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If you haven’t heard about it yet, expect to soon. Expect to hear about it in the blogosphere, in magazines, in newspapers, at conferences, and if Facebook’s claims of widening demographics are correct, maybe even in your office. Facebook has opened up their service to allow 3rd parties to bring their services inside Facebook — even if those services compete with Facebook’s own features, even if those services are making money from Facebook’s users. This is the 6th most trafficked site in the U.S. giving everyone access to their users, free of charge. And believe it or not, that’s only part of the reason why this is big news.
In this post, we’re going to talk about some of the other reasons why it’s big news. You don’t have to take my word for it either, because in the first part of this post I’m going to show you the sources I’m working from. Reading all of them isn’t necessary, feel free to look through just the ones that sound the most interesting to you. Then read on for my own analysis, in which I’ll be trying to fill in the gaps.
Rumors of third-party services incorporating into Facebook first arose back in April, when Wired writer Eliot Van Buskirk posted a tip he receive from “a trusted source”. Then over a month later, the Wall Street Journal stated firmly that Facebook would be announcing its plans for opening up three days later. Whatever the WSJ’s sources, they clearly weren’t as reliable as Van Buskirk’s, causing the WSJ to get a key point wrong, that Facebook “currently has no plans to share revenue with the companies that develop services to run on Facebook’s platform”. In actuality, Mark Zuckberg has stated that “You can build a real advertising business on Facebook. If you don’t want to run ads, you can sell something. We encourage you to do both.”
Since the Facebook conference, held Thursday, the internet has been filled with speculation, analysis, news, and insight. Here’s some of what I consider to be the highlights:
The Exclusive: Fortune Magazine
The Mainstream: The New York Times
The Video: Webware
The Cautioner: HipMojo
“By making Facebook the social utility, they will all become beholden to a powerful company that will sooner than later be competing with them, much like Google competes with everyone, everywhere, at all times.”
The Naysayer: Donna Bogatin at ZDNet
“Now, [Facebook] stands for what’s best for Facebook: Unlimited demographic diversification and commercialization, while nevertheless attempting to cling to its founding philosophical centricism via feel good Facebook positioning.”
And Donna Bogatin at ZDNet again.
“students, and student bodies, the purported soul of Zuckerberg’s Facebook, are decrying what they deem to be a not so trusted “social utility” that is the Facebook reality in its unvarnished by PR speak experience.”
The Major Players: VentureBeat on Challenging Google
The Old Media: Rob Curley of the WashingtonPost
The First-comers: CenterNetwork’s List
Show Me The Money: The Webpreneur
“Imagine getting updates that your friend just finished a great book, or is listening to a great song, or that they just bought the hottest new pair of jeans. A large portion of purchases that people make are based on recommendations.”
“Facebook will allow users to make money, such as selling ads or conducting transactions, through “canvas” pages (not profile pages).”
“When you are dealing with money, either as a borrower or lender, you need a sense of camaraderie that goes beyond drinking buddies.”
Users by the Numbers: Hitwise
“Facebook Visits up 106% Since Opening Up in September”
“Facebook is doubling in size once every six months, 100,000 user per day. And the fastest growing demographic is the desirable 25 and up. More than 60 percent of users are outside of college age. By the end of 2007 more than 50 million users if the current growth rate continues, and with more beyond college.”
“Consider that in the past three weeks more people have joined Facebook than are on Second Life.”
On the Way to IPO: Alex Iskold of Read/Write Web
Ooo, Shiny!: Mashable
“The Facebook Platform, […] means you can use lots of cool new applications within Facebook. […] Here are more than 30 of the best, with more being added as they are announced”.
And Mashable again.
“There’s a huge announcement buried under all the Facebook Platform buzz today: Facebook is launching a video service to compete with all the major video sharing sites.”
Puppies, Orphans, and Politics: TechCrunch
Community Discussion: Metafilter, because Digg comments are a garbage dump, and Slashdot hasn’t covered stuff that matters since Web 1.5.
Straight From the Source: Facebook
They key points from above:
- Facebook is growing, and growing fast. Zuckerberg said 3% per week, or 100,000 users per day. And not just in the U.S.
- Facebook isn’t just for college kids. Facebook’s demographics are expanding in every direction. First they were college students. Then they added high school students. Then they opened it up to everyone. Now many of the early adopters are graduating from their universities, but their profiles are staying on Facebook. And having opened to everyone earlier is starting to have its effects seen. Zuckerberg said the fastest growing group is age 25 and up.
- This is an excellent business opportunity. Facebook gets more stickiness. 3rd parties get more customers. Users themselves get more services, and the opportunity to make money from their networks just by doing what they already do: pointing to the things they like.
Now it’s time to talk about what the articles above haven’t covered. What else this means, and where it’s going from here. Facebook as an open platform isn’t just about giving widgets free reign and keeping users clicking. It’s the creation of a centralized data service that could someday rival what Google is creating. I have no interest in conspiracy theories or sensationalism. All I want to do is point out that data is being collected about who you are, who you’re friends with, what you like, what you believe, what you do, and what you buy. It’s naïve to think that data won’t be used.
Google isn’t the only one Facebook has decided to compete with. Not only is it clear that Facebook and Microsoft have strong ties, as Eric Eldon pointed out, but I want us to think about what it means that 65 “Platform Partners” had applications ready to go for the announcement. Facebook chose the groups it invited, giving them the first-player-on-the-field advantage with Facebook’s users, and access to those users might be able to jumpstart some of those services’ popularity. Facebook is essentially picking the winners(or at least making them more major contenders) in a lot of markets. Facebook is definitely picking sides when it gives Slide a headstart over Kindfish, or taps QOOP to be the merchandise solution Facebook users go to instead of CafePress.
Of course, all of that is about Facebook positioning itself for future competions. Right now, their main competition is still in the social networking space, where the supposed giant MySpace is the service Facebook will have to slay, or at least surpass, if it wants to be unfettered in branching out into other markets later. Opening up to 3rd party applications is a key move for Facebook, because it highlights their willingness to let users decide what they want, and do what they can to support it.
Facebook recognizes that its users will go where they want to, and Facebook wants to be the place they want to go to. MySpace, on the other hand, seems to feel like it owns its users, giving them the right to tell the services their users are using what they can and can’t do, and if they don’t tow the line, telling their users they can’t use that service any more.
Of course, Facebook could win the goodwill contest and the popularity contest both, but it would do them no good if none of the rest of us could tell. According to most sources, MySpace has an enormous lead over not just Facebook, but almost every site on the Internet. That’s what current web metrics say. But are those numbers the result of a true advantage, or of a bad design that inflates the numbers? TechCrunch brought up a lot of these issues again at the end of April, but there still hasn’t been a significant movement to change the way we measure use of the web.
New technologies made the “hit” obsolete almost as soon as it started being used gaining popularity as a metric. Now page impressions have been made obsolete by web technologies that don’t require a new page to be loaded after every little action. But because the metric is still be used, sites like MySpace take full advantage of it. If Facebook wants to win and be seen to win, in needs to take a stand in defining the future of web metrics.
Finally, it’s worth looking at what some have mentioned as Facebook’s only remaining option: An IPO. While I think it’s a possibility that Facebook could do so, thus far Zuckerberg has shown every intention of remaining independent. And maybe it’s just that I’m re-reading The Cluetrain Manifesto, but it strikes me that Zuckerberg is really the key here. He’s 23 and a CEO of a company that could make $100 million this year. Watch the video of the Facebook Conference, and you can absolutely see that he is getting a buzz from being the one to make things happen.
Sergey Brin was 24 when Google incorporated. Larry Page was 25. Zuckerberg is in a position where he can do great things, and I don’t think he wants to be beholden to a board and quarterly reports. By opening up Facebook to 3rd party developers, he’s adding new features, making partnerships, and getting others to have a vested interest in keeping his service running well, and he gets it at a fraction of the cost of doing it himself. Most importantly, it reduces the number of new employees Facebook has to hire to keep growing.
Social networking is key to how the web will develop in coming years. While before the trend was for services to bring social features to their sites, this is a powerful pull in the opposite direction. There are benefits and downsides to centralization, but ultimately I don’t think Facebook will cause an extreme of either. What Facebook is doing is giving us choices and giving a lot more power to some other startups struggling to reach their markets. And the more people that get involved through the web, the better.