At its founding, Slide was supposed to be a shopper's search engine. That model was dropped and before today's news, Slide's plan was to somehow charge advertisers for conversations its social network widget users had about brands. That was too gimmicky and unproven for Madison Avenue. One exec there told me he expected "Slide and [it's closest rival] RockYou will get weeded out." Now Levchin says: "Television is a world that advertisers love." More than widgets? Let there be no doubt.

If Levchin can turn Slide into an old school brand advertising-supported business with massive scale he might just live up to his investors expectations. For perspective, remember that ad-supported Readers' Digest has half as many people as subscribers and a private equity firm bought it for $1.6 billion in 2007.

Levchin's Slide promotes the practice of sharing every precious and not-so-precious moment with the world at large, and that his company has massive amounts of Facebook user data at its disposal thanks to the popularity of the company's Facebook applications. Yes, the rich are different than you and I: They don't buy into the crap they sell us.

• Wendi Deng Murdoch, MySpace China
• Chris DeWolfe and Tom Anderson, MySpace
• Max Levchin, Slide
• Robin Li, Baidu
• Markos Moulitsas, DailyKos
• Elon Musk, SpaceX
• Ali and Hadi Partovi, iLike
• Mika Salmi, MTV
• Dmitry Shapiro, Veoh
• Quincy Smith, CBS
• Andrew Ross Sorkin, New York Times
• Peter Thiel, Clarium Capital
• Evan Williams, Twitter
• Andrew Zolli, PopTech

The list is topped by an widget called Mob Wars, which exhorts users to "Join the Mafia, and start your own mob. Band together with your friends to become the most powerful force in the elite criminal underworld of Facebook." DeveloperAnalytics says Mob Wars' users return to its page 60 times a day. Facebook's most popular application, Slide's FunWall, only shows up fifth on the list, because users load its pages just two or three times a day. Here's what DeveloperAnalytics didn't account for in running the numbers: Slide's opening an office in New York to sell its inventory to major brands, while Mob Wars ads ask if you want to take an IQ challenge.

But he is not above a little strategic flaunting. Slide hired a Hollywood props firm to create life-sized versions of the sheep and other icons from its SuperPoke Facebook app, displayed like museum exhibits at the party. Could rival RockYou afford such a gratuitous show of wealth? With their latest funding round not quite locked down, unlikely. It's considered bad form to spend money while you're out raising more. And that was Levchin's point in throwing the party: It's not quite that he was spending money for the sake of spending money. He was spending money to show that he could.

VCs already were asking why should I not worry about Facebook copying [your widgets]. But it was a theoretical question. Now, it is practical and amplified. I think that Facebook has really killed the potential for investment in the platform or the attractiveness to entrepreneurs. I am unaware of a single VC investment in a Facebook app company post the new regime (Sheryl, Elliot, policy enforcement). and now this will definitely affect matters. The last two VC investments I believe were Friends For Sale and SGN [Social Gaming Network] — doubt either investor is happy nor would they do the same deal again.

If our widgetmaker source is correct, it is bad news for at least two Facebook hangers-on — Zynga, a widgetmaker and SocialMedia, an ad-network for Facebook widgetmakers. Both are trying to prove him wrong by raising a new round of financing.

A source tells us SocialMedia founder Seth Goldstein spent last week in New York trying to raise $20 million. A VC in the community confirms he's recently heard Goldstein's pitch. Goldstein himself tells us, "We're talking to investors," but he wouldn't confirm the terms.

Zynga, which in January raised $10 million in funding from Union Square Ventures, Peter Thiel, Reid Hoffman, and Bob Pittman, is said to have hired a bank in order to find more funding.

Goldstein says that those worried about worried whether Facebook's aggressive moves against Slide will stunt VC investment in startup widgetmakers should worry about top widgetmakers like Slide or its closest rival, RockYou, instead.

These guys wanted to believe there wouldn't be a long tail of apps on the Facebook platform. But Facebook wants lots of little apps relevant to lots of little groups. Two guys from Estonia will be able to beat a team of 45 top flight engineers. Facebook doesn't want three major developers taking over the platform like some kind of CBS, NBC and ABC. Top Facebook apps aren't all going to be made South of Market.

Remember, Goldstein's a Facebook bull because his business depends on it. But one way to read his comment is as a confirmation that no one — including VCs — should expect widgetmakers to turn into large media companies. There may be a future on the Facebook platform, but last year's frenzy that once led HotorNot founder James Hong to declare the Facebook platform "the new Internet"? It's over.

"Yes, we view this feature as directly competitive to a relatively small part of our Top Friends functionality," Slide's Keith Rabois told us. "A developer on any platform must expect that their popular, but simple, features will be absorbed into platform over time."

But none of this has the salesman in Rabois down. He goes on:

You can see that Top Friends has a very large number of complex features that have a complicated back-end (Awards, Visual Personality, Music, world-class skins) — we expect those will continue to be long-term strategic advantages over other large developers and the platforms themselves

The secret of social networking revealed: world-class skin! We always suspected as much.

There are policies Facebook has issued, but there is always room for interpretation - and in light of current changes, the interpretation is a lot more stringent now in contrast to before.

Facebook's probably getting strict because its preparing for a relaunch of its design in July. Or — and this pure speculation — the third-party security firm Rock You's rival Slide hired to audit its own privacy might have gotten paid a little extra to take a close look at the competition and alert Facebook to any infractions. We wouldn't put it past hypercompetitive Slide founder Max Levchin and his crafty sidekick, Keith Rabois.

Slide rival Rock You's Super Wall saw traffic plummet 70 percent in the last week. InsideFacebook's Justin Smith speculates the dip is due to "some kind of punitive action against the application" over privacy concerns by Facebook, "perhaps by restricting feed access or by lowering the application’s notification or invitation limits." Another source tells us Flixster, the widgetmaker behind the Movies app, is going through similar punishment from Facebook over privacy concerns.

Despite the blow from Facebook, Shen told SAI that unlike its closest competitor, Max Levchin's Slide, RockYou intends to keep developing for the platform. RockYou will need to — especially if developer Blake Commagere wrestles back control of his popular Vampires and Zombies apps. (Photo by califrayray)

When only 8.5 percent more money buys 66.6 percent more inventory, you know what's happened to prices. CPMs, the price advertisers pay per thousand pageviews, have plummeted. You can probably thank pageview-creating monster social networks like Facebook and MySpace for that. Either way, it's probably not a great time to open an ad sales shop in New York. Not that we know anybody doing that.

Facebook's upcoming redesign eliminates much of the viral growth widgetmakers such as Slide enjoyed during the platform's first year and these developers aren't happy about the changes. Last month an executive at one of the widgetmakers told us this lost enthusiasm for the Facebook platform seriously damaged the company's value.

FB's valuation is driven by the perception it can serve as a platform (or launching pad) for derivative businesses. Without that perception, FB is a $3-5 B company. Period.

the success of campaigns on our popular products, such as SuperPoke!, Top Friends and FunWall, has attracted the attention of not only top brands, but also top talent like Jason.

If only attention were as good as cash. Then Slide might be more than the online version of the musicians in every corner of New York's subway system — amusing, nice to have around while waiting for a train or a page to load, but hardly worth $550 million. U.S. marketers spent a paltry $600 million on social media advertising in 2007 — the same amount Procter & Gamble will spend over two months on its entire marketing budget and a tiny fraction of the $18 billion spent on interactive advertising last year. Somehow, we don't think a bunch more SuperPoke inventory flooding the market is going to fix the problem.(Photo by bk . ninja)

Byron Ng, the inquisitive Canadian computer technician who found a hole in MySpace's linkup with Yahoo, tipped me off to this trick, which works with a wide range of widgets, he says, whether or not you're friends with a given user. (SuperPoke has a private-actions option, but it's hard to find and few people seem to use it.)

Is it scandalous to learn that, say, Slide CEO Max Levchin has "bitten" Facebook CEO Mark Zuckerberg? Not especially (though Levchin went through a rather disturbing biting phase last month). What it tells us, really, is just how unseriously people take the widgets on Facebook. That these applications have remained wide open just goes to show that they don't do anything worth hiding. And where's the fun in that?

First, we've listened to Elvis Presley, Ms. Sandberg, and SuperPoke is no Elvis Presley. Second, Elvis was a moneymaker — heck, he still is. The Elvis 30 #1 Hits album, released in 2002, has sold 16 million copies at $15 a pop. Conveniently, that adds up to $240 million — the same amount Microsoft paid for its 1.6 percent stake in Facebook. And what did Microsoft get? A company whose COO still can't articulate what, precisely, Facebook's advertising revolution will look like.

Because Levchin believes that right now, companies that get it right — get funding, revenues or both — will be able to vacuum up developer talent and smaller, failing companies with useful assets. For example, Slide, which recently raised $50 million, and whose most successful application, SuperPoke, was an acquisition from three Seattle based kids, not an internal development. How convenient if Levchin's theory made it even easier to perform more such maneuvers. And does anyone wonder why he wasn't predicting an impending apocalypse before his company's latest round? All of this seems like it would have been useful information for his new investors. (Photo by flawedartist)

Gawker Media polls require Javascript; if you're viewing this in an RSS reader, click through to view in your Javascript-enabled web browser.

• No incentives may be given to a member for sending a message, bulletin, comment, or any other form of communication. This includes "points," "bucks," increased standing, or even features within the app.
• It must be very clear to a member what they are sending, when they are sending communication. "Share with friends" is not sufficient messaging, the link must state "send comment," "send bulletin," and so on.
• The "no popups" rule we have had in place since day one applies to messaging windows. This means no more popping up a messaging window the first time someone tries to use an app. No popping up messaging windows without a user clicking on a very clearly marked link.

Consider the value of other companies that deliver entertainment: Disney (DIS), Time Warner (TWX) and Sony (SNE) have a combined market cap of over $168 billion. Gross revenue for the NFL and MLB last year exceeded $12 billion. Apple (AAPL) made nearly $2 billion through iTunes music sales alone. Social networks benefit from increased activity, advertisers benefit from an exuberant audience, and widget users can, well, share favorite "American Idol" moments, send virtual margaritas or trout slap each other.

We're just not sure Slide or any other of the widgetmakers are there yet. Scrolling through Facebook's application directory, we mostly find the Web's version of road-trip distractions like the find-all-50-states-license-plate game or the one where you guess the name of the person I'm thinking. They pass the time, sure. But are they the next American Idol? No.

Or not yet. Rabois, and his boss, Slide founder Max Levchin, will work until they get there. For an idea how they might, we suggest they and you check out Draw My Thing from Iminlikewithyou, a sort of Pictionary for the Web. Just remember, Keith: You type the answers rather than call them out.

Previously:

• A is for Adelson, who cofounded Digg


• B is for Botha, who sold YouTube big


• F is for Fitzpatrick, and "hookers and blow"

1. Current Facebook profiles allow users to move application boxes around their profile wherever they like. Zuckerberg's new profiles won't allow as much customization. "The question is whether users will like the return to a uniform "profile" that looks the same for everyone. I would bet that users actually prefer to customize the look & feel of their profiles," an exec at one of the major widgetmakers tells us.
   
2. Zuckerberg wants to integrate the News Feed with the Wall. One developer tells us: "Mixing in 'X wrote on Y's funwall" along with more personal messages from friends may deteriorate the quality of the new wall/feed feature as a whole."
   
3. Facebook widgetmakers hate the tabs on Zuckerberg's new profile. One complains that most apps will suffer due to them: "By default a few apps will get their own tab and most will be relegated to the 'more' tab." Another source tells us this is one area where Zuckerberg has definitely caved to developer pressure.

   Facebook has some improvements in the latest version which should mitigate some of this effect on developers. Nevertheless, a substantial fraction of traffic to developers' apps will likely be lost as navigation to new tabs is unlikely to equal current profile traffic.

   
   
4. This search bar better not disappear like it does in the other profile preview. If it does, one developer asks:

   How will users easily find their applications and search for new ones as well as do a quick search of their friends? Getting users to adopt to such a massive change without any major problems is going to be a huge x-factor.

Similar fears likely went into Tumblr founder David Karp's decision to offer a subscription "Pro" package later this year. At the end of the last downturn, photo-sharing site Flickr sought shelter in subscription revenues while the advertising well remained dry. But an executive media director at an interactive agency tells us Levchin might be overreacting. "I have had absolutely no cutbacks so far," the exec said. "In conversations with peers they say they have not had cutbacks either."

At the very least, it's no longer a Mark Zuckerberg production. The widgetmakers have taken it over. Large Facebook-application developers — VC darlings like Slide, RockYou and Zynga which have thrived on Facebook's platform since it launched last May — panicked when they saw Zuckerberg's plans. And, perhaps because Google's rival app platform, OpenSocial, gave them leverage, the widgetmakers' collective kiboshed Zuckerberg's plan to launch the redesigned profiles in April. They wanted to see changes first. And now, we hear, they got them. Zuckerberg and his team are already "improving the design to have less radical implications for developers," one tells us.

Back when the Facebook platform launched, reporters compared Zuckerberg to Bill Gates. Gates ruled programmers who wrote applications for his Windows platform with such an iron fist that Europe's courts still aren't over it. But how often did third-party software makers push Gates into making Windows the way they wanted it? By contrast, Zuckerberg is hardly putting the "eek" in his ecosystem.

Slide won't be running an IPO any time soon. The only way founder Max Levchin and Fidelity and T. Rowe Price cash out is by being acquired, perhaps for a hefty chunk of Facebook stock. Mark Zuckerberg's company already has a huge amount of eyeballs, but picking up Slide would give them even more — and most importantly, massive reach across the other social networks that Slide's widgets run on.

Zuckerberg has already said he wants to expand Facebook across the Web, looking ahead to the inevitable day when growth on his site stagnates, the way it already has on rival MySpace. Beacon, his first attempt to extend Facebook, flopped last year amid charges that the privacy-invading feature ruined some users' Christmases.

An ad network for widgets could be Facebook's answer to Google AdSense. Google makes a ton of money from ads placed on Google.com, but reaches thousands more sites by offering them a cut of ads it sells and places. It also helps track users as they move around the Web.

Combining Facebook's existing ad ventures with Slide's huge audience of drunken-party-pic posters would give Zuck a hedge against fickle users abandoning his site for the next new thing. As Google showed us, the advertising business is where the money is made. It would be smart for Zuckerberg to solidify his hold on the market while he still can. Of course, he'd have to buy Slide for inflated stock, not cash — but Web entrepreneurs like Levchin love to deflect reporters' questions about their wealth by saying it's all on paper.

In Slide, RockYou now faces a very well-financed rival which took $50 million from its new investors. And Slide has real advertisers like McDonald's, AT&T, and BP; RockYou is better known for its plan to charge other Facebook-app makers to advertise their wares. (Does that strike anyone as a pyramid scheme?) Finally, there are RockYou's cofounders themselves — perhaps the biggest reason they won't get $400 million for RockYou.

Last year, they settled with their ex-employer Iconix, which charged them with developing the idea for RockYou while still working there. The episode was messy, and public. One would think RockYou's prospective investors would take it into account before putting their money in Shen and Tokuda's hands.

1. Create a feeling of technological openness. Developers love the ins and outs — the bugs, unfinished features.
2. Treat developers equally, but the best ones? Let them closer in.
3. Manage a community pre-launch: meet-ups, chats, IRC channels, mailing lists, visit companies.
4. Shift support/documentation onto the early developers. Smaller developer groups will help each other.
5. Respond quickly to platform issues.
6. Bible-thump: "you will make money" during the early platform days.
7. Make your campus a place that developers want to visit, a prize.
8. Over-communicate policy changes with the perception of open debate.
9. Make the goal of your PR team coverage for successful developers
10. Hold frequent developer events. Invite leading developers to speak.

Swisher, aggrieved at the lack of recognition for her scoop, accused BusinessWeek and the Times of running "hand-fed" stories, a charge Lacy and Stone's editor denied. (Lacy told me she'd known since the previous Sunday, but had held the information for her column; Stone's editor told Swisher his meeting with Slide that morning was previously scheduled.)

PaidContent.org clearly felt left out. After one of its writers filed a me-too post, editor Rafat Ali skewered Lacy in a followup post, calling her a "doting, in-awe poseur."

On Silicon Alley Insider, Henry Blodget, Lacy's cohost on Yahoo's soon-to-be-launched TechTicker finance show, came to her defense, dismissing PaidContent as an "aging, LA-based digital news blog."

Oh, and somewhere along the way, I managed to write a story on the subject without calling anyone names.

All of which shows how petty bloggers can be, and none of which answers the question of whether this matters to readers. My suspicion: Only to the extent that they may pass over a story they feel they've read elsewhere first. Google News actively punishes scoops, presenting news on a given subject by the most recent article written, a practice which encourages follow-on news articles and blog posts — and, for that matter, makes it hard to discover who actually broke a given story. Techmeme tends to favor the person who writes with most authority, drawing links from other blogs.