This was Facebook Week here at Read/WriteWeb, but I couldn't help but notice how many other blogs wrote posts about Facebook this week as well. It seemed that almost every day there was a Facebook meme on Techmeme. Anecdotal evidence would seem to suggest that Facebook is the most hyped thing this year other than the iPhone. So I had this post about Facebook's hype all planned out in my head. I was prepared to explore whether Facebook was deserving of the attention, and I would remind everyone of Flickr, which between September 2006 and March 2007 had 60% more blog coverage than Photobucket, but whose traffic is dwarfed by Photobucket (which incidentally was sold News Corp. for about $200 million more than Yahoo! paid for Flickr). The point being that becoming a media darling doesn't necessarily mean that you're the top dog.

A quick search on digg, where 25 Facebook-related stories have hit the front page in the past month compared to 10 for MySpace, seemed to confirm my premise. But then a funny thing happened: other numbers started to indicate that anecdotal evidence might be wrong, and maybe Facebook wasn't actually as hyped as I thought. The graph below shows that blog mentions of Facebook vs. MySpace isn't even a contest: MySpace is being talked about nearly 5 times as much as Facebook most days over the past month. And Facebook hasn't really garnered the same mainstream attention as its chief social networking rival, either. According to Google News, over the past 30 days MySpace has been mentioned in about 15,000 news stories, compared to just over 6,000 for Facebook. Further, Google Trends says search volume for "myspace" absolutely crushes that of "facebook."

Of course, it's not just how much they're talking, but what they're saying. A number of prominent bloggers, business people, and analysts have been heaping praises on Facebook since they launched their platform strategy in May. Here's a taste:

"Facebook IS the internet portal of 2007." - Jeff Pulver

"Facebook could easily become the Microsoft Windows of tomorrow." - Duncan Riley

"No matter how you look at it Facebook is the one. Right now." - Robert Scoble

"Facebook will reach 50 million, then 100 million, then 200 million users, and beyond." - Paul Allen (who also compares Facebook founder Mark Zuckerberg to Alexander the Great)

"Last time an inward looking ecosystem caught the imagination of developers, it was Windows 95, the defining moment for Microsoft. The winner of that movement: Microsoft." - Om Malik on the Facebook platform

"There's a chance that someday, Facebook will be the preferred place to read this blog because of all the social apps that will be built around it." - Fred Wilson

Even readers of this site last week declared that by a slim margin over Google, Facebook has so far been the most impressive web company of 2007. So there is no denying that Facebook has a good deal of hype, but is it deserved? Could Facebook really be the next Google or Microsoft? Or is all that talk just a wee bit premature?

The Numbers

Facebook's core business is social networking -- without users their highly touted "social operating system" ceases to be quite so social and loses value. And in their core business, the numbers don't lie: Facebook is still in a distant second place. According to Compete, Facebook is visited by about 22.6 million people per month, compared to MySpace's 72.5 million. Both sites are growing, however Facebook is growing faster, up 115.5% on the year to MySpace's 31.7% growth. But even with impressive year-over-year growth, Facebook still has leagues to go to catch up with their rival. To illustrate that point even more clearly, in April, even though Facebook's traffic had doubled since opening up to non-college users in September 2006, MySpace still received 80% of all social networking traffic according to Hitwise.

Om Malik notes that Facebook's page views actually declined from May to June 2007 following the launch of Facebook's platform. That's very surprising giving the number of new users and new pages that the platform has created for Facebook.

The question, then, is why do so many top bloggers and analysts see so much promise in Facebook when they are clearly a very distant number two in their own niche? The answer is: the platform. Facebook has realized that the killer app for the web is the platform, and that the web platform is social. MySpace, on the other hand, has the second part nailed, but the first part still seems to elude them.

The Platform

It's not hyperbole to say that Facebook's platform is one of the most significant developments in web business this year - even though it isn't as open as the hype would suggest. Facebook has taken the widget culture that caused MySpace to rise to prominence (and allowed piggyback companies like Slide, Photobucket, and RockYou! to gain multi-million dollar valuations), and embraced developers, making it easier for them to make more useful applications for the Facebook ecosystem. The Facebook platform is currently the best way for application developers to quickly reach a potential mass market of Internet users (including many early adopters).

A few days ago Mike Arrington wrote about Seattle-based iLike, who have had 3.5 million users sign up for their service since last October. However, since launching their Facebook app less than 2 months ago, they've added nearly 5 million more (over 100,000 in the past 3 days). I can't think of any other platform that gives developers access to so many users, so quickly (and actually encourages that growth and makes it easier for it to happen).

Facebook's platform move was brilliant. They put the power to extend the network's feature set into the hands of thousands of developers, and did so in a way that lets their users decide which features to utilize. So there are thousands of people extending Facebook's service for free, and millions of users deciding which features are the best. All it will take is one killer app -- something that you really need -- built on the Facebook platform to make the above statement from Jeff Pulver true.

Hold On, Says MySpace

MySpace wants to make it abundantly clear that they are still the number one social network on the planet. They put out a press release last week entitled "MySpace Outperforms All Other Social Networking Sites," but it really could have been called "Why You Should Stop Writing About Facebook." In the press release, the folks over at News Corporation detailed how MySpace handily beats all comers in nearly every metric: visitors, page views, stickiness, etc. They're right, of course, the numbers show that MySpace still has a commanding lead on Facebook in all categories -- except one: rate of growth. As I mentioned above, Facebook is growing at a faster clip than MySpace. And the fact that News Corp. felt the need to put out this press release at all is an indication that they are at least somewhat worried about Facebook.

Facebook Hasn't Won Anything Yet

The Washington Post published an interesting article last fall shortly after Facebook opened up about a mini-exodus that was occurring from MySpace to Facebook among young users. The article brought up an interesting point about social networking users: they are traditionally fickle.

"Such is the social life of teens on the Internet: Powerful but fickle. Within several months' time, a site can garner tens of millions of users who, just as quickly, might flock to the next place, making it hard for corporate America to make lasting investments in whatever's hot now."

The article details the rise and fall of once-hot social networking sites Xanga and Friendster. Both were supplanted by MySpace as the "it" place for social networking, and now many people feel that Facebook is on the same track to become the next big online scene. But if the past is any indication of the future, if and when they reach the top, their place there may be tenuous at best. What makes people think Facebook can get on top and stay there? The answer will invariably come back: the platform.

What If Facebook Can't Monetize?

Facebook might have another problem: how to make money. In March, Valleywag reported that Facebook ads performed dismally for a number of media buyers, averaging a terrible 0.04% click-through rate. "Facebook was consistently the worst performing site on just about every campaign we ever ran with them," complained an anonymous advertiser to the gossip blog. Last week Reach Students confirmed the low 0.04% click-through rate (at least for flyer ads).

If Facebook is having that much trouble getting its users to click on ads, there is a question of whether Facebook will ever be able to monetize. They can't offer too many pay services because the platform enables anyone to create a free alternative literally overnight (as people have done with Facebook's paid "gifts" program). The comparisons to Microsoft have one major caveat: when Microsoft grew their platform (Windows), every user had to buy a copy to tap into the application ecosystem. On the Internet, however, the barrier for entry is so low that if Facebook tried to charge for access to their platform, it would open the door for alternate platforms and social networks and there would be nothing stopping app developers from deploying on them as well.

So that leaves charging developers. That's easier said than done. While some application developers might not hesitate to pay for access to Facebook's user base, many of the smaller "just for fun" applications would either need to be purchased by developers with more resources (or by Facebook) or likely face going under. Neither of those options might sit well with users who often form an affinity for the developers of their favorite apps. (See also: Scott Karp's excellent post on monetizing Facebook users.)

Conclusion

So is the Facebook hype justified? My answer would be a very tempered yes. The platform was a truly brilliant move for Facebook, and they have an opportunity for phenomenal growth. But Facebook hasn't won anything yet. They operate in an industry that has already seen the meteoric rise and fall of a number of sites, and Facebook has yet to prove that they can even reach #1 let alone stay there.

Further, if MySpace releases an API in the next six months, Facebook's platform advantage could be greatly minimized. There is also the threat of platforms from Google and Yahoo! (neither of whom have the cohesiveness of Facebook, but both have the massive number of users, the developer support and the resources to pull off just about anything). Last May, shortly after the announcement of the Facebook platform, I wrote that start pages like Netvibes and Pageflakes appear to have the same idea as Facebook. This story really hasn't yet been written, so don't write off start page companies as the potential winners of the web platform wars.

What do you think? Is the Facebook hype really justified? Leave your thoughts in the comments below.