A change has happened at Facebook and not many have noticed it. As the VC's and entrepreneurs have become more connected to facebook, the average user (a college student) has become more disconnected.

Facebook as a replacement for TV? It was that 2 years ago, it isn't any more. As a college student and an entrepreneur (like everyone else in the world, I have a facebook app being released next week) I've seen the change happen. Last year, whenever we - and by we, I mean college students - were bored, we'd get on facebook and browse around for a while. Check out some photos, browse friends profiles...just bounce around on facebook for an hour or so.

But now, facebook has added so much stuff that it isn't an exploring tool anymore - they've optimized it to a point where I don't need to explore. Instead of spending hours jumping around on friends profiles, i can take a quick look at hte news feed. I get text msgs and emails whenever I get a message, tagged in a photo, or any other "actionable" item. I've found I only go to facebook now when I need to act on one of these "actionable" items; e.g., receive a message, wall post, tagged in a photo.

And it's not just me. I've been talking to a lot of college students because I want my facebook app to succeed. It had almost been finished before they released the platform - it originally used the API - but rebuilt it using the platform, which delayed the launch.

Anyway, almost everyone I've talked to has said the facebook apps now are out of hand. One person even said "someone should build a facebook like it used to be, no one wants this new facebook anymore but there's nothing else that's better." Facebook is becoming like digg - too much noise for exploring (ie, TV replacement), but it still works well as a communication platform. So, we are now using it as a replacement for email, IM and the like.

I'm not saying facebook is going anywhere - it is still the best communications platform out there. It has most of my social network already plugged in and I can't take that to another service (unless it's built into facebook). But those 250,000 users your application has, they are mostly the same 250,000 users all the other applications have. The vast majority of students aren't adding any applications. With the huge stream of options, they just blocked the whole thing out.

It's going to be much harder for my application to get critical mass at my university because the majority of people just won't look at the application - even if it would be extremely useful to them. People have told me they would have loved my service back before the facebook platform, but now it's just going to get lost in the noise.

(sorry for the rant)

F8 reminds me so much of late 90s AOL. The revenue share you propose is indeed similar to the revenue share AOL had with its content providers before all you can eat ISP pricing. And, The Facebook dev platform could be compared to the AOL rainman platform back then too.

Of course, all you can eat pricing made this economic arrangement impossible and almost all of the early AOL content developers -- many small businesses you got comp'ed based on traffic -- could no longer survive. But back them the web browser as a platform was not mature, so developing inside AOL's walled garden was an acceptable approach.

Were Facebook to recreate this model, would the revenues be enough to sustain all this development? And, further, are the constraints of building an app (apps-lite) for FB too great to sustain long term value with this?

Can't the developers run their own ads? Is there anything to prevent them from adding AdSense positions to the frames they serve?

Zach Allia, the Northeastern student who created Free Gifts (2,381,091 users), is having his application hosted by 30 Boxes in exchange for a link in the upper right corner of app's home page. He's trying to figure out how to do more advertising.

Brad -

What are your thoughts on an independent entity being formed whose sole purpose is to acquire multiple top-rated Facebook applications, forming a "Facebook App Conglomerate"?

I am sure that quite a few of the independent developers who have created these applications, and who are bearing the costs of their growing user base, would be happy to sell their creations. Thus, this "Facebook App Conglomerate" would operate multiple applications spawning millions of users, which could result in efficiency when attempting to monetize these users (ad model?).

I am curious as to your thoughts on such an idea formulating into a viable, monetizable, and profitable business.

@Rick: Depends on the page placement given the limitations on Javascript. In addition, the Google ads are going to be CPC - the small add-ins will probably do a lot better with CPM based ads.

@Brandon: The conglomerator is - um - Facebook. If they aren't thinking that way, someone should smack someone over the head. I'm sure a Facebook App Conglomerate will emerge (and expect at least one VC will fund one) - when the 7th emerges, you know we are hosed.

my thoughts:

http://defragcon.com/Blog/?p=69

an anonymous comment:

I guess I still don't see the problem. Facebook has been around for about 4 years now, and they've had their application platform for a month. The applications provide a medium for publishers use for whatever they want, but whether or not these guys put out new applications or even continue hosting the current ones, facebook will be fine. They are trying to please their users, not their publishers. Does Mozilla revenue share with publishers of their Firefox add-ins? It seems to me that it is the publishers' problem to figure out how to monetize their users, not facebook's. Also, when facebook made the application platform, I don't think they expected it to blow up this big. They were just looking for new perks for their users, like attaching music or videos to a profile, in order to better compete with myspace, and it would be okay with them if it reverted back to that.

I developed the NewsCloud application and the Daily Show News application on Facebook.

I haven't turned on ads but I have tested and confirmed the ability exists to add your own adsense or other ads via iFrames.

I mostly built the apps for long term customer acquisition.

If I could also add ...

There are now 800+ applications in Facebook and Facebook is now limiting invitations for apps to ten per user per app per day.

So, the days of 1M+ users in one week are over.

The days of being the first app provider are nearing the end.

I agree with the post that only deeper more complex apps will add value to the platform over time.

Here are links to my two apps
Daily Show News
http://www.facebook.com/apps/application.php?id=2417657927

NewsCloud
http://www.facebook.com/apps/application.php?id=2366953907

Open source code for the NC app is here
http://blog.newscloud.com/2007/06/newscloud_faceb.html

If an existing company were to acquire a specific and relative Facebook application in order to build an additional user base for their business, how do you feel the user acquisition cost and valuation could be determined?

I hear what you're saying but the composite newsfeed on my Facebook page shows friends who try and discard applications several times a week. Who has time or patience for dozens of widgets pumping in all sorts of content? With 120 friends porting all their lifestreams into a combined newsfeed on my page, I'd have to use more than half a cup of coffee to blow through their musings. That's not my cup of pleasure. I think the pleasure comes in knowing Facebook is delivering some quality nuggets in one space in fewer than three page scrolls.

Friends don't ask friends to be friends.
You can be a Social Hermit on Facebook (group) or http://hermits.ning.com
Take a breather, step back, be alone together.

@Easton: No real clue.

Face book is a silo. Silos do not work on the internet. History has already show this with what happend to AOL, Lycos, Excite, etc

Plus ca change...?

The problem you describe is just what happened with the web 1.0 "social networking" leaders GeoCities, Tripod, et. al. -- the burnout/churn of users who lose enthusiasm for the loads of work and resources needed to maintain a web site/app; the annoyance of everyone as a simple clean interafce twists into unusability in attempts to monetize; the inherent conflict between those who support and pay for the enormous infrastructure and their need to monetize versus the anti-commercialism pathos of the web user.

Anybody remember the uproar when GeoCities put ads on users' pages?

Anybody remember GeoCities?

Facebook is facing/will face similar stresses when it either brings in-house the support for third party apps (the cost and pain of which will drive them to enforce/restrict/control the apps in ways that will piss off everybody) or else reverses itself and closes off the facebook api. its only a matter of time.

unless, of course, papa google or papa newscorp or papa cbs comes in and buys facebook and, as they did with youtube, myspace and last.fm, says "big losses? spiraling costs with no business model? cool!"

the pressure on jerry yang to do some transformative-looking deal and acquire facebook must be overwhelming around now. it will be fascinating to see whether that brilliant thoughtful man -- who signed off on the $4.3BN GeoCities deal, and so best understands the fickle value of such web properties -- will do a similar deal again.

The average college kid might have app fatigue or he might pine for the old facebook, but if they leave they won't be gone for long. Most college kids who grew up with Facebook have built a network they can't easily replicate. Maybe they have a similar one at Myspace, but I've not seen reasonable people argue that Myspace is better than Facebook at its worst.

Remember "Day Without Facebook"? When Facebook users en masse revolted because the news feed / mini-feed? The numbers indicate that just about all those kids came back when they figured out that Facebook has sophisticated granular privacy controls that are hella easy to use. They could recreate their "old" Facebook with ease. But I'm betting most of those who protested didn't get rid of their feeds. Instead, they have probably come to depend on those feeds. The explosion in apps (e.g., 4 million new users for iLike) indicates that the feeds are the engine of all that viral growth that's happened in the last month.

Today the privacy controls are even better. And there's going to be a shakeout amongst the apps in which the strongest survive and weakest ideas get lost. The current app craze will slow down and gain focus, and the features will be more compelling. And oh yeah, Facebook and developers are going to make money. All they need is just a little patience.

Brad:

Good points, and something that has given me a lot to think about. I have a larger thought up on "The Facebook Problem" on my blog, but that's far to long to post here. What might be the converse to your "problem," it's not much more than pure customer acquisition, but I would assume iLike is happy with the results they've achieved. Of their just over 6m total users in 8 mo. More than 4m have come in the last month, most from their facebook application.

From Ali Partovi (iLike CEO), in an interview on onlinefandom.com, in response to whether he's OK with users going to facebook instead of his site.

"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 fact, the business model doesn’t change at all — the only difference is that it will take more effort to build and maintain multiple versions of our site (especially if we need to support more than one such platform, if FB’s competitors create equivalent platforms of their own)."

@william: Silos have been proven not to work historically only when they control all the data. With the advent of widgets there is benefit for a "summary site" which you and I may consider a blog or a personal website. This site gives us an opportunity to define ourselves online, post content, and bring content out of services, through widgets, to aid our definition.

Facebook Pages with these new applications just gave the vast majority of people without blogs or personal websites the ability to offer this definition of themselves. I think that's a sincere offer that delivers value, and it's one worth paying attention to.

Great post.
Face book needs to break down the widgets and their user base into core components. You could have 4 or differnt subscription model of widgets so as not to overload users and to still have a decent rev stream coming in.

Its great to have college kids loving the site but they don't buy jack compared to soccer moms. When that happens then this is will really be a huge tipping point for the site. Additionally, from a usability stnadopoint, I wan to go from zero to near expert in no more that 10 minutes of using a site.

The one thing I notice about the facebook explosion is the number of people compelled to state how overblown the hype is.

It is a great measurement of a platform or technologies success when you have a bunch of users stating how wrong it or what a failure it is.

Facebook and its uses has yet to be realized.

Absolutely. I joined facebook so that I could keep in touch with my friends back home and all of the friends that I have. I didn't join facebook to add 3,334 applications to be added to my page. It's okay to offer some, but at some point, it's just too much. It's too cluttered, it's just too much. Which is precisely why I don't - and wouldn't use MySpace. Facebook's competitive edge, among other things was a simply and clean design.

I will agree with you on this one. ---> [ the straight “we’ll make more money and share it with you” seems the most logical approach to me.]

This has been a proven model for the Telco Providers here in the Philippines through their SMS Value-add Services. The telco provides the communications infrastructure (or the new Facebook Platform), while various Content Providers (or the App Developers in the case of Facebook) supply the SMS value-add content such as ringtones, wallpapers, daily horoscopes via SMS, etc. Revenue share stands at 70-30 (70% for the Telco/30% for the Content Provider).

It is only quite recently that the three major telcos in the Philippines have begun "rationalizing" their value-added content. They realized the same problem that Facebook IS GOING to realize... that of APPLICATION NOISE.

Too many applications without real value or use create clutter. I am sure there'll be some sort of rationalization phase for Facebook as well. They'll need it. Believe me.

I think that you do have a good idea with the sharing of revenue approach, but that still doesn't take away from the fact that developers should not be relying on Facebook to make their money for them. In fact, the developer has the ability to stick some sort of CPM ads in their program and take all of the money earned instead of just a share. I think that Facebook is probably going for a hands off approach, and just letting everything fall on the developer.

I responded to your comment on my site as well, but since I didn't know if you'd return I thought I'd post here. And perhaps "wrong" would be a better word than "idiot."

What if I was a ring tone A&R who wanted to get my artists ring tones on facebook, who, what and how would I do it?