Valleywag
Facebook is the new internet, or so the social utility's fans insist on telling us all the time. Their enthusiasm is understandable. The old internet — dominated by one search engine, three portals, and two social networks — no longer looks like virgin territory. In Facebook, which recently allowed users to install third-party applications such as music recommendation systems, an entrepreneur can begin again — in theory. Except it hasn't really worked out that way. After the jump, four reasons why Mark Zuckerberg's new platform for social utilities isn't a panacea for growth; and an explanation for why, as the chart shows, the signup rates have declined by between a quarter and a half in the last week. Facebook is the most interesting site on the internet right now, and the excitement about its potential is genuine, but it's time someone pricked the bubble.
1. Unimpressive apps. For users, the novelty has worn off. The conventional wisdom, among early adopters at least, is that nothing compelling has emerged from the first generation of Facebook applications, most of which are little more than basic widgets, no better than their equivalents on Facebook's despised competitor, Myspace.
2. Illusory popularity. A few apps, such as iLike, have attracted millions of new users on Mark Zuckerberg's social utility. It claims only 3% or so have subsequently deleted the application, but many more simply neglect the service. Apart from requiring a major investment in servers, it's really not clear how many of iLike's users will stick, or try out iLike's main service, which is an add-on to Apple's iTunes music player.
3. Disappointing numbers. This is the most significant downer, for most developers: server overload, or poor conversion rates, are the least of their problems. Having dropped other projects in the hope of instant success on this, the brand-new internet, they're discovering that popularity on Facebook, which is the default for college students and Silicon Valley execs, is far from automatic. Most of the attention is hogged by the most popular apps — and those tend to the ones present at launch, such as Slide's Top Friends, run by people who got a head start on no-name developers, because they came to Silicon Valley in the Mayflower.
4. Change in the rules. And a recent change by Facebook, to the way that users invite their friends to install apps, has made it harder for interlopers to break in. The social utility used to allow friends to be invited to join a service like Horoscopes in batches of ten; now it allows only ten additions each day. A subtle change, designed to stop developers setting up Facebook accounts and spamming users with invitations. But it's crippled new entrants, who are now crying foul. 98% of the last 500 apps to join the system have fewer than 10,000 users. And, as you can see from the chart, the daily rate of signups has declined, over the last week, by over 20% for Flixter, Top Friends, Social Moth, Magic 8 Ball, Hot or Not, and Fortune Cookie, among others. [Original data from Appsaholic.]
[Data from Appsaholic. Signups taken at midnight, and compared with 24 hours earlier.]
The disappointment of smaller developers is a testament more to their naivete than to Facebook's malice, or some Silicon Valley conspiracy to shut out outsiders. Of course companies such as iLike quickly began boasting of the millions of users they added, in order to get a share of the press interest in Mark Zuckerberg's new initiative. The Silicon Valley establishment hadn't something to get excited about for a while, so it played along. But it wasn't as if anybody promised that a slick Facebook app was a short-cut to popularity, funding, and success.
As for Facebook itself, it can hardly be blamed for wanting to whip up enthusiasm for a platform which depended on third-party developers. In evangelizing any new system there's an element of salesmanship, even deception, involved. Facebook may yet prove itself to be the new internet. While we wait, however, it should expect more complaints like this: "Dozens if not hundreds of startups in the Valley who made a strategic decision to divert valuable resources over the past month to develop a Facebook app did so with the understanding that we would have access to the same viral tools that all the initial applications had access to. But we do not, and Facebook has taken these tools from under our feet without any announcement or recourse."
Comments
Facebook has quietly clamped down on the growth of applications developed by third parties for its platform, shutting down two means for viral growth. The company has done so because it fears that some applications are spamming users, and may turn them off.
Insightful write-up, and right on the money, if you ask me. I'm one of the many developers who instantly dropped everything else to join the race onto Facebook - the very second I heard that the Facebook API was opened to 3rd party developers. And you can even monetize it - woohoo! And so we jumped on the bandwagon.
We finally got our app out, just 7 days ago. And so far, I can say, the experience has been somewhat disappointing. Our growth is not exponential - it's painfully linear. Those app developers that were out of the gates early (and especially those that were in on it with weeks of headstart before the rest of the world even knew what hit them) - they've undoubtedly had a great advantage. Spammy practices with 500 invites plus email begging and other borderline questionable practices put them ahead. I'm envious and so are many other struggling app developers.
So, can new Facebook apps still work? It depends.
Some apps are made predominantely to lure users off to the mothership - their main site, where each user is worth a lot more than in the Facebook app. I'd wager a guess that for most apps, including ours, this strategy is not working out nearly as we well as we had hoped, naively.
Monetization is another issue. The simply-slap-adsense-on-it solution doesn't work, and even though there are specific Facebook app advertising solutions coming up, monetization will remain a difficult endeavour.
What are we left to do? Somehow I stubbornly choose to believe that if we make our app just so super good, it will become a must-have and one day our continued effort to make the app better and better will pay off. I hate to admit it, but right now it's not looking like it will.
If I were to wager a prediction - I think many developers will take the IP they've developed and see whether they can re-use it as a stand-alone site or widget, to be finally successful outside of the Facebook platform. It makes sense, and I'm certain that for many developers that was always a part of their strategy or at least a fallback plan, should the app not take off like wildfire. Personally, I'm just a little bit deflated that we do have to seriously consider plan B already, after only one week after the app was released.
With the number of apps increasing, the app tiredness of the userbase will increase and it's only going to get harder and harder to stand out from the crowd.
Let me close my report from the trenches with another aspect that may influence app uptake rate. I myself am new to Facebook - I got to it after the API was opened. Within a few weeks, I now have more "friends" on Facebook than in real life. Yet, I suppose that those that have been on Facebook a lot longer have grown their friends list and also have lots of real life buddies on that thing. In that sense, developers with the seniority advantage were probably able to turbocharge the initial distribution of their app via social engineeering. For a newbie like me it's a lot harder.
I too did think that Facebook has a good chance to become "the new internet". I still think that in some ways, but from the perspective of current and prospective Facebook app developes, I believe that the real value of having a Facebook app is yet to be determined.
The Gotham Gal started out her career in the retailing business and spent time as a buyer at Macy's. The way that job worked was she'd get her "open to buy" report and then go into the market and buy. I always loved that term. It meant it was time to go shopping.
Audition? As if.
What I want to say to you, and I don't care if it appears for publication or not, is that your complaints about Facebook's new policies limiting app spam and presenting privacy options to users upfront are aligning you directly against the interests of Facebook's users.
Since you want my privacy options hidden away inconveniently so that there is a greater chance that your app will behave in a way I *don't* want, is there a logical reason I *shouldn't* despise you?
Please pull your head out of your code long enough to realise that everything is not about YOU.
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