Facebook Connect is the next iteration of Facebook Platform that allows users to "connect" their Facebook identity, friends and privacy to any site. This will now enable third party websites to implement and offer even more features of Facebook Platform off of Facebook – similar to features available to third party applications today on Facebook.
Facebook lists Trusted authentication, Real identity, Friends Access, and Dynamic Privacy as key features of the new platform. Here are more details at the developer blog.
Although open is very much the key paradigm it is also clear that major social players Myspace and Facebook are working hard to figure out how to make "their" open application "the" open application.
MySpace will be supporting very open data portability standards which will make it easy to share information across different websites with a single login as well as other excellent features. This is separate from the Open Social initiative which will also be supported by Myspace but represents the same type of open, data sharing approach that is becoming a key component of "best practices" for online development and interaction.
Ben Metcalfe is a key player in all this and will certainly be a great steward of the project. He's a very knowlegeable social media consultant and participant, spearheaded work at the BBC's superb website, and most importantly can be trusted to make sure these standards are not co-opted or abused by the major players.
It's very exciting to see the shift from guarded, proprietary approaches to openness. Ironically the general principles of open standards formed the foundation of the early internet but as commercialism, big money, and search optimization started to rule the internet we saw less transparency, less user-centric behavior, and a lot more BS. Open standards represent a step back to a friendlier, more functional, and more personal online experience.
As social applications like Facebook, Myspace, Ning, and dozens of others attain sky high valuations few are focusing much attention on how poorly most of these social networking sites monetize their enormous traffic levels.
Microsoft's Emerging Business guru Don Dodge, in an excellent post about Social Networking, notes an example where a Facebook application only manages to generate $6,000 to $15,000 per month revenue with page views of .... wait for it .... three hundred million per month. This disparity is so great I'm wondering a bit about his source for those numbers, but it is certainly clear that social media monetization is no walk in the PPC park.
Google's dominance in the very lucrative search pay per click market has made Google the global online advertising leader in terms of advertising traffic and advertising revenue. Despite this success, even Google has been failing to find another holy grail. YouTube may eventually justify its huge valuation in indirect ways, but it does not appear to be a very healthy way to capture revenue for Google or for affiliated video publishers.
Likewise Facebook's key advertising revenue has come somewhat indirectly - from a guaranteed advertising deal with Microsoft rather than from clever internal advertising schemes like Beacon, which practically blew up in Facebooks ... own Face when issues were raised over privacy and potential misuses of Facebook user account information.
People, and certainly the advertising market, are still adapting to social networking so it is too early to know if social networking will prove to be as fertile a ground for advertisers as search. What is clear is that not much revenue is growing there yet.
While US social networks are waiting on advertisers to shifting their ad spending their way.Tencent, a Chinese internet portal which operates QQ.com is not banking on advertising. The company reported revenues of $523 million and an operating profit of $224 million. About 60% of the revenue came from services like games, virtual currency called QQ coin (which is fake currency paid for with real money), an additional 21% came from mobile services like ringtones and only 13% came from online advertising. QQ.com is reported to have over 300 million active accounts. Yes you heard that right. That is 8 times the size of Facebook or the same size as the US population.
Facebook on the other hand posted revenues of $150 million in revenue for 2007. The company has raised over $400 million and there is growing nervousness over its valuation and its ability to monetize its user base. Bebo, which was purchased by AOL for $850 million had revenues of just $5 million. MySpace purchased by News Corp. for $560 million is projected to haul in $1 billion this year.
A new social networking alliance will include internet powerhouses Google, Yahoo, and Myspace in an "Open Social Foundation". Facebook's absence from this list is something of a social networking elephant in the room as Facebook is generally considered the key innovator and eventual market leader in the social networking space.
The Open Social Foundation will, according to the Yahoo Press release today, work to ensure:
... the neutrality and longevity of OpenSocial as an open, community-governed specification for building social applications across the web...
The foundation will provide transparency and operational guidelines around technology, documentation, intellectual property, and other issues related to the evolution of the OpenSocial platform, while also ensuring all stakeholders share influence over its future direction.
In short, Open Social is working towards a social networking environment that spans the internet, sharing information across platforms and websites rather than confining social networking information to a specific standard or a particular online environment.
Facebook has also created tools for the integration of information with other sites and routines, but generally Facebook is considered to be a less open online environment than the type envisioned by Open Social advocates. With Facebook the user tends to socially interact within Facebook itself, where with Open Social you will be able to access social networking functions from any sites that have adopted the Open Social platform.
Facebook and Myspace each have approximately the same number of users according to data provided by Comscore and parsed by Silicon Valley Insider.
There has been a surge of growth from the public deployment of Facebook when it opened the service to everyone. Other Facebook developments have defined it as the innovative leader in the social networking space.
Today's big news is AOL's acquisition of Social Network Bebo for a cool $850 million. Kara Swisher has an excellent piece detailing some of the financial aspects of this mega-deal. She also notes that despite some significant success in the space, Bebo is very much in the shadow of Myspace and Facebook as a social network.
With only $5 million in EBITA for 2007, Bebo is selling at a whopping 160+ times earnings. Big companies tend to do be viewed more favorably than small ones by this EBITA multiple metric, but it is notable that with small and moderate sized website dealings one would expect to pay only about one or two times annual earnings rather than paying in the tens or in this case over one hundred times annual earnings.
This discrepancy is in part due to the fact that large sites are arguably more stable than small ones, but in my opinion this is still a very conspicuous aspect of wheeling and dealing with online companies, and arguably yet another indication that internet bubble two may be ... growing ever larger.
One has to be middle aged to remember when AOL was pretty much the *only* big game in town in terms of online socializing, and I'm sure AOL execs are wishing they had managed to turn more of that early chat room activity and idle banter into a thriving social network like Myspace or Facebook or Bebo.
Can Bebo help AOL regain the former glory it enjoyed in the early days of online activity?
Compete.com has published their ranking of Top 20 Social Networks for February 2008. The fastest growing social network was Fubar - an online bar and happy hour. The author reports that year- over-year growth rates seem to indicate that social networking (as an industry) has yet to peak. The table below shows sites ranked by monthly visits. This ranking factors in both total audience size, and also intensity of use.
Myspace was down slightly from February 2007 in terms of total US visits. However, the networking giant still holds a commanding traffic lead over all other Social sites.
Facebook visits fell slightly from January 2008 to February 2008, but over the year the site has grown by over 75%. In terms of US visitors, it is now about one half the size of Myspace, but receives about 1/3rd as many visits.
Niche markets are still attractive in terms of Social networking: Cafemom (a social network geared towards mothers), Linkedin (a networking site for professionals) and Fubar (“the first online bar”) all grew by 5X or more from February 2007 through February 2008. Fubar, in fact, exploded into the top 20 networks from relative obscurity one year ago.
Innovative business models also had success in 2007: Communication platform Twitter, and white label social network Ning, both found a dramatically larger audience in the past year.
MySpace is finally getting ready to pull the trigger on its long-awaited platform for developers. Starting today, programmers can sign up to register for the MySpace API program, which will go live on February 5th. The APIs will allow developers to create social applications for MySpace much like they can already for Facebook. The platform will be compatible with Google’s OpenSocial platform, meaning that applications written for OpenSocial will work on MySpace with a few minimal tweaks.
More details will come out later about what exactly the APIs will allow developers to do, but at a high level they will allow for deeper integration into MySpace than can currently be done with Flash widgets. The APIs we believe will support Flash, iFrame elements and Javascript snippets, and give developers deeper access to MySpace member profile information and their connections. Developers also will be able to make money from advertising associated with their applications.
What it means: with all the talks about Facebook in the last 6 months, we tend to forget MySpace is still a major force in the social networking world. According to this recent eMarketer article, "The site received 72% of US visits to social networks in December 2007 alone" with Facebook a distant second at 16.03%. In terms of reach, MySpace had close to 72M unique visitors in October 2007 (source: eMarketer quoting ComScore) giving the site 40% reach of the US online market (Facebook is at 18%). In November, Compete data showed that only 20% of MySpace members were also on Facebook. So, if you're interested in reaching these 72M users, get in line to get a developer access.
MySpace has agreed to work with 49 states to make the internet safer for minors against predators. The social networking site favored by teens and owned by NewsCorp, will work to create an Internet Safety Technical Task Force to which other social networking sites (like Facebook) will be invited to participate.
As part of the steps, the company has agreed to respond to complaints within 24hrs, make the default profile settings for all members under the age of 18 private, develop an email registry for parents to block their children from accessing the site, screen images and videos uploaded review the content of all Groups pages, and delete the profiles of any registered sex offenders who sign up on the site.Texas is the only state that didn't sign on citing concerns with the age verification process which is not yet fail safe. MySpace Chief Security Officer Hemanshu Nigam said "Today, there is no product that can prevent someone from pretending to be a different age than they really are".
In a Forbes.com report, PFF's Adam Thierer argues that: Even if social networks do develop a way of automatically blocking underaged kids from social networks, the international nature of the Internet means they would likely flock to less-regulated sites hosted outside the U.S. The wrong policy, he argues, could drive users to a "black market" of social networking. "With the wrong controls, we'll see a number of youngsters flock to offshore sites, where we have no control at all". "Kids will find a way to get online."
Facebook’s targeted advertising was criticized heavily last week by bloggers despite Facebook promises to create a better user experience through better targeting of the ads. I’m guessing users will hardly notice the change, and advertisers will continue to be underwhelmed with the performance of social network advertising although these ads will play an increasingly important role as social networking explodes and the number of page views on social networking sites like Myspace exceeds pageviews on any other site.
I think Myspace now has the top global pageview count which is why the new ad network from News Corp (Myspace’s parent company) is an important development. It appears they will sneak in under the radar and avoid the heavy criticism levied against Facebook even though presumably they’ll also be working hard to target the ads to the specific Myspace user profiles.
The game is social networks. The stakes are very high, and the news and rumors are flying fast, furiously, and inaccurately.
Here are some points about the "Open Social" vs Facebook battle for the hearts and minds of developers and, far more importantly, users:
1) After a $240,000,000 partnership with Microsoft many blogs lit up suggesting that Facebook recieved another 500 million from two other private equity groups. This rumor was false. It is very conspicuous in my view that the rumor rose and spread so fast, and that Facebook did nothing to quell it. This news is still shaking out over at TechCrunch which reported the rumor of the 500 million and now reports it was false. Another example of how news at the speed of real time may not be news at all.
2) Google says Open Social is open to Facebook and all are welcome (I believe them).
3) Facebook says Google was not keeping them in the loop on Open Social (I believe that as well)
4) Facebook says they may join the Open Social movement, but suggest they have their own great stuff coming shortly. I’m skeptical they can “out open” Google, though they probably could come up with some great new social networking applications quickly.
On balance I think Facebook is in trouble. Much of the recent hype - which was overdone anyway - assumed that Facebook would be the key beneficiary of the boom in social networking. That reasoning suggested that although Myspace was bigger, it was a “closed” environment and was favored by a younger and poorer demographic that would ultimately have less value to advertisers. Facebook, that thinking went, would continue to grow explosively, open up gradually, target advertising very directly, and become the dominant social networking platform.
All that changed yesterday, and it changed dramatically. Now it is Facebook that offers the "least open" platform for social networking, a position that will quickly become untenable.
So, what is Facebook worth in an Open Social world where even Myspace is a Google partner?
The tech world's theatrical performance ended yesterday with Microsoft getting the girl and the girl getting a "public" valuation.
For Microsoft this is about search, advertising, and Google. For Facebook, it is about MySpace and Google.
Microsoft, out-Googled on all fronts, desperately needs to stay in the game. The company needs a vehicle to move ad inventory and is willing to pay to achieve this. More importantly, to be perceived as out-Googling Google.
Facebook, desperate to catch up with MySpace needs a partner with deep pockets to finance the endeavor. Facebook has always been envious of the Google/MySpace deal and has been unsuccessful at cutting a similar deal with Google. Facebook saw this as an opportunity to get cheap money to catch up to MySpace and show Google that it, too, is a valuable property to cut a special deal with. Hence, the fixation on valuation.
This is personal. It is a marriage of convenience. Microsoft and Facebook need each other for their own ulterior motives. The two actors carefully orchestrated this and played it out publicly to get maximum exposure in order to advance their own interests.
This deal expands Microsoft's advertising deal with Facebook internationally. Google does not need Facebook for international exposure as Google's Orkut is already king internationally. If anything, Google would be interested in the U.S. portion which Mircosoft has with Facebook through to 2011.
The financial terms of the deal have not been disclosed but I suspect the deal is similar to the Google/MySpace deal. The $240 million investment will accrue in the form of a payout as part of advertising deal. Microsoft would have given the money for no equity simply to secure the international rights. Microsoft is not paying for it, the advertisers are. However, Microsoft must be thrilled to get 1.6% of Facebook for $240 million and have advertisers pay for it. So for Microsoft, valuation is irrelevant. Valuation is everything to Facebook. The company plans to use the valuation metric to present itself as bigger than it is to attract larger advertisers and create a self-fulfilling prophecy.
Microsoft secured first right of refusal on any advertising related financing Facebook does in the initial agreement. Facebook knew that and used that to extort more money from Microsoft. This is a case where Facebook and Microsoft used each other to achieve their objectives. Next they will be using your data to do the same.
comScore, Inc. (Nasdaq: SCOR), released its monthly comScore qSearch analysis of the U.S. search marketplace for September 2007. Google remained the top search property with more than 5.3 billion core searches conducted, representing a 57% share of the search market, followed by Yahoo! 23.7%, Microsoft 10.3%, Ask.com 4.7% and Time Warner Network 4.3 %.
comScore qSearch 2.0 Report - Total U.S. Home/Work/University Location
Share of Searches (%)
Search Entity Aug-07 Sep-07 Sep vs. Aug Total Core Search 100.0% 100.0% 0.0 Google Sites 56.5% 57.0% 0.5 Yahoo! Sites 23.3% 23.7% 0.4 Microsoft Sites 11.3% 10.3% -1.0 Ask Network 4.5% 4.7% 0.2 Time Warner Network 4.5% 4.3% -0.2
* Based on the five major search engines including partner searches and cross-channel searches. Searches for mapping, local directory, and user-generated video sites that are not on the core domain of the five search engines are not included in the core search numbers.
September U.S. Expanded Search Rankings
In the September 2007 analysis of the Top 50 properties worldwide where search activity is observed, Google Sites led the pack with 6.6 billion searches. Yahoo! Sites ranked second with nearly 2.4 billion searches, followed by Microsoft Sites (999 million), Time Warner Network (843 million) and Fox Interactive Media (492 million). Despite the decline in overall search activity in September, Ask.com saw a 10-percent gain versus August.
Expanded Search Query Report - Total U.S. Home/Work/University Locations
Search Queries (MM)
Expanded Search Entity Aug-07 Sep-07 Sep vs. Aug Total Expanded Search 13,703 13,018 -5.0% Google Sites 6,809 6,593 -3.2% Google 5,602 5,388 -3.8% YouTube/All Other 1,207 1,205 -0.2% Yahoo! Sites 2,473 2,381 -3.7% Yahoo! 2,438 2,346 -3.8% All Other 35 35 0.0% Microsoft Sites 1,144 999 -12.7% MSN-Windows Live 1,111 966 -13.1% Microsoft/All Other 33 33 0.0% Time Warner Network 937 843 -10.0% AOL 438 397 -9.4% Mapquest/All Other 499 446 -10.6% Fox Interactive Media 571 492 -13.8% MySpace 560 483 -13.8% All Other 11 9 -18.2% eBay 457 445 -2.6% Ask Network 439 445 1.4% Ask.com 205 226 10.2% MyWebSearch.com/ All Other 234 219 -6.4% CRAIGSLIST.ORG 199 197 -1.0% Amazon Sites 154 138 -10.4% Comcast Corporation 73 65 -11.0%
Disclaimer: The opinions expressed on the WebGuild Blog including posts, comments, and external links, are those of the individual
authors and not WebGuild's.
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MySpace will be supporting very open data portability standards which will make it easy to share information across different websites with a single login as well as other excellent features. This is separate from the Open Social initiative which will also be supported by Myspace but represents the same type of open, data sharing approach that is becoming a key component of "best practices" for online development and interaction.
While US social networks are waiting on advertisers to shifting their ad 
