ON A FACEBOOK APPS REPORT CARD

EARLY DAYS

Tim O'Reilly's organization just published a timely report on the Facebook application ecosystem, ahead of their upcoming Social Graph conference next week (see Techmeme discussion).  Tim summarizes the report as follows:

"My team at O'Reilly Research has been crunching the numbers on the rise of Facebook as application platform, and we've released a new report today, entitled simply The Facebook Application Platform. 

The good news has already been widely disseminated: there are nearly 5000 Facebook applications, and the top applications have tens of millions of installs and millions of active users.

The bad news, alas, is in our report: 87% of the usage goes to only 84 applications! Only 45 applications have more than 100,000 active users.

This is a long tail marketplace with a vengeance -- but unfortunately, the economic models (for developers at least, though not for Facebook itself) all rely on getting into the very short head.

Here's the distribution of active users among the top 200 developers. (Some developers have multiple popular applications.) As you can see, the drop-off is extremely steep."

This is not a surprise to those who've been following the growth of the Facebook application market on third-party services like Adonomics and Appsaholic.

Having studied the trends at those services for a while now, and looking at the summary reports from the O'Reilly post, several observations and questions come to mind regarding the Facebook platform, five months after it's launch on May 24th this year.

1. The tenth most active application on Facebook has an active user base of around 457,000, just over 1% of Facebook's 40 million registered users.  How does this compare to other platform plays in their early history, be they DOS, Windows, Linux, Mac, Palm, and others?

2.  Two of the top ten apps are provided by Facebook itself, while over half of the third-party apps are but enhancements of existing Facebook applications.  What happens when Facebook introduces new features in it's own applications and competes more aggressively with the third-party apps?

3.  If one makes a distinction between applications and widgets, how would one break down a list of Facebook's top ten or top twenty applications into "useful" applications and "fun" widgets?

4.  Although competitor MySpace, with it's 68 million plus user base doesn't offer an "application platform" as robust as Facebook, it has provided defacto platform for dozens of third-party widget providers to do a thriving business on MySpace.  They've faced the same perils as the Facebook application developers in terms of the platform host eventually competing with the application/widget provider.

It'd be interesting to compare the active user metrics of the top ten or top twenty widget providers on MySpace with Facebook's experience thus far.

5.  It'd also be interesting to compare how these top ten/twenty providers have fared versus each other on their economic models as well.

At one extreme, one could view all this as described by commenter Thomas Lord, commenting on Tim O'Reilly's post:

"So, facebook is very fancy and cool and does what it does but it's not a platform -- just a browser library and some AJAXy web services of dubious value. The mythical "platform" people are waiting for lies in the future, behind a different technological underpinning."

It may be too early to judge Facebook's experiment in this harsh a light, especially since the company is likely to ramp up major features shortly on two fronts:

1.  Providing users more tools to "group" their friends, and

2.  Presumably rolling out an ad network strategy that would benefit both Facebook, and it's third-party application developers.

Tim makes a good point at the conclusion of his post above:

"...the future opportunity is less in Facebook applications per se, and more in the development of applications that use the social graph embodied in Facebook for entirely new purposes."

And let's not for get that a whole host of external competitors, both incumbents and startups, are racing to apply social network/social graph goodness to a whole range of services in coming months.

The race has barely begun.

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