From a technology business point of view, I learnt a couple of nasty things about Facebook last week. Like about 70 others I attended the Facebook Developers Garage in Melbourne to see what was going on with Facebook. Facebook is the American social networking phenomena that was launched in 2004 and now has over 64 milllion active users . It allows anyone to write and connect up an application available to those users. Think being able to play scrabble with your friends on line. Facebook provides the environment and scrabble is the application written by someone.
Sounds pretty sweet that you could tap into that large a customer base really easily. Additionally, if people use your application, you get a cut of the advertising action, and this is apparently making some developers people nice revenues simply riding on Facebook coat tails.
But here’s the rub.
1. Facebook is a set world. If you want to do something on Facebook, it is going to look like Facebook application. This means the Facebook font and a blue coloured environment.
2. The Facebook environment is changing regularly (apparently weekly) so this means you may have to be updating your application on a weekly basis.
3. Facebook isn’t going to tell you if your application will be killed by their changes, you have to monitor it yourself.
Therefore building a Facebook application isn’t like building up website, in that you have to be constantly maintaining it at a technical level and you are really constrained in that you can do.
There was also some nasty commercial lessons learnt.
1. Most applications fail to attract users. A tiny installed base in the hundreds of users only is the norm, and this isn’t a critical mass.
2. Monetisation of applications, other than by getting a cut of the advertising, is extremely difficult to achieve, the “buy a virtual gift for a $1” applications quickly run out of steam.
3. Marketing your application virally is the main way to get people to use your application and this is pretty difficult to achieve. With Facebook you are in a closed environment where thousands of other developers are competing to market their application virally.
4. The lesson appears to be that Facebook users of an application, don’t jump out of Facebook. Ie your Facebook based users stay Facebook based users.
5. The reason Facebook has opened up their system so that you can write your own application, is so that they can get more users, not the other way round. There is a reason they have 64Million users in three years, and was valued by Microsoft at US$15Billion.
One again it appears that there is no “magic button” solution for business.