Home Does Facebook Spell Trouble for MySpace Widgets?

Does Facebook Spell Trouble for MySpace Widgets?

Yesterday venture capitalist Josh Kopelman unleashed a diatribe ripping into MySpace and praising Facebook for the recent move to open up and become a platform for widget developers. Kopelman estimates there there has been $250 million dollars invested into widget companies over the past year and a half, but because of MySpace’s tepid relationship with widget creators, he says, it’s a no-brainer to choose Facebook as a focus for your development efforts.

Think about it. If you ran a venture-backed company and had to decide whether you wanted to focus your effort on: (a) a property that welcomed you in and let you keep 100% of the revenue you generate or (b) a company with a vague policy that doesn’t let you generate any revenue, which would you choose? I don’t think it’s even a decision. It’s an IQ test.

MySpace’s icy demeanor toward widget creators, and their indecision on how to handle them, created a huge opportunity for Facebook, according to Kopelman. “Facebook has just increased it‚Äôs [sic] virtual R&D budget by over $250 million dollars,” he writes.

Mike Arrington agrees with Kopelman, pointing out that even though MySpace still dwarfs Facebook in size (100 million users vs. 20 million), and is growing faster, Facebook’s openness toward widget creators should be very attractive to them. “Startups can build a very large business on the back of Facebook. The MySpace path is much riskier,” he says.

I agree that Facebook made a brilliant move last week by opening up their network and embracing third-party developers. They may well have just leap-frogged MySpace by providing an environment that encourages developers to make Facebook more useful for its users. While nothing too compelling has been created so far (though iLike’s Facebook application has an impressive 482,000 users in its first weekend), all it takes is one killer app on the Facebook platform to really start drawing in the users and catch up to MySpace.

The move will certainly encourage developers to create applications for Facebook, and it might inspire some people to develop companies specifically around Facebook. The chances that that killer app will be created have increased. But, I don’t think it will necessarily hurt the MySpace widget ecosystem. The barrier for entry in creating a widget is so low that there’s really no reason not to develop your widget on as many platforms as possible. It costs virtually nothing to create a widget, and if your goal is attracting users, then spreading your widget around makes sense.

For the majority of widget creators, the service isn’t the widget, but rather the widget ties into the service. Last.fm, Photobucket, iLike, and Flixster, for example, are all services outside of their widgets. These companies are all likely to offer their users the ability to access their service via as many entry points as possible. Widgets on multiple networks also increases the likelihood that they attract new users.

Certainly, a little less frostiness toward widgets by MySpace, and dare we dream, an API, would help even the playing field, but the Facebook platform is not a death sentence for MySpace widgets. Widget companies collectively breathed a sigh of relief last Thursday: they all of a sudden had access to another 20 million users and from a company that was welcoming them with open arms. But they’re not going to abandon the 100 million users they were already serving at MySpace. Widgets will continue to flourish wherever there are users.

Kopelman compares MySpace to Prodigy and AOL in the early days of the world wide web.

This brings back memories from the early days of the Internet, when companies like Prodigy and AOL were the only online services in town. Despite the launch of the web browser (which unleashed the creation of millions of web sites), AOL and Prodigy initially focused on maintaining their proprietary online environment and controlling everything on their site. It took a few years, but ultimately they saw that it is impossible for one company — no matter how popular and well-funded — to compete with an unlimited army of motivated (and funded) developer.

Last Thursday, while I watching the Facebook platform announcement unfold, I too thought of Prodigy and AOL, but my comparison went the other way. Facebook, like any other platform, is the entry point for every app that runs on top of it, which in a way makes them similar to the Prodigy of old. Developers, however, will go where the users are, and users are increasingly demanding that they be able to consume content and services wherever that happens to be. It follows, then, that as long as MySpace is popular with users, it will be popular with widget creators.

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