How Has Social Networking Impacted Society?

Those of you who are interested in the human side of social networking (rather than the marketing side, wink) should check this out. The New York Times’ Freakonomics blog asked several notable academics about the effect of social networking on society. Their thoughts are gathered here.

Facebook Needs to Stand up to Rogue Apps

Facebook’s modus operandi almost since its inception has been to launch a feature, listen to feedback from users, and then tweak it. Standard operating procedure for thousands of businesses, right?

Remember the News Feed launch and the huge uproar over that? And what about Beacon? The problem is that the amount of time Facebook waits before making changes is getting too long for comfort.

Case in point: yesterday, Facebook announced a series of changes designed to reduce application spam. You know - the apps that force you to invite friends so you can see the results of the quiz you just took, or the ones that send mail to your personal email account (such as the Movies app that spammed me 5 times over the weekend).

According to the Facebook Blog (emphasis mine):

• When you get a request from an application, you now have the ability to “Block Application” directly from the request. If you block an application, it will not be able to send you any more requests.




• A few weeks ago, we added the ability to “Clear All” requests from your requests page when you have a lot of requests and invitations that you haven’t responded to yet.




• Your feedback now determines how many communications an application can send. When invitations and notifications are ignored, blocked, or marked as spam, Facebook reduces that application’s ability to send more. Applications forcing their users to send spammy invitations can wind up with no invitations at all. The power is in your hands; block applications that are bothering you, and report spammy or abusive communications, and we’ll restrict the application.




• We’ve explicitly told developers they cannot dead-end you in an “Invite your Friends” loop. If you are trapped by an application, look for a link to report that “This application is forcing me to invite friends”. Your reports will help us stop this behavior.




• We’ve added an option to the Edit Applications page that allows you to opt-out of emails sent from applications you’ve already added. When you add a new application, you can uncheck this option right away.




• Applications must now give you advanced warning if you’ll need to invite friends to get information or access content. So you should always know ahead of time if that quiz you’re taking will require you to invite friends to see your results. If you see applications withholding content without warning, go to that application’s About page to report it.

The changes come only after Facebook members griped for months about spammy apps. And notably (see the boldfaced sentences above), Facebook isn’t being nearly as aggressive as members may have hoped. Instead of simply banning rogue apps, Facebook tells members that THEY have to do the complaining.

I think it’s time for Facebook to take more responsibility within the app ecosystem it created. ISPs routinely blacklist email spammers. Facebook ought to do the same for bad apps.

MySpace Learns From Facebook

Yesterday, MySpace finally launched its developer network. Soon, you’ll be able to bite, pinch and slap your friends on MySpace just like you did on Facebook.

Although MySpace is 9 months late to the third-party-application party (Facebook opened its platform last May), it’s clear that the social networking giant has learned something from Facebook’s experience thus far:

1. App developers can use MySpace tools to sell advertising. This is smart because it allows MySpace to keep its hand in the game. Facebook’s hands-off approach means apps have to come up with ad strategies on their own. Developers don’t have to use MySpace’s tools, but they will undoubtably make it easier for apps to generate revenue.

2.  Apps are hosted on MySpace servers. Correct me if I’m wrong about this, but I’m pretty sure Facebook apps are hosted on third-party servers outside of Facebook. If that’s the case, then MySpace probably will have a lot more visibility into how the apps work and the way they interact with user data. Some of the problems Facebook has had with rogue apps using deceptive practices may not happen on MySpace.

3. Apps must pass a “safety review process.” All apps running on MySpace will need to go through a safety check to make sure they don’t overstep privacy boundaries, according to a company statement.

The true test will be whether developers will flock to MySpace as they have to Facebook (now with 15,000+ apps and counting).  But surely the parameters outlined above will bring more legitimacy to the app marketplace.

What I’m Reading

I’ve been traveling the past few days. Here’s a bit of a catchup post on what I’m reading these days.

BBC joins up with MySpace: This could have been written up in the Onion (maybe it already has). The BBC signed a content distribution deal with MySpace making selected videos available through a MySpace TV channel. A quick peek at the channel yields this video gem: “Stefan Eats Testicles” (the link fortunately, or unfortunately, did not work for me). Yum.

The Facebook Economy: Great piece from the Knowledge@Wharton folks. Features the commentary of Peter Fader, a longtime Internet marketing expert:

“Being based 100% on Facebook is very risky, because social networks are inherently unstable. Five years ago, we would have been talking about Friendster.”

Discussing the flap over Scrabulous, Fader says:

“Scrabulous has created value for the product in a way Hasbro would have never thought of doing. Hasbro’s challenge is to call off the lawyers, do better business development and come up with an online version of the game people will like even better. If people are playing more Scrabble, they should figure out how to tap into that.”

Google tests demographically targeted AdWords: Google is launching a test of a new feature of AdWords letting advertisers deliver targeted ads based on age and gender. The feature only works on sites that have gender and age information — many of them social networks.

Widget standards coming? GigaOm reports that widget industry exec may start working with the Interactive Advertising Bureau to create standards for widget advertising.

Facebook Developers Are Getting Too Cocky

Last week, Slide Inc. got a big $50 million investment round. It’s definitely the largest funding of an application/widget developer that I’ve heard about.

Max Levchin, Slide’s founder, has every right to be proud of his accomplishment. His company’s applications are among the top time-wasters on Facebook, and he’s getting ready to unleash more apps for the upcoming MySpace platform.

But, in an interview with The New York Times’ Bits blog, he makes what I consider a very disturbing statement. According to reporter Brad Stone’s blog entry, Levchin said:

“It’s impossible for social networks focused on scaling the network itself to build all the niche applications that bring people and keep people on these sites,” he said. Just as consumers bought Windows to play games, organize their taxes or create documents, application makers like Slide “add the bulk of perceived value to the consumers of these Web platforms,” Mr. Levchin said.

It’s disturbing because without access to Facebook’s code, Slide’s apps wouldn’t even exist. No doubt Facebook feels like IT offers a lot of value to its members. Not to mention the fact that Facebook lets developers keep all of the revenue they generate. More time spent on developers’ apps = less time with Facebook features = less revenue for Facebook.

It wouldn’t take much for Facebook to change the terms and start taking a cut of what the developers generate. Levchin and others ought to remember that.

MySpace vs. Facebook: Who’s Winning the Stats Battle?

These days, whenever News Corp. execs give public speaking appearances, the Facebook comparison slides are de riguer. Try as it might, MySpace just can’t get the little monkey (or 1,000-pound gorilla?) off its back.

The latest dustup? Some Hitwise figures announcing that MySpace had a 72% market share of US visits to social networking sites in December 2007 — well above Facebook’s 16% share.

TechCrunch jumped into the fray with some numbers from comScore showing that MySpace had 69 million US unique visitors in December vs. Facebook’s 35 million — giving it not nearly as big a lead as the Hitwise numbers indicate. In page views, TechCrunch reported, MySpace’s 38 billion trounced Facebook’s 13 billion.

TechCrunch also reported — breathlessly — that worldwide comScore figures showed that Facebook had surpassed MySpace in minutes spent on the site — 21 billion to MySpace’s 17 billion.

MySpace, meanwhile, sent out a press release touting the Hitwise numbers and figures from NetRatings (yet a third measurement service) showing that

“MySpace leads in the “Loyalty Matrix” (time spent per person combined with visits per person). During the month of December the average user spent over two hours and fifteen minutes on MySpace.”

A couple of things to note here: First, page views are a distorting metric. In a time when so many sites are using Ajax, they’re becoming less and less important as a measure of true activity.

Second, time spent is also a vague measure. For one thing, Facebook’s site has become one of the slowest loading sites around (thanks to all those apps cluttering people’s pages). And plenty of people keep Facebook open in one browser tab while they do other things online. So unless comScore’s numbers measure active engagement with the site (something the company is in fact working on), the time spent metric is also flawed.

Mark Zuckerberg’s Coming-Out Party for the CBS Generation

For a couple of years now, I’ve been telling my parents about the analyst work I’ve been doing in social networking. Considering that they are retired people living in the middle of Florida, I think they are pretty Internet savvy.

Still, I was surprised to call them at 7:45 on Sunday evening for our weekly chat and hear that they were watching the Mark Zuckerberg interview on 60 Minutes. In fact, my dad didn’t even get on the phone until the interview was over.

There has been a lot of talk about this momentous occasion, and how this was Facebook’s unveiling for the CBS generation. The interview opened with Lesley Stahl setting up her own Facebook page and - amazing! - getting a friend request from an old acquaintance within minutes. The skeptic in me says it was a setup, but who knows.

I think Zuckerberg played the part well - awkward at times, passionate at others, overly mawkish at still others (saying the company needs to make money because it has 400 employees to pay? not the most compelling explanation of their ad strategy).

Will there be a spike in Facebook usage among 50- and 60-somethings? Perhaps. I can’t wait to see what they think of Vampires and SuperPoking. But Scrabulous, well, now that’s a pretty natural fit.

Piper Jaffray on Social Network Advertising

Piper Jaffray’s latest edition of its Internet Strategist research note (out today; not available online) contains strong optimism for the future of online advertising. Among the predictions from Piper analyst Aaron Kessler: 20% growth in the online advertising market (vs. single digits in the rest of the ad biz), strong growth for ad networks and more consolidation in online ad services.

In the social networking realm, Piper projects that sites such as MySpace and Facebook will continue to suck time and pageviews from other sites, but that ad CPMs for SN sites and user-gen sites in general will remain low due to huge inventory (i.e., untargeted remnant banner ads), consumers’ lack of interest in the ads and advertisers’ concerns about the content.

One bright note for social networking, Kessler believes, is the ad targeting plans that the two major sites are working on. MySpace’s HyperTargeting has shown CPM lifts of 50%.

Kessler left out a key piece of the SN revenue puzzle: search. Already, search accounts for 30% of MySpace’s revenue, according to a presentation that Fox Interactive Media’s Michael Barrett gave at last month’s UBS media conference.

Another revenue driver for 2008 and beyond is the local/small business market. Both MySpace and Facebook recently launched self-serve ad systems, enabling any business to create a campaign (on Facebook, businesses can design a page for free, while MySpace still charges for anything but the basic no-frills page). Local online advertising is a growing business and social networks may be poised to bring in a sizeable portion of that revenue.

Facebook Phishers, Spammers and Adware, Oh My

It was bound to happen. Phishers are putting fake wall posts on Facebook profile pages. When you click the link, you’re redirected to a fake Facebook login page. Type in your user name and password and voila, it’s now in the hands of the phisher. Not cool.

Meanwhile, some unscrupulous application developers are tricking people into installing apps they don’t want. Facebook is trying to stop this behavior, according to a post on its Developer Blog.

And a Facebook app called Secret Crush reportedly tricks users into downloading adware to their computer. This is particularly worrisome because Facebook members routinely install apps on a whim, without knowing much or anything about the developers behind them. As Fortinet states in its description of the rogue app: “In a digital world where web traffic equals money, such a user base attracts spammers, virus/spyware seeders, and other ethic-less online marketers like honey would attract flies.”

If Facebook doesn’t stop all of this activity in its tracks, the app business will be in big trouble.

UPDATE: Zango, the advertising company named by Fortinet in the “Secret Crush” investigation, is denying any involvement with the matter.

Too Much Noise in the Widget Marketplace

Thinking about adding widgets and Web applications to your online marketing strategy this year? Then your head is probably spinning. I haven’t seen this many companies falling all over themselves for a piece of the action since the late 1990s.

Which brings me to this article in Forbes. According to data in the article from Adonomics, which tracks installs and users of widgets, there are 100,000 companies worldwide developing widgets. Widgets and applications already in use — such as FunWall, Super Wall and Scrabulous — have a combined market value of $374 million, the article says.

Of course, Adonomics — owned by Altura Ventures, the “first Facebook-only VC,” according to its Web site — would naturally want to promote the widget marketplace to the fullest.

But even at half that market value, this fledgling widget/application economy is looking pretty robust. Now, it’s up to the developers to find concrete ways to monetize all those Zombie downloads.