Home Facebook Grows Up – An Analysis of Today’s News

Facebook Grows Up – An Analysis of Today’s News

Today in San Francisco social networking site Facebook officially announced their much talked about open platform, for companies wanting to hook into the Facebook network. There’s plenty of blog coverage of this event, so in this post I hope to synthesize it all and explore what it means…

What has Facebook announced?

Today Facebook launched “The Platform”, a system enabling 3rd party companies to integrate their services inside of Facebook user pages. The platform will go-live later tonight. About 70 companies have apps set up already (more on those below). As explained in an excellent FAQ by one of Facebook’s 3rd party partners, SplashCast Media, this platform goes beyond the ability to post media from outside into Facebook and it goes beyond the previous Facebook API (a read-only Application Programming Interface (API) released on August 15th, 2006, and at the time also called The Platform). With the new platform, outside companies are now being allowed to deploy advanced functionality inside the Facebook site.

One of the key questions is: can these 3rd party apps make money off Facebook? There is a bit of uncertainty right now about this, but according to SplashCast, “some monetization in Facebook will be permitted, so long as it’s not done on the same pages where Microsoft ads are being run.” Gigaom though is reporting that at the SF event CEO Mark Zuckerberg said: “you can serve ads on your app pages and keep all the revenue, sell them yourselves or use a network, and process transactions within the site, keeping all the revenue without diverting users off Facebook.” So we’ll wait and see what pans out there, but obviously it is key for 3rd party apps to be able to earn revenues off the Facebook platform.

Facebook’s naked ambition

Facebook is growing….big and fast! The fact that yours truly (a kiwi in his 30’s) recently become a Facebook user, tells you that their user base is rapidly branching out from their core audience of American college students. This extension of their user base becomes even more stark when you look at Facebook’s current user base stats – Techcrunch reported that Facebook is growing 3% per week (100,000 new users per day) and the fastest growing demographic is the 25 and up age group. Active users have doubled since Facebook expanded registration in Sept 2006. The international user base is still at an early stage, but obviously has room for large growth. Currently Canada has the most users outside of the United States, with more than 2.5 million active users; followed by the U.K. with more than 1.4 million active users.

As well as quantity, Facebook has on its side that it is a very sticky site – 50% of registered users come back to the site every day. Facebook is generating more than 40 billion page views per month, from 24 million “active” users – 50 pages per user every day, which is very very high. In comparative terms, Facebook is now the 6th most trafficked site in the U.S. and gets more page views than eBay.

Facebook also has an impressive range of social software apps – it claims it has the no. 1 photo sharing application on the web and it has just released a video app to take on YouTube.

So Facebook has a huge user base, is very sticky, has all the main social media apps, and is bigger than eBay. But perhaps what is most interesting about Facebook is its ambition. Does Facebook CEO Mark Zuckerberg have a goal to be the next Steve Jobs? He certainly has the same level of enthusiasm and ambition. Liz Gannes at Gigaom even opens her post with the Jobs comparison, saying that Zuckerberg is “channeling Steve Jobs”. In any case, Facebook’s lofty goals and the reason why Read/WriteWeb thinks Facebook will be the first big IPO to hit the Web since… well, Google, is probably best summed up in this quote via Techcrunch: “Says they are targeting Google next” (note: it’s possible Zuckerberg was just joking, but still, to even say that shows their confidence).

Social Utility

The Facebook platform was described by Zuckerberg as a “social utility”. ZDNet’s Dan Farber has a great summary of what that means:

“It’s a utility in terms of a tool for the 24 million Facebook users, but it also reflects Facebook’s desire to become a utility, like an power company, in which potentially billions of people use the service in their personal and professional lives. Facebook, MySpace, and other growing colonies of linked communities with semi-permeable walls represent the rise of the social Web and Web utility companies.

Zuckerberg describes the Facebook core function that the new third-party applications can tap into as a “social graph,” the network of connections and relationships between people on the service.”

So let’s explore that. We’ve often discussed on Read/WriteWeb the theory that an ‘open social network’ will be the Next Big Thing in social networking. It’s also well known that the current leader in social networking – MySpace – is probably the quintessential closed system. So opening up is a sensible move by Facebook, because it gives them a key differentiating factor versus MySpace. However other competitors have also made moves to open their platforms – e.g. Yahoo has been proactive in opening up its content via APIs. The same with AOL, the former portal king in the 90’s – now struggling to keep up with MySpace, Facebook, Yahoo, et al.

Facebook has always had impressive user base and usage stats, and was up till recently regarded as the second biggest social network after MySpace (but Bebo probably now has that honor). Up till the end of last year Facebook was also a restricted user base – in that you needed to be a US college student to register. So when Facebook opened up its registrations beyond US college students (even letting in kiwis), it signaled the beginning of Facebook’s ambitions to take on MySpace, Yahoo, and (eventually, maybe) Google. This “social utility” platform is of course the next big step in that direction.

What apps have been built on The Platform so far?

The event in SF today showcased some of the 70-odd external company apps that have already been built on the Facebook Platform – including amazon, box.net, feedburner, forbes.com, microsoft, oodle, photobucket, slide, splashcast, twitter, warner bros records, washington post, widgetbox, and many more. SpashCast has created an excellent webcast, showing some of these apps in action:


We may never know the full story on why Yahoo and Facebook couldn’t agree terms on a $1Billion deal. But you have to commend Facebook for its brave move of going it alone and building out a development platform themselves. It would’ve been much easier to go the MySpace route and sell themselves to the highest Bigco bidder.

Could we eventually see the biggest IPO since Google, when Facebook puts its hand out to the public for cash? It’s looking like a good bet now. And as Facebook’s current stats show, they are growing at a remarkable pace. They have the vision, the user base, and 3rd party developer support. It seems the monetization isn’t quite worked out yet, which could still end up spoiling the party. But one thing is for sure, Facebook has gone well beyond what MySpace has to offer – and is looking distinctly threatening to not only MySpace, but the other big Internet companies. Facebook has grown up!

What do you think about what Facebook announced today? Impressed?

Pic: Don Loeb

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The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

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