I was one of the guest panel at the first
Melbourne Facebook Developers Garage last Friday. I thought I might try and jot
some notes about what I said. As always I ran out of time – trust me to
disappear off on a tangent.

I deliberately took a slightly cynical tack
to start with. But I feel justified. As far as I’m concerned with Facebook, the
goldrush is still on. We saw some early land grabs – and a few of those who hammered
in their stakes early on have made good money. And there’s a small group of developers
who are making ok money. But it isn’t a diamond mine quite yet. The early millionaires
have been minted, the rest of the world is still casting around for a business model.

A reality check would be good:

1. New features cannot remain viral indefinitely. “It is likely
        that as more and more companies develop applications for Facebook, the
        signal to noise ratio will become overwhelming for the users to spread
        applications by word-of-mouth.” (Monetizing Facebook Applications)

2. Totally dependent on Facebook. Their Beacon advertising system
        showed their inability to always understand their operating environment.

3. Who’s to say the platform won’t change? Facebook might change
        its policies regarding affiliates, referrals and advertisements by cutting
        in on the profit, or even worse, deciding to develop their own competing
        applications. We’re seeing this already with Facebook’s own social ads,
        they’ve got their own advertising inventory to sell. Or their move in the
        past week or so to throttle the amount of invites an app can send to each
        user and eliminating the practice of forced invites. Hopefully measures
        like this will force apps to sharpen their focus, and weed out the poor
        ones.

Based on our experience, success is derived
through long term, recurrent transaction history with loyal customers.

I was always cautious of the early
generations of social networks – I called them stepping on your friends for
personal gain. Then again, I thought virtual gifts were stupid.

 “There is a fundamental flaw in the overall
state of Facebook applications. The issue as I see it is that for a venue with
as much potential Facebook, the apps built on its platform have no real use
(other than diversionary). It seems as though almost every Facebook app is
something irrelevant, some way to compare friends or some ridiculous game
(there are some exceptions).” (Facebook Platform: The State of the Apps)

“Half of Facebook applications have under
350 installs. There are 16,000+ apps. So only half get any kind of minor
traction. When designing a Facebook
strategy for apps you need some very compelling reasons to make users CARE. It
needs to do something for them that they find useful, entertaining, share
worthy or compelling. Most apps are missing 1, 2, 3 or all 4 of these critical
aspects. Thus they effectively remain in the dustbin of application minutia on Facebook.
Lack of strategy guarantees lack of performance.” (Half of facebook apps have
under 350 installs)

There’s a time and place for everyone for
everything. The problem with sites like Facebook is they want to intersperse
themselves into many parts of peoples’ life. You can’t change human behaviour –
well, it’s blinking hard. Have we conditioned users so much to the time wasting
and silly, that it will be hard to sell them real value? And is Facebook the
environment in which to do it, given their propensity to use it as a
work-avoidance mechanism?

FB caters to the now generation, but I’m
not convinced about the next generation – my ten year old will write her own
Facebook, not want to work within the confines of an imposed structure.

Facebook will have negative cash flow in
2008, despite projecting doubling it’s revenue – because it’s going to have to
double its cash flow, and spend $200m on infrastructure. Hence it was kind of
handy having some venture capital injection. (Chatty Zuckerberg Tells All About
Facebook Finances)

Here’s where I think the opportunities lie:

1. I’m fascinated at the concentration on advertising driven apps,
        and not transactional. Everyone seems focussed on page impressions and
        advertising networks. Yet we can’t even rely on the official statistics.
        Why aren’t more people selling stuff? Even if it’s the eBook rubbish, it
        would be a transaction. Personal services – outsourcing your PA to Mumbai.
        Information and content subscriptions. Job seeking. Sure you can make
        money from advertising. But you need a big, constant audience. And only a
        few FB apps have that audience. Unless you’re happy scrabbling around
        making a few hundred a month on Google Ads or Adonomics.

2. Developers need to focus more on augmenting the methods in
        which Facebook members connect, rather than simply creating workplace time
        wasting diversions. You still really only meet people via the original
        Facebook invite system. (Facebook Platform: The State of the Apps)

3. Games – real ones, thoroughly thought out, requiring actual
        player input. Just avoid copying brands (Scrabulous), make them socially
        addictive, and socially looping.
       

But hey, I’m a Gen X, what would I know. I’m
completely the wrong demographic:

 “There are 2 distinctive 2.0 audiences –
Gen Y social networkers and the older mostly male geeky TechCrunch reading 2.0
audience. One is scalable and foreshadows future behavior while the other will
try anything 2.0 for 2 weeks and maxes out at somewhere around 300K users. The
Facebook crowd is the former.

They don’t read techcrunch

They don’t blog

They don’t use most of the 2.0 apps out
there

They’re mostly female

They’re mostly 18 – 24 and 25 – 34

They live on Facebook, MySpace, Hi5, etc…

They don’t hang out on Linkedin”

(Web 2.0 has 2 very different audiences,
only 1 is scalable)