eBay To Help Developers Make More Money

eBay announced the launch of a new services for sellers and developers. The services expand the reach for sellers with a new platform, new APIs and a new way for to get in front of eBay sellers.

The new platform initiatives are significant in that they enable developers even more opportunities to make more money with eBay. The program gives developers access to all the data that eBay's existing online app for medium- and large-scale retailers. EBay estimates that their developer program currently has 70,000 members who have created approximately 12,000 live applications.

"We're announcing opening up the eBay.com site for developers and in the process enabling a new monetization channel for developers," said Kumar Kandaswamy, Senior Manager, Developer Platform Strategy, eBay Developers Program. "With Project Echo, the next generation eBay platform that is being announced, developers can embed their applications where hundreds of thousands of sellers manage their businesses on the eBay.com site."

Like other online apps that have become platforms, such as Salesforce.com and Facebook, eBay's new initiative, called Project Echo, will give developers not just access to rich data they can package up for customers, but also a marketing channel for their applications.

Project Echo will allow app developers to pitch their apps to just the potential customers they are looking for. For example, if an app is designed only for high-volume electronics sellers, Project Echo will make sure that those sellers get queued up to see pitches for the app; other sellers won't be bothered with it.

In order to get into the Project Echo program, developers have to meet certain standards for trustworthiness. Also, all apps must have 30-day free trials. In return, developers will get access to "special APIs that are only available to people who integrate in Project Echo," according to Max Mancini, senior director of Mobile Platform and Disruptive Innovation.

How To Make $500,000 A Month On Facebook

The answer is simple. First, create a Facebook application; next, all you need is one person to like it, then their friends find out and it spreads and soon you will be making $500,000 a month. What's the catch? It could you up to 2 week to start making $500,000 a month. That is what Chamath Palihapitiya, the company's vice president of marketing told attendees at a conference two weeks ago. He went on to disclose that about 33 percent of Facebook application developers reported profits of up to $500,000 a month. At last count there were 200,000 developers evaluating the Facebook platform.

He said Facebook's platform is turning the company into a sort of "cable company" for the internet and this plumbing is creating huge opportunities for entrepreneurial plumbers who are willing to work with the pipes of Facebook's application platform. He said, "all you need is one person to like it, one person to be an advocate of it, and then their friends find out and engage in that."

Sounds too good to be true? We set out to investigate. We spoke to over 30 Facebook app developers and nothing could be further from the truth. But first for the premise to be even plausible we did a quick calculation and the numbers don't add up. Facebook would have to payout $3.3 billion monthly on revenue of $15 million a month. Even if 1 percent of the developers made $500,000 per month, then Facebook would still be paying $15 million more than they take in. Here is how we got the number.

Developers    Percent     Payout       Payments            Revenue
200,000       33%         $500,000     $3,333,000,000      $15,000,000

Individual vs. Professional Developers
Of the Top 10 Facebook applications, perhaps the Top 3 have apps that make $500,000 a month or more, however, these entities have also raised in excess of $15 million each. These are companies are Slide and Rock You which are under tremendous pressure to increase revenues. So much so that they are starting to compete with the very same advertisers that advertise on Facebooks. They are staffed by digital-ad sales executives that used to be with Google, Yahoo, AOL and other ad agencies. While there are opportunities for individual app developers on Facebook the odds favor the professional developers that have the ability to move inventory in mass across many verticals.

Confessions Of A Facebook Developer
The low barriers to entry and dreams of quick riches has led to a flood of Facebook applications. One developer that I spoke with invested $150,000 in 3 Facebook apps and has made approximately $2,000 in three months. His advice is "Don't develop unless: you're a student and want to build an app to learn and add to your resume. Or, you have a particular vertical expertise that you can leverage to an off-facebook site". Facebook's users say that it has become a platform for "spam", and the measures taken by Facebook to prevent this has made it more difficult for applications to achieve viral growth.

The Hype Has Worn Off
According to Jesse Farmer of Adonomics, a site that tracks Facebook applications, the hype has worn off for application developers. He says, "the activity level of the Facebook forums is a fraction of what it was at the beginning of 2008". In April, there were 51% fewer daily posts, 29% fewer daily signups, 44% fewer daily threads, 27% fewer active users and 47% fewer highly active users than there were in January. In fact, the valuation of the professional developers has dropped considerably since we started working on this story despite the fact that they have more installs and or more users. Figures is green mean an increase and red are a decrease.

Rank Company             Installs         Active Users      Valuation

1    Slide               89,675,650       4,312,214         $413,612,129
1    Slide               99,265,744       3,662,673         $324,135,448

2    Rock You            83,808,230       2,384,565         $259,379,647
2    Rock You            94,379,420       2,406,267         $251,213,915

3    Social Gaming       45,939,652         807,337          $88,348,254
3    Social Gaming       50,659,650         729,471          $83,150,109

4    Zynga               43,657,806       2,034,789         $110,832,266
4    Zynga               44,005,306       1,915,308          $98,620,166

5    Blake Commagere     26,265,200         262,647          $38,438,720
5    Blake Commagere     22,802,300         228,020          $37,888,153
 
6    Chainn Inc.         23,174,125         498,951          $48,163,700
7    Chainn Inc.         20,899,817         416,270          $44,915,552

7    42 Friends          19,010,950         360,576          $32,047,589
8    42 Friends          19,310,467         354,377          $28,523,564

8    Flixster            17,467,000         524,010          $48,448,127
6    Flixster            21,374,800         427,496          $46,387,451

9    Watercooler         16,058,900         201,939          $16,351,744
9    Watercooler         15,873,253         184,443          $15,374,382

10   iLike               14,118,850         282,377          $35,650,374
10   iLike               15,060,600         301,212          $32,802,945

Facebook needs developers to continue to buy the hype so that they can keep developing apps for free and continue to build the user base. Facebook depends on them to justify its high paper valuation. Recently, the company raised another $100 million, which the company stated was for servers for hosting the apps developers were building. Other sources said a large chuck of the funds were used to settle with Facebook's original founder. Many developers we spoke with said app fatigue has set in and adoption rates are dropping. Maybe $100 million worth of servers will end up on eBay or Craigslist soon.

Meanwhile, Farmer has some advice for developers dreaming of making $500,000 a month in 2 weeks. He said, "It boils down to this: investing most of your man-hours into Facebook at this point in time is a mistake. The potential return on that investment, a year after launch, is a fraction of what it once was. And the fact that Facebook continues to change the rules and selectively break them for their own benefit means the risk is comparatively higher".

Programmers: Better domesticated or wild?

Venture capitalists are often contemplating the most intriguing questions in the technology community, and this post from Paul Graham is a wonderful essay speculating on how programmers react to their environment.

Graham is a VC involved with Y Combinator (not to be confused with Yahoo's startup division). Y Combinator is a very interesting early funding structure for new companies that combines a modest level of financial support with a fairly good dose of team building and advice from experts. The financial support is usually $5000 + 5000 x the number of founders involved, so a 3 person startup would only get about $20,000 cash. Y combinator gets on average 6% equity for this contribution plus all the help they give the startup.

Graham's speculation is that computer programmers react very differently depending on their surroundings and circumstances of employments. He notes how different "big company" programmers seem to act from the startup folks with whom he is more familiar. Most interesting is his speculation that large companies have become too large to optimize the human element. In a sense he's suggesting that programmers are probably at their best "in the wild" running small startups than "domesticated" in large corporate structures.

I think he may be on to something here in that most of human evolution happened in close knit family and tribal environments where you would only need to navigate and negotiate with a few dozen - or at most perhaps a few hundred - other people.

Only recently, in the broad terms of evolutionary history, have humans interacting as tiny parts of massive organizational structures. One can reasonably argue that our brains and thinking are more likely optimized to work within the smaller structures we encountered through most of our evolutionary history than the large structures we now find in business and society at large.

If Graham is right then many big companies may have IT organized in ways that are out of synch with the best use of our natural tendencies, and should even consider breaking up into more autonomous parts where individuals are given more power, more involvement, and more of a stake in the outcome to encourage innovation and performance.

Mashup University

Over the next few days we will be live blogging some of the action here at Mashup Camp 6 in Mountain View at the Computer Science Museum.

The first two of four days are ¨Mashup University¨ where companies will introduce their APIs and mashup enabling technologies. Then, at the ¨Mashup Camp¨ of the final two days we will review dozens of new companies that are using mashups in their projects and vote for the top mashup.

This morning Raymond Yee of UC Berkeley is introducing some of the basic concepts, with more complex stuff to follow from his recently published book ¨Mashup Guide". Yee has released the book online under creative commons license and is encouraging people to mash it up with other information - a very cool move Dr. Yee!

Yahoo: We Are Open For Developers

Yahoo has just announced an expansion of what it calls the Yahoo Search "Open Ecosystem".

Yahoo has been a leader for some time in the Web 2.0 space with several applications and innovations such as photo site Flickr and adoption of OpenID. Recently Yahoo opened up their search application for more customization by developers.

Today's announcement marks a stronger level of committment to new standards that will support the growth and development of the semantic web through the adoption of microformats - basically formats that help standardize the way applications can interact with data. Yahoo is supporting microformats including hCard, hCalendar, hReview, hAtom, and XFN

As we noted in a recent post about Tim Berners-Lee's vision of the future, the promise of the semantic web is extraordinary as it allows for richer, more helpful, and more navigable relationships between the billions of pieces of information flowing online every day.

Developers will also want to look for Yahoo's soon-to-be-announced beta program to build "enhanced results applications" using Yahoo search, not to mention the developer launch party hosted by Yahoo at their Sunnyvale headquarters.

Diclosure: Long on Yahoo

YouTube Expands Developer Services, Wants To Be "YouTube Everywhere"

YouTube is opening up even more to the online community with a suite of APIs (application programming interfaces) that will allow websites, mobile devices, and more powerfully integrate YouTube content and capabilities.

Here are more details from Christine at the YouTube developer blog

Here is the YouTube announcement

For some time websites have been able to embed YouTube videos using a standard player, but
from YouTube's Press release this morning we learn that they have added added the following new API services for external developers:

*Upload videos and video responses to YouTube

* Add/Edit user and video metadata (titles, descriptions, ratings, comments, favorites, contacts, etc)

* Fetch localized standard feeds (most viewed, top rated, etc.) for 18 international locales

* Perform custom queries optimized for 18 international locales

* Customize player UI and control video playback (pause, play, stop, etc.) through software

The new interfaces that will spring from this effort will allow sites to customize players with the site theme to play YouTube videos as well as have the visitors interact with the videos in more interesting and site-specific ways.

This is an excellent move for YouTube as it will consolidate their dominance in this space as well as create more video uploading and viewing activity for YouTube. Users and websites should benefit as well from the ease of use and greater distribution. However despite the fact that millions of video clips are viewed daily at YouTube, monetizing that traffic and content has been a serious challenge for Google and it remains to be seen if the YouTube aquisition of last year will have direct and positive cash flow benefits for Google.