6 Comments »Building a successful Facebook App is tough enough without having to worry about plagiarism and idea theft. Indeed, it is not unreasonable to consider why any sufficiently successful application would not simply be amalgamated by Facebook. A brief exploration of the business mechanics behind Facebook, however, put these fears largely to rest.
The Facebook business model is neither new nor particularly complicated: generate as many users as possible and keep them engaged. Revenue comes primarily from local and online advertising, which appears at the lower left and bottom sections of the pages. The bulk of Facebook’s expenses come from development and hosting costs.
This is why the opening up the Facebook Platform works so well for Facebook. On one hand, third-party applications make Facebook more useful, keeping users spending more time and becoming more dependent on Facebook for all sorts of needs. On the other hand, an additional third party application costs next to nothing to produce, considering that the bulk of the original investment, developing the platform, was largely a one-time expense. Furthermore, third-party apps have to be hosted externally, saving Facebook relatively considerable hosting costs, especially with rich-media applications.
For this reason Facebook is highly unlikely to copy a third party application. Why pay for internal development and hosting when the same advertising revenue can be generated for you by somebody else, gratis?
The one concern here lies with Applications which stand directly in the way of Facebook’s future expansion plans, such as its rumored email system or a Web OS. In this way Facebook is like a charging elephant – as long as you don’t get in its way, you’re more than welcome to come along for the ride.
Alexey Komissarouk is a Technology and Business Consultant who has literally months of experience with the Facebook F8 Platform. He is available at AlexeyMK[at]gmail.com
“s long as you don’t get in its way, you’re more than welcome to come along for the ride.”
And that negates everything you argued just now, because how can you know which way Facebook will move in the future?
What if you create an app that works extremely well with advertising and generates a better ROI than anything Facebook offers? FB will NOT allow you to go on too long without competition from them.
“s long as you don’t get in its way, you’re more than welcome to come along for the ride.”
And that negates everything you argued just now, because how can you know which way Facebook will move in the future?
What if you create an app that works extremely well with advertising and generates a better ROI than anything Facebook offers? FB will NOT allow you to go on too long without competition from them.
Hashim,
You bring up a very interesting and worthwhile point. Let me see if I can clarify.
Facebook's current advertising platform feels like it could be more optimized and to an extent this is likely true. If your application has an incredible revenue stream and/or click through ratio for advertising, the Facebook may take note and adapt their advertising offering from lessons learned. As a whole, however, directly copying any applications or features of applications would create unrest with the entrepreneurial developer community. The money from stealing one good app isn't worth the lost revenue from the five hundred applications that developers won't make because of Facebook's newly-gained “evil” mantra.
This will not and should not stop Facebook from innovating and developing new features, but any new features are more likely to be well expected and known beforehand and will very unlikely undercut successful applications. Facebook does not mind being outdone: there are two “alternative-wall” and three “alternate-poke” programs in the top twenty five as we speak. It has even sacrificed what looked to be an otherwise profitable venture with its Gifts to the various Free Gifts applications.
I cannot tell you what exactly the Facebook game-plan is for the next twelve months. I can tell you it will likely involve an even more advanced platform, as well as an e-wallet payment system. If you intend to build an application that requires money exchange, I would advise using PayPal for now and leaving space to integrate whatever Facebook will offer.
Generally speaking, though, you're OK. The makers of the Fortune Cookie and Zombies may at last have a good night's sleep
Hashim,
You bring up a very interesting and worthwhile point. Let me see if I can clarify.
Facebook’s current advertising platform feels like it could be more optimized and to an extent this is likely true. If your application has an incredible revenue stream and/or click through ratio for advertising, the Facebook may take note and adapt their advertising offering from lessons learned. As a whole, however, directly copying any applications or features of applications would create unrest with the entrepreneurial developer community. The money from stealing one good app isn’t worth the lost revenue from the five hundred applications that developers won’t make because of Facebook’s newly-gained “evil” mantra.
This will not and should not stop Facebook from innovating and developing new features, but any new features are more likely to be well expected and known beforehand and will very unlikely undercut successful applications. Facebook does not mind being outdone: there are two “alternative-wall” and three “alternate-poke” programs in the top twenty five as we speak. It has even sacrificed what looked to be an otherwise profitable venture with its Gifts to the various Free Gifts applications.
I cannot tell you what exactly the Facebook game-plan is for the next twelve months. I can tell you it will likely involve an even more advanced platform, as well as an e-wallet payment system. If you intend to build an application that requires money exchange, I would advise using PayPal for now and leaving space to integrate whatever Facebook will offer.
Generally speaking, though, you’re OK. The makers of the Fortune Cookie and Zombies may at last have a good night’s sleep
Alexey, thanks for your reply to my reply.
A way that Facebook can solve this conflict is by offering an adverting platform for developers, and discontinuing their own ad selling. Until then, developers are stuck, and are only acting as incubators for the Facebook mothership.
Alexey, thanks for your reply to my reply.
A way that Facebook can solve this conflict is by offering an adverting platform for developers, and discontinuing their own ad selling. Until then, developers are stuck, and are only acting as incubators for the Facebook mothership.