[12 November 2007]
Chicago Tribune (MCT)
CHICAGO—Rupert Murdoch looked at the future of social networking and he saw the competition. That’s why he told a conference of influential Web developers last month that MySpace, a unit of Murdoch’s News Corp., would open up its software platform to allow the types of interactive applications that have helped make Facebook the social darling of the year.
Those applications, mini-software programs that personalize a user’s profile page and are sometimes called widgets, represent not only a tech trend of the moment but also another way of tracking the explosive growth of Facebook.
Facebook opened its platform to outsiders in May. It launched with just a handful of applications users could place on their profile page. Today, more than 6,000 are available.
Clearly, MySpace saw a need to respond.
Software developers have jumped to attention, too, offering up a bewildering variety of applications for Facebook users to enhance their profile pages. On Facebook, these applications allow a user to interact with friends’ profiles, such as offering a glimpse at the books they like to read or the social causes they support.
While MySpace has allowed widgets, it did not offer outsider developers the opportunity to create programs that would generate income. Facebook, on the other hand, allowed developers to make money.
“Our revenues have gone through the roof” since May, said Jia Shen, the San Francisco-based co-founder of RockYou. “We spend 90 percent of our time working on Facebook apps now.”
The company has made widgets, such as photo slide shows, for MySpace since late 2005, but, Shen said, “the opportunity to monetize” the programs didn’t exist.
“MySpace hasn’t been happy with third parties building large businesses on their site,” he said. “We would get 150 million widget views everyday,” but little revenue to show for that traffic.
MySpace is the leader, with more than 105 million users, compared with more than 40 million for Facebook, according to industry figures. But Facebook is adding users far more rapidly: It had 134 percent more users in September than a year ago, while MySpace increased 12 percent, according to Internet tracking firm Hitwise.
In the wake of Facebook’s decision to solicit outside software developers, the site has been a beehive of activity, with users actively downloading applications and developers trying to create new ones.
The key has been to create programs that allow for an interaction between users and their friends. Some have been drawing huge numbers. One RockYou program, a message board called SuperWall, has 12 million users.
Chicago software developer Keith Schacht recently introduced his fourth Facebook application. Called “Goals,” it is designed to give one’s friends a little bit more insight about the goal setter. Users list the goals they want to achieve—lose weight, see the world—and then friends can comment on those goals and cheer the person on or join them in the quest.
“It’s the type of program that has been working well on Facebook,” he said.
Several revenue streams have emerged for the outside developers. Some companies are generating revenue through advertising, some use the applications for e-commerce, and some are selling more Web-development services.
The Facebook platform “lets developers monetize their applications as they like, whether they choose to offer it for free or build a business on their application,” Dave Morin, a Facebook platform manager, said in an e-mail.
Schacht is generating revenue for his new company, 42 Friends LLC, by selling advertising. If you want to add a Goal, the page you are directed to includes a small banner ad.
His most popular program is “Grow A Gift.” A Facebook user sends a virtual plant to another user as a thank you for some deed, for example, and, like the application’s title suggests, it grows when the user accepts the gift.
It may sound silly, but more than 3 million people have used the application.
Schacht is doing well enough that he has hired a full-time programmer and some part-time programmers at his company.
“I’m very encouraged,” Schacht said.
Troy Henikoff is taking a different approach to generating revenue from applications. A co-founder of SurePayroll, the Skokie, Ill., online payroll company, Henikoff recently started a company called Free Lunch to develop applications for Facebook and other sites.
The company will be launching an application within a few weeks, he said, and the “focus will not be to just get eyeballs, but to monetize them.”
Henikoff wouldn’t disclose what the first application would be, but he did say it would take an e-commerce approach similar to the popular Visual Bookshelf. With that, users import the covers of books they have read, are reading or, most important, want to read. Click on a book you want to read, and the user is directed to Amazon.com, where it can be purchased.
“It tells you what your friends are reading,” he said, “and you are only one click away from making a transaction.”
Visual Bookshelf’s developer, Washington, D.C.-based Hungry Machine, gets a percentage of every sale made on Amazon through the application, said Aaron Batalion, a partner.
“We also monetize the applications via advertising,” he said. The site also creates hundreds of thousands of user reviews, including 11,000 alone for the most recent Harry Potter book, considered a top way to sell more books.
“People will always trust their friends,” Batalion said.
Another Chicago Web developer has found success through Facebook, though largely by accident.
The “Where I’ve Been” application places a map on a user’s profile page. It indicates where someone has traveled over the course of their life. You simply click on the countries visited, and your friends can see the places you’ve been.
Craig Ulliott, a programmer based in Philadelphia for Chicago’s Blueye Corp., designed the application so the firm could show its clients how it could use the Facebook platform, said Shannon Smith, a partner.
More than 3 million people have downloaded the application, and Ulliott, who remains a Blueye programmer, is trying to spin “Where I’ve Been” into a separate business.
The application is not producing “a ton of revenue right now, but companies are looking to advertise,” Smith said.
The Facebook application platform is “so new, but it has quickly caught on. We’re still learning,” he said.