Facebook Grows Up - An Analysis of Today's News
Today in San Francisco social networking site Facebook officially announced their much talked about open platform, for companies wanting to hook into the Facebook network. There's plenty of blog coverage of this event, so in this post I hope to synthesize it all and explore what it means...
What has Facebook announced?
Today Facebook launched "The Platform", a system enabling 3rd party companies to integrate their services inside of Facebook user pages. The platform will go-live later tonight. About 70 companies have apps set up already (more on those below). As explained in an excellent FAQ by one of Facebook's 3rd party partners, SplashCast Media, this platform goes beyond the ability to post media from outside into Facebook and it goes beyond the previous Facebook API (a read-only Application Programming Interface (API) released on August 15th, 2006, and at the time also called The Platform). With the new platform, outside companies are now being allowed to deploy advanced functionality inside the Facebook site.
One of the key questions is: can these 3rd party apps make money off Facebook? There is a bit of uncertainty right now about this, but according to SplashCast, "some monetization in Facebook will be permitted, so long as it's not done on the same pages where Microsoft ads are being run." Gigaom though is reporting that at the SF event CEO Mark Zuckerberg said: "you can serve ads on your app pages and keep all the revenue, sell them yourselves or use a network, and process transactions within the site, keeping all the revenue without diverting users off Facebook." So we'll wait and see what pans out there, but obviously it is key for 3rd party apps to be able to earn revenues off the Facebook platform.
Facebook's naked ambition
Facebook is growing....big and fast! The fact that yours truly (a kiwi in his 30's) recently become a Facebook user, tells you that their user base is rapidly branching out from their core audience of American college students. This extension of their user base becomes even more stark when you look at Facebook's current user base stats - Techcrunch reported that Facebook is growing 3% per week (100,000 new users per day) and the fastest growing demographic is the 25 and up age group. Active users have doubled since Facebook expanded registration in Sept 2006. The international user base is still at an early stage, but obviously has room for large growth. Currently Canada has the most users outside of the United States, with more than 2.5 million active users; followed by the U.K. with more than 1.4 million active users.
As well as quantity, Facebook has on its side that it is a very sticky site - 50% of registered users come back to the site every day. Facebook is generating more than 40 billion page views per month, from 24 million "active" users - 50 pages per user every day, which is very very high. In comparative terms, Facebook is now the 6th most trafficked site in the U.S. and gets more page views than eBay.
Facebook also has an impressive range of social software apps - it claims it has the no. 1 photo sharing application on the web and it has just released a video app to take on YouTube.
So Facebook has a huge user base, is very sticky, has all the main social media apps, and is bigger than eBay. But perhaps what is most interesting about Facebook is its ambition. Does Facebook CEO Mark Zuckerberg have a goal to be the next Steve Jobs? He certainly has the same level of enthusiasm and ambition. Liz Gannes at Gigaom even opens her post with the Jobs comparison, saying that Zuckerberg is "channeling Steve Jobs". In any case, Facebook's lofty goals and the reason why Read/WriteWeb thinks Facebook will be the first big IPO to hit the Web since... well, Google, is probably best summed up in this quote via Techcrunch: "Says they are targeting Google next" (note: it's possible Zuckerberg was just joking, but still, to even say that shows their confidence).
Social Utility
The Facebook platform was described by Zuckerberg as a "social utility". ZDNet's Dan Farber has a great summary of what that means:
"It's a utility in terms of a tool for the 24 million Facebook users, but it also reflects Facebook's desire to become a utility, like an power company, in which potentially billions of people use the service in their personal and professional lives. Facebook, MySpace, and other growing colonies of linked communities with semi-permeable walls represent the rise of the social Web and Web utility companies.
Zuckerberg describes the Facebook core function that the new third-party applications can tap into as a "social graph," the network of connections and relationships between people on the service."
So let's explore that. We've often discussed on Read/WriteWeb the theory that an 'open social network' will be the Next Big Thing in social networking. It's also well known that the current leader in social networking - MySpace - is probably the quintessential closed system. So opening up is a sensible move by Facebook, because it gives them a key differentiating factor versus MySpace. However other competitors have also made moves to open their platforms - e.g. Yahoo has been proactive in opening up its content via APIs. The same with AOL, the former portal king in the 90's - now struggling to keep up with MySpace, Facebook, Yahoo, et al.
Facebook has always had impressive user base and usage stats, and was up till recently regarded as the second biggest social network after MySpace (but Bebo probably now has that honor). Up till the end of last year Facebook was also a restricted user base - in that you needed to be a US college student to register. So when Facebook opened up its registrations beyond US college students (even letting in kiwis), it signaled the beginning of Facebook's ambitions to take on MySpace, Yahoo, and (eventually, maybe) Google. This "social utility" platform is of course the next big step in that direction.
What apps have been built on The Platform so far?
The event in SF today showcased some of the 70-odd external company apps that have already been built on the Facebook Platform - including amazon, box.net, feedburner, forbes.com, microsoft, oodle, photobucket, slide, splashcast, twitter, warner bros records, washington post, widgetbox, and many more. SpashCast has created an excellent webcast, showing some of these apps in action:
Conclusion
We may never know the full story on why Yahoo and Facebook couldn't agree terms on a $1Billion deal. But you have to commend Facebook for its brave move of going it alone and building out a development platform themselves. It would've been much easier to go the MySpace route and sell themselves to the highest Bigco bidder.
Could we eventually see the biggest IPO since Google, when Facebook puts its hand out to the public for cash? It's looking like a good bet now. And as Facebook's current stats show, they are growing at a remarkable pace. They have the vision, the user base, and 3rd party developer support. It seems the monetization isn't quite worked out yet, which could still end up spoiling the party. But one thing is for sure, Facebook has gone well beyond what MySpace has to offer - and is looking distinctly threatening to not only MySpace, but the other big Internet companies. Facebook has grown up!
What do you think about what Facebook announced today? Impressed?
Pic: Don Loeb
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Best analysis I've read yet, as usual. Thanks. I only wonder now if they'll alienate their 'core' demographic of college students. The last time they made a big change - with the news feed - it really pissed off a lot of people. Opening up the platform for commerce- and not a word about it to facebook users yet - could be seen in a negative light...
Impressive numbers.
Just signed up to have a look. Did not like what I saw and guess what? It is impossible to remove your account (you can only deactivate it). I therefore recommend to multiply the number of Facebook users by 0.2 to get a gist of the real user base. Or maybe it is an idea to ask Facebook for the number of deactivated or inactive accounts.
Antikronos - the numbers quoted are active accounts. Those that have been accessed in the last month.
Will - people will complain about everything. The funny thing is the News Feed is probably the most loved feature on Facebook.
Wow. Very impressive work, and great write-up thanks.
My only concern is the privacy of user information. I disabled sharing anything to wait and see how it pans out. It could easily backfire with marketers enjoying data users did not want shared. The fact that a lot of sharing is happening by default (and I didn't hear anything about it) is not a good sign.
Anyway, we'll really know in a few months time. If it works, FB would have created essentially a new business model no one can match. If it doesn't, I'm sure history will forget and someone will re-invent in Web 3.0 or 4.0.
For now, color me amazed!
Pierre
Very impressive - and well done Splashcast for the slideshow. See http://apps.f8.facebook.com/apps/ for a list of the apps currently on Facebook.
Smart move, but there is something i've noticed today.. i added Facebook Video, and then when i added veoh, facebook video was replaced although i might be interested to use both at the same time! because there are different videos on both sites... so is see something in this, facebook wanted to become big and very fast without getting rushed out developing a bunch of software... so they decided to make their website as a platform and they have a big incentive (user base) but i don't see the future will work the same... facebook will yes give a choice of using outside services... but the user must choose between facebook and external services and not to use them both together (and i think that most will use facebook if the services are equal, even if facebook's is little less) because the facebook trade mark will appeal to users. so the companies which we see are happy now to offer their applications to be used on the facebook will end out to be competing with facebook every time facebook rolls out a new service (because they will desire more money each day)... and as we saw google's innocent face one day and then it turned out to make a FOG, and as we saw ebay and how it is using its money and user base to force a raise in fees, we will see the same with facebook...! and let the days talk
Dan has more abgout the Microsoft and Facebook relationship here http://blogs.msdn.com/danielfe/archive/2007/05/24/microsoft-facebook-partnership.aspx
this is exciting to say the least...
This is really funny. There seems to be so much fanfair about this launch everywhere -- except in Facebook itself! I see NOTHING in the Facebook site about this launch. If I am a regular Facebook user who do not sniff around these tech news, I wouldn't have known a thing about it. What's happening to them?
Are you sure there's an app from The Washington Post? I can't seem to find it via their search.
The Post's app is called "The Compass". There's a nice write-up at http://robcurley.com/2007/05/24/washingtonpostcoms-new-facebook-app/ about it and about how they decided what kind of app they would do.
It’s time for Face Book to Pay Up.
The End of the Plantation system.
I would like to help a bit in bringing about a new era on the Internet. We can call it web 3.0, or 2.5. I will leave the definition to others that are better at this kind of thing.
This will be the era of a true revolution in the power of site members. An era where members have the power and the ability to be rewarded monetarily for the value that they add and the revenues that are generated from their work and participation.
The recent announcements by Face Book that they are going to be the next OS, or the next platform, or the next goggle, reeks of egotism and self indulgence as well as a master slave mentality. In the bravado of the announcements that spewed forth from the reality distorted world of Face Book what was left out was the untold fact that Face Book would have little or no value if it were not for it’s 25 million members.
The hard fact and truth of the matter is that Face Book makes hundreds of millions of dollars off of the backs of its 25 million members and has no plans to share the true wealth (money) of the revenue they generate with them.
Does Mr.Zuckerberg or anyone at Face Book believe that they add more value to Face Book than the 25 million members ?
If the answer is no then the revenue generated and the value added to Face Book should be shared monetarily with the members that have have generated the revenue and added the value. Without the members Face Book would have little or no Value.
We now live in a technical age where a close to approximate monetary value can be assigned to the value and revenue that Facebook members add to the company. This fact can no longer be hidden, it can be found and it should be known by all of the members that generate the wealth and revenue.
Why cant we see a graph on Face Book that discloses to the members the amount of revenue that is generated from them in terms of revenue generating partnership deals and advertising ?
Why cant Facebook give an equitable portion of its ad revenue directly to its 25 million members ?
Of the revenue that Face Book generates, as a percentage how much is given back to its 25 million members in a monetary form ?
The advertising revenue that is generated by Face Book come from the actions of the 25 Million members, not the Face Book staff, so the members should receive the lions share of the revenue
How much stock in the company do the 25 million members that generate hundreds of millions of dollars for Face Book own. Because the 25 million members generate most if not all of the revenue and value for Face Book, shouldn’t they all be stock owners ?
As a group the 25 million members add value to the company and generate revenue, as a group they should own stock in proportion to the vaue that the add and the revenue that they generate.
How much is Microsoft paying Face book for the rights to serve ads to Face Book members? Since the value of the ad deal is probably based on the amount of members that face books has, it would make sense that the members should be given a share of the money that Microsoft has paid to Face Book for the rights to serve the ads. Mr Zuckerberg and the rest of the Face Book team should give the 25 million members the money they deserve for the value that they add to Face Book.
If yahoo would have acquired face book for one billion dollar, would any of this money be given to the 25 million members that have given Face Book the one billion dollar valuation ?
For a one billion dollar acquisition that is by and large based on membership size as well as advertising revenue generated by the members; it seems that giving each of the 25 million members 1 million dollars would be an almost equatable reward for their participation.
There is little difference between how Face Book treats its members and the share cropping schemes that were used to generate wealth for rich land owners on the backs of poor people and slaves. At least in the old share cropping schemes the works received a small portion of revenue, in the current situation members receive none of the revenue from the content that they create. Face Book and other sites that do not share the revenue and wealth that members create for them do not understand that the times have changed and the plantation game will no longer work. Now members have the ability to leave the plantation and to either create their own communities or to become members of communities that will pay them an equitable portion of the revenue and value that they create. This is one of the key revolutions of technology. There are no barriers to owning the means of production. Members are the means of productions, and are the value add. The pyramid that had members who are content creators and add value on the bottom has now been turned upside down. Unlike slaves that could not break free of the wealthy plantation owners bonds, members now have the ability to demand their equitable share and if they are not given it they can leave without retribution.
It is time that members demand to be equitably rewarded (in the form of money) for the revenue and value that they generate.The 25 million Face Book members as a group should demanded to become stock holders and to be given a part of the revenue that they generate from advertisement clicks as well as a portion of the revenue that is generated from partnership deals based on their action and their numbers . If the members do make this demand and they are not rewarded in an equitable manner they should leave Face Book and any other site that will not reward equitably for the value and revenue that they generate.
From Wikipedia
“Sharecropping typically involves a relatively richer owner of the land and a poorer agricultural worker or farmer; although the reverse relationship, in which a poor landlord leases out to a rich tenant[2] also exists. The typical form of sharecropping is generally seen as exploitative, particularly with large holdings of land where there is evident disparity of wealth between the parties.[attribution needed] It can have more than a passing similarity to serfdom or indenture, and it has therefore been seen as an issue of land reform in contexts such as the Mexican Revolution. (Sharecropping is distinguished from serfdom in that sharecroppers have freedom in their private lives and, at least in theory, freedom to leave the land; and distinguished from indenture in sharecroppers[][]entitlement to a share of production and, at least in theory, freedom to delegate the work to others.) Sharecropping is often described as a never ending cycle of debt.
Sharecropping agreements can however be made fairly,[attribution needed] as a form of tenant farming or sharefarming that has a variable rental payment, paid in arrears. There are three different types of contracts.
1. Workers can rent plots of land from the owner for a certain sum and keep the whole crop.
2. Workers work on the land and earn a fixed wage from the land owner but keep none of the crop.
3. Workers can neither work for nor get paid from the land owner, so the worker and land owner each keep a share of the crop.
There are three different types of tenant farming. According to A. Alkalimat, renters who were to hire land for a fixed rental to be paid either in cash or its equivalent in crop values; share tenants, who furnish their own farm equipment and work animals and obtain use of land by agreeing to pay a fixed percent of the cash crop which they raise; share-croppers who have to have furnished to them not only the land but also farm tools and animals, fertilizer, and often even their own food, which they had to pay back with a larger percentage than shared tenants. Tenant farming was a way in which to keep African Americans and other poor groups under control but make them feel like they had some importance. Though many blacks participated in tenant farming they still were looked at and labeled as the lower class.
Because of the high rate of illiteracy among blacks at the time, they were often taken advantage of. Poor, illiterate and intimidated by post Civil War violence, many former slaves agreed to sharecropping contracts that were designed to keep them poor [PBS]. Eventually this exploitation led to violence. Courts would usually rule in favor of landowners when these incidents were brought to court.
Lots of gadgets or just lots of gimmicks?
Isn't this what RSS is all about?? What happened to having a good simple idea and delivering it well??
I just found http://www.FindLikeMinds.com - No clutter, no gimmicks and no hype, just a good simple idea!
Best coverage on the news, I have read so far!
However, I am really really surprised why everyone thinks this is new. Salesforce.com did the exact same thing several years back, and it should not have taken any large social network to have epiphany to think of this. The on-demand platform model worked very well for Salesforce.com, but I am not sure the same applies to consumer social networks. Its tough to think that we will do "all" our social interactions in one network. If this is just a way for them to boost their traffic... sure, it definitely will do that I am sure. Essentially, the app developers who build for facebook will market facebook further as well.
I am not sure this is SO market changing and SO big. And Salesforce.com did the same long back.
Facebook just knocked the ball out of the park. This is the biggest innovation in the internet since social networking was introduced. A completely new way of viewing the internet and users interactions with the internet. Social networking hasn't even scratched the surface of potential users. Facebook has 20 million users of how many hundreds of millions (and rapidly growing everyday as China and India come on-line) of daily users?! In a sense they've basically re-engineered AOL for the new internet generation. They've created a slick and usable interface that acts as a mini-web for users and likely keeps them close to Facebook at all times. It's truly brilliant. Kudos to Facebook, I think we're going to see a lot more of these guys in the coming years. Google 2.0
Facebook as open social network? Mark Z doesn't think it's a social network: see Richard's current post.
I'm not so sure it's open: see People Aggregator, and Richard's earlier post on it, and note the contrasts with FaceBook.
The ACLU raises a good point about the potential impact of third-party applications on Facebook users' privacy:
"Facebook users may benefit from the additional functionality that Facebook Platform makes possible, but they should be more vigilant than ever about controlling access to personal information now that responsibility for keeping such information safe can now fall to an array of individual developers instead of a single company."
More here:
http://aclunc.org/issues/technology/bytes_and_pieces/facebooks_new_third-party_applications_with_great_power_comes_great_responsibility.shtml