Facebook App Racket Does Not Strike Me As Wise

18 11 2008

A pretty spot on analysis by Mike Arrington at TechCrunch about the new verified application process as a… Protection Racket.

I also don’t have a problem with this. In fact, I would generally applaud a company for finding a fair way to generate a significant revenue stream.

Except this doesn’t strike me as wise. Name one open platform that has charged a fee for inclusion, and seen this somehow improve the platform. Can’t? OK, maybe Facebook can be the first one to make it work for them.

The only company I can remember charging for inclusion, in a previously open and free product, is Yahoo Directory. Eventually, the Directory became a stale product that was somewhat costly to maintain. It made a whole lot of sense to charge $299/year for inclusion, both for Yahoo and the price was right for the vast majority of sustainable businesses. So far with Yahoo, we know what going down that road does for you.

The step basically admits that your model is becoming stale. You’ve run out of monetization options. Maybe it’s a wise admission (profit extraction), but I would have liked to have seen Facebook exhaust further monetization options first: complete its promised payment system (as Mr. Arrington mentions) or some virtual currency system.

Marc Andreessen said for Ning that a long tail of inactive accounts is valuable. The same applies here. I indeed believe strongly that revenue must be king, especially now. And, yes, quality of applications wil go up – $375 is not a huge amount of money. However, for a company with grand ambitions and broader promise than most any other, I just don’t think this is the right move at the right time.

Only time will tell, I suppose, but we may look back at this moment as an interesting inflection point.

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4 responses

8 12 2008
mich109

do you mean you are not in favor with how Facebook is turning out now? Facebook has become one of the most popular networking sites now because of the breakthrough of its numerous applications…..a lot of Facebook subscribers are really benefiting from that

9 12 2008
rodgerv

Facebook’s application platform unquestionably created a powerful new software platform. The question is how best to continue to grow that platform, and closing opportunities for developers just doesn’t seem fully appropriate right now, that is all. Perhaps Facebook will still let applications blossom sufficiently while gaining a new revenue stream.

15 12 2008
mich109

I agree with that….Facebook application really has already gone through a wide range of applications for the users and a lot of game developers are really benefiting from this much more the players…..just like this spectacular application I have been so addicted to – Realm of Empires ….I was enjoying a lot of applications from Facebook but never have I thought that such application as Realm of Empires could also be played on Facebook…. if it was just a simple guessing game or a chain letter like message I think it’s just fine but a lot of applications like Realm of Empires have been showering Facebook with spectacular graphics, well that is really something to be so amazed in Facebook….they’ve come up with this brilliant idea….

30 01 2009
Legal Hallucinogens

I repeat, Facebook’s application platform unquestionably created a powerful new software platform. The question is how best to continue to grow that platform, and closing opportunities for developers just doesn’t seem fully appropriate right now, that is all. Perhaps Facebook will still let applications blossom sufficiently while gaining a new revenue stream.

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