Brad Feld>Fred Wilson>Me

Fred Wilson posted about “The Facebook Problem” in response to Brad Feld’s concern about Facebook’s new Application layer not showing much immediate benefit for those developers building applications.

Brad Says: “In the absence of [ad-revenue sharing], 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.” “

Fred Says: “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.”

In response to Brad I brought up the success of iLike: 6m total users in 8 mo. More than 4m have come in the last month, most from their facebook application. Their CEO is not worried about monetization. In an interview he said “There’s no way we’d try to fight an uphill battle against what’s best for the consumer. And fortunately, in contrast to the precariously-balanced “Myspace widget ecosystem,” making $ on the FB platform is no harder than making $ on our own site.”

In Response to Fred I drafted a comment, which I shortened and posted to his blog. That comment turned into this post:

I suppose that unfortunately, I’m in the “Facebook Generation,” I have 3 thoughts that may contribute some value to this discussion.

1) I resisted facebook for awhile, thinking it was silly. One of my friends tagged a photo of me and that was enough value to join. I just throw on a “noise” filter and it’s very nice. I can keep up with people I met while traveling in Europe, or from high school, from my hometown, etc. I ignore everything else and after 5 hours I’d found all those I wanted to find. Now all things I want to see get emailed to me (I made plans for tonight and saw a friend was coming home while drafting and proofreading this comment), and management takes very little time. Applications increase the level of information I can see about my friends. Nothing regarding them gets pushed to me though, it’s just there when I seek it out. I like this.

2) Quote Generator, Free Gift, Pets – I agree these are fluff applications with little value other than social interaction for social interactions sake. This helps college kids have sex, it will always exist! BUT, facebook exists as the primary online brand for most of my peers. 10% of my network have websites/blogs (most also have facebook or other social profiles), 75-80% of my network has a facebook or a myspace page. I have a desire to define myself online, so I’m redesigning my website to continue to house my blog and also use widgets to converge all my major online published material and control the presentation of it. Facebook Apps like last.fm, del.icio.us, twitter, etc. are essentially widgets and allow that 80% of my network to exercise similar control over there definition/brand online as those who code their own website/blog. If you doubt the value of widgets to some people, just look at the sidebar of Fred Wilson’s Blog. Of course not all 80% of my network that uses facebook find widgets useful, but more than the 10% that also run personal sites/blogs will have use for widgets. This brings me to my third idea.

3) Facebook users are experiencing an exploratory phase. Most users are not entrenched in the Web 2.0 world, this applications program is arguably the first time many of these users have seen these ideas of widgets (and also the “web2.0″ services that are easy to build but don’t actually provide much value — we all know that the vast majority of “web2.0″ isn’t useful). Facebook users are doing what all people do when placed in new circumstances, they are exploring. This I say with relative assurance because in just reviewing my notifications – my friends are removing applications just as fast as they are adding them. The quotes, the pets, the “hangouts i like” apps don’t stick around much. The last.fm, twitter, and other “established services” apps don’t get added much but they never get removed (I’m inferring from this that only current users of the services are adding these widgets). The iLike phenomenon is the most interesting, iLike faces a lot of entrenched competition and is still pretty young (8 mo. old). It now says it has between 6 and 7 million users, 3.9m of which have signed on to the facebook app in the last month. More than 4m have joined in the last 30 days. I’ve had many friends add this app and some remove it. It’s my educated guess that most of those friends hadn’t heard of iLike before the application, so everyone who still has the app is a brand new user for iLike. That’s good news for the users that found a useful service and it’s good news for iLike. It would be of interest to see the metrics across the FB network of adding and removing applications. I’m dealing with a limited sample group.

Broad Level Takeaways:

To those who are disappointed with the “noise level” – the info-noise level will continue to be higher than previous levels, but you are now experiencing an exploratory spike which will calm down as people begin to realize what apps are and what they do. The same reason I don’t email my friends when I sign up for a new service just because it asks me to, your friends will learn that they need 3 days to test drive an app before saying they like it. Most will learn to stop notifying you, unless they think it will provide value to you, and in that case wouldn’t you want to hear about it?

To those who think facebook needs to help developers monetize apps: You’re both right and wrong. Facebook benefits in two ways from the applications…
1) Users like me get more information in many ways. Apps like Video and events help address competition with options available on Myspace, without having to alienate anyone who’s not interested in changing their profile or interface. Apps like notes help users publish data for their friends to find if they want to (facebook blogging anyone? “flogging” if you will). Apps like Twitter, Last.fm, Dopplr, etc. mean I don’t have to publish information twice to share it with a wider facet of my network. It also changes how I use these services, normally for the better. Synergistic! This doesn’t require Facebook to help with monetization. Certain developers will take the risk that they can monetize the traffic. Any new app is only an added value to the userbase, and the critical features are built and maintained in-house.

2) The Marketing Playbook (great book; worth the read) details 5 strategies a software company can take. One strategy is the platform play, in which a company gain numerous allies by empowering other companies to survive in an eco-system they create. This could be a powerful move for Facebook. Empowering other developers is a great move, especially when it so perfectly fits into your core business. If they do help companies like iLike succeed and even allow companies to move to FB and turn a profit (like it sounds like iLike may do), then they have something unique, extremely valuable, and a huge win for them.

Thoughts? Responses? Comments!