Thursday, December 6, 2007

Facebook's Open Platform : Master Stroke or Big Mistake

The conventional wisdom is that facebook making itself an open platform was a stroke of genius. However, over the last few weeks, some data+news and some thinking has led me to question the conventional wisdom, especially from the point of view of facebook being a business wanting to drive up revenue in the coming years.

I am gonna divide the discussion into 2 scenarios. In both scenarios, the starting point is the same i.e facebook is already a well-established social networking site, growing very fast. Scenario #1 is what facebook has done so far and the path it will have to follow given it's action so far. Scenario #2 is a hypothetical one i.e "what if" facebook would not have made itself an open platform.

Scenario I:
# Facebook starts focusing its time and resources on building a platform with open API(s), client libraries, guidelines, building a very flexible and extremely scalable architecture with caching etc.
# Facebook launches its platform and makes it available for developers. A lot of time and energy is spend on working out the kinks.
# Tons of apps are launched increasing the need for facebook to scale up its system ( hardware and software )
# New problems/issues surface. Apps are spammy and facebook has to spend a lot of time/energy fighting feed/notification spam.
# Facebook also launches an ad system based on profile-based targeting. An amazing feat given all the other challenges they have been facing.
# However 2 huge issues with the ad platform :
(1) eCPM is extremely low. I have heard of and myself experienced eCPMs of a few cents ( less than 10 cents ). On the other hand, high monetization verticals like autos have eCPM of ~$20 ( with a single ad unit ).
(2) privacy concerns.
# So now, facebook will be spending a tremendous amount of time and energy trying to increase their monetization. It is definitely not easy to have a good monetization engine based on profile and some user action/messages. Remember that the canvas page now belongs to the app owner and not facebook.
# For a given vertical ( say movies ), there are multiple applications available. If things on facebook work out the same way as it does otherwise, we will see 2-4 big players in each vertical. Now, this means that although you and your friends are on facebook, you might have installed different apps but of similar nature. This would mean that information that your friends are sharing in 1 app will not come to you at all and vice-versa. Isn't that the same problem that exists on the internet today ? And yes, it exists because the internet is an open platform and web sites are application and the same effect will happen since facebook is now a platform and the apps are the applications.
# Users become unhappy about the spam they get or the useful info that they do not get in their news feed.

I am not suggesting that facebook is doomed in this scenario. It's still doing extremely well. But the question is for themselves to prove their valuation and increase it. Seems like in scenario I, facebook did increase it's pageviews and user enagagment ( as well as spam ) but they have paid a huge price for it. In a certain way, they are hosting the internet ( part of it ) and will be unable to extract tons of value from it. And at the same time, they have created islands within facebook itself which do not talk to each other, leading to bad user experience.

Scenario II:
# As mentioned, Facebook has already solved the hard problem of building a large social graph.
# They still create a platform on which apps can be built internally ( or selectively with partners, a la Apple's iPhone ) since it's a good model/architecture. However, they do not have to worry about a lot of things, including scaling very rapidly, fighting feed/notification spam, etc.
# Instead, they spend time/energy on building killer apps themselves and along with partners, one for each vertical or functional area rather than multiple ones, which is the case today.
# Pageviews/Engagement grows ( maybe not as fast as it has grown by opening up the platform ).
# However, facebook is now able to monetize at much higher eCPM. It owns/partners on all the app pages and targeting is easier, examples being a travel app where a page is about boston or a car app where the page is about an audi.

Bottom line, in scenario II, user experience is much better, no spam and no multiple applications even amongst friends leading to isolated islands. More importantly, facebook would have been able to spend it's time and energy on a path leading to much higher monetization and revenues.

Your thoughts ?

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Saturday, December 1, 2007

Citipals reaches to Kolkata

"Good Friends, Good Times". Kolkatians now have a new web destination, its http://www.citipals.com/kolkata , the home url of CitiPals Kolkata. Whether you enjoy Kolkata's food & dining, its arts & entertainment, movies, or its night life, now you can come to http://www.citipals.com/kolkata, to find out what your friends opinions are about all these places in Kolkata. You can also share your thoughts and opinions with your friends. CitiPals's goal is to
connect you with your friends to help with everyday choices.

Opinions of reviewers are good but opinions from your "friends" are priceless to help you make the right choice. There's an implicit level of trust you associate with folks you know. CitiPals captures this and provides trusted recommendations by weighing in your social network higher. Opinions of folks in your social network are not only weighted higher as you peruse information on CitiPals, they are also displayed prominently along with your 'relationship map' to that user. Your social network on CitiPals comprises of friends ( and their friends, up to 3 degrees ) as well as users you trust. Over time, you might start trusting some users whose opinions have helped you, and/or whose tastes are similar to yours. These are users you trusts, and CitiPals allows you to mark them as "trusted reviewer", and include in your social network.

The notion of trust has been extended to the web at large, and is not just limited to reviews written on CitiPals. CitiPals has adopted the open model of web 2.0. Opinions are aggregated from the web and a CitiPals user can trust someone who writes on other publications, websites and blogs.

If you are a blogger, if you have discovered some hidden gems in Kolkata, or someone who would simply like to share your thoughts about places in Kolkata, head on over to and invite your friends to join you as well. Your reviews will be useful not only to your friends, but to the web community at large.