Facebook Aspires to Be Society's Social Operating System

Facebook is literally MySpace's baby brother, launching three months after the #1 social network, in February 2004. But it wasn't until September 2007 that the platform became accessible to folks outside of the .edu domain. First ten corporations, including Accenture, Apple Inc., Intel, PepsiCo, and Microsoft, were invited to build networks within. Then - BAM - anyone who had a valid e-mail address. At that point there were eight million regulars in the Facebook community. Nine months later, there are 23 million. And it continues to grow by 100,000 registered users a day.

So, if it ain't broke why fix it? If you've been offered a reported $1 billion by Yahoo! for your company, why risk a fickle public and a fast-cooling venture capital community? Friendster, anyone?

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The answer to WHY Facebook launched F8, its revolutionary Facebook Platform, is both evidence for Facebook's position that they are uninterested in being acquired and are in it for the long haul, as well as a concrete allusion to their mission statement: "Facebook is a social utility that connects people with friends and others who work, study and live around them." They aspire to be no less than our Social Operating System.

While MySpace was growing its wide-ranging community by leaps and bounds, fostering creative chaos, allowing perfect strangers, including creators and consumers, to "friend one another," Facebook was and continues to be based on real-world networks.

And while MySpace continues to be plagued by issues of verification (and consequent hysteria over sexual offenders) Facebook has taken pains to create a seamless connection between one's school or place of business and users online identities by authenticating relationships. So while advertisers have enjoyed the massive reach of 100 million MySpacers, they were aching for Facebook and they didn't even know it. Now the sixth most trafficked Web site, Facebook offers this enviable mashup: a qualified lead that's spread by word-of-mouth.

As Facebook has evolved from a directory of the various Houses at Harvard (the elite school's refusal to publish a single-use "Facebook," unlike other universities, led then-sophomore now-CEO Mark Zuckerberg to create the "social graph," and the decision to open up the community to the outside world was inevitable. But the manner in which Facebook decided to do so this last month has marked a paradigm shift, not merely for developers and advertisers, but for the Web itself.

Simply put, the Facebook Platform is a business opportunity. Developers (working on behalf of brands) have access to a toolkit that allows them to not only build an application that seamlessly conforms to Facebook's standards, but to immediately introduce their widget into the Facebook community via "canvas pages." Either you can search all applications (there are now 300 since launch) or, if you find that someone in your network has an app you like, you simply click on it and add it to your profile. It couldn't be easier. With this move, Facebook has shown that the acquisition model is no longer an endgame. Rather, in a manner similar to how BBC opened up its data via Backstage [April 17] and Twitter [May 23] has grown by encouraging its users to innovate, Facebook's new platform will allow it to leverage its size on behalf of startups and new brands.

ILike is a music recommendation service that has a vast library of profiles of artists from both major labels and unsigned artists, offers the ability to add songs to your profile, and delivers information on upcoming concerts. ILike president Hadi Partovi saw a demo late winter and he was smitten: "In the history of computing, there was the personal computer, there was Windows, there was the web, and now the Facebook platform." Pass the Kool-Aid? Not so fast. His application was added by 10,000 users within the first ten hours of the service being live. It reached 40,000 in the first few days of platform launch, and is now adding 200,000 registers a day. ILike soon issued pleas to the Bay Area community for servers merely to keep up with user demands. We should all have such problems.

Less hyperbolic in growth, but still bullish is long-term partner PicksPal, the fantasy sports betting Web site started by Tom Jessiman that's now known as the Home of Genius Picks (at last count PicksPal's "geniuses" were accurate 62.5 percent of the time). Jessiman thought that PicksPal and Facebook were a match made in heaven from Day One and was an early advertiser. Over a two-year period the two companies began working on projects, including a widget Jessiman designed for March Madness that took one's picks for a bracket and published them to users' profiles. Jessiman terms the Facebook release nothing less than "a company changing event." He's a convert to the Social Graph and believes in the future of hyper-marketing (high-volume, low margin). Says Jessiman, "It's not like an ad buy where you reach 4,000 eyeballs/day if you spend X dollars. When you install my app, you go into your profile and your Mini-Feed (Facebook's internal RSS) and all of your fifteen friends can grab the widget and then show their friends. You install it with one click! Our stats have gone up 50 percent every day since we started it. If we went the traditional marketing route [and they have, they've advertised on Friendster and MySpace] it'd be the same number of eyeballs when we ended as when we began."

If there's any risk associated with the policies behind the launch of F8 it's that Facebook isn't taking a cut. At all. The revenue opportunities are all there for developers. They can advertise and decide to charge (or not) for their widgets on their landing pages (the "canvas pages") or not, and Facebook allows them to "keep" the real estate they create. Facebook is making a calculation that they're going to grow like topsy (analysts like eMarketer's Debra Aho Williamson estimate $100 million in revenues; others speculate that Facebook could quadruple their profits by year end) and become that much more valuable to advertisers. So much for "foregoing" profits.

Part 2 of our report on Facebook's emerging business models and prospective impact on MySpace and other social networking sites will be published next week. Subscribe to the  Jack Myers Media Business Report RSS Feed.