Practical Entrepreneur

If you are following social media development, then you probably have seen or heard of the O’Reilly Research analysis published here and analyzed here (among many other places). Ben Lorica’s post on Radar provides a very interesting glimpse into the Facebook ecosystem and highlights some industries that are doing well through an in-house categorization of applications and comparing the corresponding number of active users.

As this chart from the research highlights, the biggest category on Facebook is applications that are ‘just for fun’. Obviously the assessment that the most successful applications on Facebook are those that have marginal value and are time wasters resulted in extensive coverage of the report in the blogosphere and ended in headlines such as: On Facebook, Girls And Boys Just Want To Have Fun.

I think the categorization of the applications by the research team has a lot to do with this assessment. I have been looking at the same question from a different angle for a while which might be useful in structuring a discussion around the topic.

Facebook was a social network way before it became a platform. It had millions of users that were active on the site way before any of these applications existed. When the platform was introduced last year, from a user’s perspective, all of a sudden new functionalities became available. Some of the functionalities were improved versions of the existing features (think SuperWall) and some opened completely new opportunities (such as iLike for music).

So what happens if you look at the Facebook universe in terms of activities that were facilitated before and after the platform launch. Below i have tried to summarize the main activities of a typical Facebook user (please comment if I have missed major areas). I have also included (a very subjective) assessment of how Facebook was doing in facilitating each category before the platform launched by using different font sizes.

In the right most column I have included some of the applications that have emerged to improve the user experience for each activity plus the total daily active users of all such applications in the top 20 facebook applications (in terms of daily actives). Please note that the active numbers are based on back-of-envelope calculation on a random day and only for top 20 applications. In the O’Reilly report, they summed all applications up which takes the tail into account as well.
I think this perspective highlights a couple of trends/questions

• What’s up with Photo Sharing? Is Facebook Photo application so perfect that nobody can provide value beyond it? This seems like an excellent opportunity for a brand new application to come out of no where and take over.
• Improving existing functionality/purpose has the least barrier to user adoption. This is especially true in case of sub-perfect existing experiences. Facebook wall was boring and text only when FunWall and SuperWall exploded in popularity. People discovery still sucks on Facebook which is a great opportunity for Zoosk and others innovating in this area.
• Media consumption has always been a part of most successful social networks except for Facebook. To this day I don’t understand why Facebook is so bad when it comes to media discovry and sharing. But this was a known winner and iLike and Flixter capitalized on the opportunity very well.
• Social gaming seems to be the only truly new activity category when it comes to successful applications. It was basically ignored by (or unknown to) social networks until Scrabulous and Friends for Sale came into the picture on Facebook. This category now is rightly so getting plenty of attention from the venture community and entrepreneurs.

What does this mean for applications not in these categories? Is this the extent of utility that application developers can provide on social networks? I don’t think so. Social gaming didn’t really realize it’s potential until early February this year, full 9 months after the platform opened up. What is the next big emerging activity category? That being said, I believe it is much more natural to grow on social networks if you are enhancing or extending existing user bahaviors.

I should also highlight that this analysis is only looking at very large applications. If your application does not benefit from network effects then you don’t need to be huge in order to be able to provide utility. One more thing to keep in mind is that monetization potential is completely left out of this discussion. Even though having a large active user base helps with monetization opportunities, it does not guarantee the way to profit.

Is this trend going to hold up on other social networks that are opening up? It’s too early to tell. But the initial indications suggest it might hold true on MySpace and Bebo as well.

PS: Obviously a large contributor to the success of applications is the viral engineering of applications. For each of the successful applications in these categories there are hundreds of tiny copies. Just because you pick a hot category does not mean you will have a huge user base. It might just make it a little bit easier to do so. Follow Dave or Andrew‘s blog if you want some viral wisdom.

One of the most mind boggling aspects of the MySpace Developer platform is their “Application Approval” process. In short, when you create a new application and want to make it live, you “publish” it which means somebody at MySpace  gets notified, installs the application, and plays with it. Then they check the application profile and home views (basically stuff that the application puts on your profile, etc) and if all is to their liking, they bless your application and normal users can see the app.

In my experience it takes between 24 to 96 hours to get somebody from MySpace to look at an application and make a judgment. On their forums I have seen horror stories about applications that have been in pending state (from the time you publish to the time they look at it) for more than a few weeks but I haven’t personally experienced it (thank god!).

This approval process is definitely costly both for the application developers and MySpace. MySpace has to have people on staff that basically just install applications, test them out and make approval decisions. Basically MySpace is helping you outsource your QA team (and them some – see below) and foots that bill.

It’s also costly for the developer because MySpace Approval Team rejects submitted applications multiple times, in each round disclosing some of the areas they are not please with. So, from the time you think your open social application is ready to go to the time it makes it to real users it could take between a few days up to weeks depending on your luck and complexity of the application.

It even gets worst. Every time you update something in your application code (say you decide to make that navigation bar purple from blue!) MySpace flags your application for re-approval and a human being looks at it again! I am really curious how much this whole thing is costing them. They are not making that much money so they better get on some cost cutting!

So you might wonder what is their approval process like. MySpace says they check to see if the application meets their Terms of Service. But in my experience they look for these categories

• Application Works
• Application References External Scripts
• Application Uses OpenSocial
• Application Impedes Browser Functionality???
• Application Makes MySpace Tester Happy?
• Application Satisfies MySpace Tester’s Expected Pointing System (for games only!)
• Application “is Valuable”?
• Application…

Basically it’s a very subjective process that really doesn’t add any value to the platform, MySpace user experience or anything close to that. It simply costs MySpace and application developers time and money! There is nothing in the approval process that market forces (i.e., MySpace users) can’t weed out. I really wonder what would have happened if Facebook tried to do something this backwards with their platform. In my opinion this just proves how different MySpace mentality is from a typical “technology company”. If you ask any tech company about moderation/approval/policing they would all say we let our users help us with it. Let’s develop some technology that users can flag “bad” behavior and we punish the common offenders! But MySpace likes the police state route better.

Just to give you an idea about how the police state if MySpace works, I am posting a few “official” rejection emails that I have receieved from them in the course of past couple of weeks. It makes for a fun reading. These are verbatim MySpace comments with identifiable pieces taken out (replaced with all caps placeholders such as LINK1)

Your application does not have any meaningfull functionality. Their is one problem with your application (when clicked on “LINK” your application has some formatting problems) Please try to add some useful functionality to your application, fix formatting problem and resubmit your application

In your application after passing the links “LINK1 and LINK2″ a link is open “LINK3″, which redirect the user to add/remove page and impede the browser functionality. Secondly, when a visitor comes to view a user’s profile who has your application installed ( visitor – user without app; user – user with app),and click on the link “LINK4″ this link redirect the user to add/remove page, which is ok but impede the browser functionality

the transition between the canvas and install page impedes browser functionality as it stalls and doesn’t allow the user to use the back button, but if you press it fast enough in repetition, then it is accomplished.  So please complete the functionality.

There are still some functional difficulties with your application. When one user votes another user, the former user gets a point added in the POINT-SYSTEM, when only the latter user should be getting the points.

The application is working but partially. The meter does not go beyond 5 even if the user wins the polls several times and neither does the comment change for the user who is winning. So please review this part of your application