Facebook: My Take
Since Microsoft paid $240 million for 1.6% of Facebook, I thought I’d make a comment.
Open wins.
Facebook opened its platform for developers to make apps for it; their efforts which were zero cost to Facebook made it more valuable for users. Now everyone is opening their network through APIs and trying to be a “platform” even MySpace — but it’s too little too late.
Palm made Palm OS something that developers could develop apps for and thus make the product more valuable at no cost to Palm.
But …
It is not necessarily sustainable forever. Palm had its day in the sun, but it too failed to innovate along with user trends — it’s heyday was before phones became PDAs, cameras, and MP3 players.
In mid 90’s Yahoo solved a particular large need as the web was starting to get unwieldy — a directory of sites curated by humans which helped organize the info into a yellow-pages like directory. It had its day in the sun.
Then as the amount of information continued to skyrocket, a more efficient way was needed so help users get to what they wanted. Google came along with a better search algorithm, and also did a nice thing for users — made the homepage so simple it contained only 1 textbox (what a concept!). It quickly took the crown from Yahoo and users switched since there was little to zero switching costs (even the Yahoo personalized homepage which I invested time into was not enough to keep me on Yahoo). Google is having its day in the sun — but what’s next?
The next “pair” of “contestants” is MySpace and Facebook. As users spent more and more time online, their real-life social interactions were also desperate to have an outlet online. MySpace was one of the earliest to solve it, specifically for the younger set of users who practically grew up online. They had their day in the sun, but also failed to innovate along with user trends. MySpace was the “web 2” version of GeoCities but lacked better social functions.
Then Facebook came along (after they opened membership to the public, rather than just alums) and the killer feature was the sharing of apps and the open platform. The sharing helped amplify the reach and speed of the social interactions. Facebook is having its day in the sun — but what’s next? Microsoft is desperate and definitely paying a premium to play catchup. Facebook has a shot at building sustainability but as it moves towards an advertising revenue model it risks offending and alienating the very users it seeks to serve.
It will be interesting to see whether Facebook can avoid the same fate of Yahoo and Palm (and MySpace) despite being such a huge success thus far.
Not Sitting Tight
Facebook continues to impress, buying one of the most interesting Bay Area startups, a company called Parakey that has developed technology for persistent web apps.
Persistent web apps are certainly one of the next big things. If the technology works, the web will be like desktop software. Imagine using gmail like you can use thunderbird or outlook on your desktop. Google is developing something called Google Gears that is similar. Google describes Gears as “enabling offline web apps”.
Adobe has developed a technology called AIR that also promises to provide persistence to web apps. I am not technical enough to describe how all these various technologies differ from each other. I am sure there are important differences between them.
But what’s important here is that the web is going to be an operating system with direct access to your device and you’ll be able to use your web apps even when you aren’t connected to the web. This is going to result in a whole new wave of innovation. And that’s a big deal.
Back to Facebook and Parakey. I said Facebook would sit tight in an earlier post this week. Clearly they aren’t going to sit tight. But it’s also clear to me that they are thinking like Google not MySpace. They are building a big platform play here. And I just don’t think that kind of thinking leads to a sale transaction anytime soon.
The founders of Parakey include Blake Ross, who is credited with much of the seminal work on the Firefox open source browser. Parakey is also open source. So does that mean Facebook is going to open source its “social operating system”? I think so. Cool. Put your seatbelts on. This is going to be a fun ride.
Advertisers disappointed with Facebook’s CTR
BizReport : Social Marketing : July 16, 2007
More reports are circulating of disappointing click-through rates for advertising placed on Facebook. Should marketers persevere or concede that social networking sites aren’t yet the place for ads?
Earlier this year the Valleywag blog reported that media buyers saw Facebook as a “truly terrible target”. At that time they were experiencing click-through rates of just 0.04 percent. Around the same time, GigaOM’s Robert Young commented that, “Word on the street, Madison Avenue that is, is that advertisers who have experimented and bought ads on Facebook are universally disappointed with the results.”
It would appear that not much has changed in the intervening months. A recent entry on the Reach Students blog expresses disappointment at their recent Facebook flyer campaign for which, coincidently, they also only managed to achieve click-through rates of around 0.04 percent.
Lots of reasons have been put forward as to why the click-through rates are so low. Some believe that a high number of tech-savvy students on Facebook are using ad-blockers and some that the younger generation are good at ignoring commercial messages.
However, while Myspace and other community networks are all about content, Facebook is more of a communication tool, like IM or a closed forum for friends. On MySpace users spend time browsing through content on various webpages whereas Facebook users spend their time absorbed in dialogue. The difference in user behaviour could well account for the disparate click-through rates, as Myspace has a click-through rate of around 0.1 percent, according to Valleywag.
The Facebook Problem
Brad Feld has a post up where he talks about The Facebook Problem. Brad sees an emerging problem for those who are developing apps for Facebook and says:
It seems like Facebook could easily turn on CPM based ads on all of the Facebook apps pages and do a revenue share with the application developer. Suddenly, the application developer would get paid for the massive new page views they are getting (as would Facebook), and Facebook would create a real incentive for the publishers to stay with their apps and grow them.
In the absence of this, Facebook is going to need to address the “value to the apps developer” quickly, before some of the larger apps vaporize due to the developer saying “I’m not willing to keep paying for servers and bandwidth.” I can think of a couple of other approaches here, including Facebook building an in-the-cloud infrastructure for their developers that they make available to one’s that reach a certain level of popularity. But – the straight “we’ll make more money and share it with you” seems the most logical approach to me.
I see a different Facebook problem. Invite overload and application noise. I cannot keep track of all the invites I am getting, both the standard invites and the application invites. And what’s worse, I can’t keep track of all the applications that all of my friends are using.
We all know I am not the Facebook generation. So maybe I am just not capable of dealing with this level of social networking. But I bet that many of the members of the Facebook generation are secretly wishing for the old Facebook where it was more about them and their friends and less about being a social operating system.
The comments to Brad’s post have a few such examples. Since there are a bunch of members of the Facebook generation who read this blog, please tell me what you think.
"I have 250,000 users, now what?"
“I have 250,000 users, now what?” — Craig Ulliott is a web developer in Philadelphia, PA, USA. 3 weeks ago, he built the Where I’ve Been Facebook application, which lets you create a map for your profile page showing visitors where you’ve traveled. Cool experiment, right?
Source: Inside Facebook
Author: Justin Smith
Link: http://www.insidefacebook.com/2007/06/21/i-have…
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