a furious customer leaves a hapless salesman in no doubt about where to put his product. Nearly a quarter of a million people have got the message so far.

Account executives now spend more of their advertising budget on Google than they do on ITV. And that revenue is under threat from the social networks. They're personal and fun, and fun is attractive to consumers.

Facebook's dream is that millions of internet users worldwide will one day use Facebook as the instant access provider of all their internet needs. Which would make Google redundant. Google pretends it isn't nervous about this, but everybody else in the industry thinks it is, because it suddenly launched OpenSocial, which encourages applications that work on many different social-networking sites. As one techie put it, "They're saying, 'We're in this game too - come and play with us.' "

"Google are scared of Facebook," says Lyndon Antcliff, a social media consultant. "They want a piece of the pie. Facebook is the flavour of the month, and it could change very quickly, but there's always something new happening on it."

Mario Queiroz, Google's vice-president of product management for Europe, Middle East and Africa, denies the threat and issues this warning to Facebook: "As soon as [a site] stops serving the needs of the users, they dump it. Users are one click away from going somewhere else."

MySpace and Facebook have been valued as tomorrow's goliaths, their global audiences so large that television and even mighty Google are threatened by the mass migration of internet users to social networks, and by their potential to siphon off revenues from established advertising and marketing budgets.

But such are the dynamics of the internet, the fickle demands of its users and the trajectory of rapid growth, that there are those who believe Facebook might fall victim to its own success.

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"Facebook is great for now," an earnest computer bod tells me, "but in three years' time we might be talking about Gobbledegook. It's pretty faddy."

The same applies to MySpace, he claims. "So it was started up by a couple of guys in a garage? Well, there's always the couple of guys in the next garage."

The new-media expert Chris Sherman, from SearchEngineLand, has a hunch that even the most popular social networks could crash; he says the phenomenon has "a bubbly feel".

"Everything in the internet now has that feeling. It's like it was in 1999 [the first dotcom bubble burst in 2000]. "Social media is hot right now, but I don't think it will last in this form.

"Ten years ago there was a hot company called GeoCities. Close to the peak of the last bubble, Yahoo! spent £2 billion buying it, and then the interest vanished. People are fickle. If they decide there's something else that's cooler, they're gone."

You don't have to look far from home for another example: Friends Reunited rose from a kitchen-table idea to a £120m business when it launched in 2000 - but seven years later it virtually disappeared after ITV bought it. They're considering relaunching with a new name, but it might be too late.

And countless social networks have bitten the dust already. Pity poor Zing, an early pioneer whose homepage mournfully announces: "Please be patient, we're trying to make a comeback!" That comeback could be a long time coming.

Already, Facebook's astonishing growth rate has been surpassed by another social-networking site, the admittedly smaller PerfSpot, which attracts young users with the boast of a library of 100m video clips, and which recorded 756% growth in four months last year.

Sarah Cooper, an American blogger, says Facebook is doomed. "For most people, the bigger their network gets, the less relevant and, therefore, meaningful it becomes."

It's no coincidence that niche networks such as Sermo.com, which specifically targets doctors, and allows them to exchange information on drugs, treatments and diseases, are growing astronomically. There is no advertising and privacy is high by default.

Likewise, aSmallWorld, otherwise known as "snobster", has only 300,000 exclusive, wealthy members - like a gentleman's club, you have to be invited, nominated and vetted (advertisers pay a minimum of £10,000 to appear on it). Members include Naomi Campbell and Tiger Woods.

Will niche sites like this be the way forward, or can Facebook find a way to subdivide itself to stop users wandering off in search of something new and more focused to their needs? The next time I play Scrabulous with Yoko, will it be on a small social network that is restricted to members who can demonstrate a knowledge of Japanese art, John Lennon lyrics and Manhattan real estate? And the mutterings about how far Facebook really can "monetise" are not going away. People go on Facebook to have fun, not to shop. "One session from an average Facebook 'whore' might produce 200 page views to various widgets, photos and messages, but that surfer is just not interested in buying anything," explains an industry insider.

Ivan Pope was one of the utopian dreamers who, back in the early 1990s, started banging on about this funny new thing called the internet. Most people thought he was nuts. "We've relaxed now into the idea that the internet is real," he says. "It's part of our lives now. Offline, online, have merged."

"There's something deep in human nature that likes this stuff," he emphasises. We've moved away from the hearth, the street, the village where we live and die. The net can give us something we're close to where every day we meet the same people. If we don't connect, we're isolated nothings. If it makes you feel a bit better, then it works. And if it works, it's unstoppable."

But ultimately, even he says Facebook will be just one step in the history of the internet.

Clay Shirky, a New York University professor who teaches on the social and economic effects of new technologies, compares the typical Facebook user's behaviour pattern to a comet - furiously active at the beginning, then gradually trailing off into the nothingness of outer space.

In other words, we'll become bored, we'll be seduced by the next best thing, or we'll be alienated by its widespread success. Because once you've accumulated all the friends you can manage, what do you do next?