Forget Platforms And Applications, Data Is The Real Asset On the Web

Time to deconstruct the “platform” hype. On the face of it, developers’ obsession with Facebook Platform makes no sense — build an application on Facebook and you can reach 30 million users. Build it on the web, and you can reach 10 (even 20) times as many users. On Facebook, there are automated mechanisms for apps to spread “virally,” but on the web, there are 1,000 times as many viral mechanisms, which truly killer apps like Google, YouTube, and Facebook itself are able to leverage as they scale users.

So why are developers obsessed with Facebook? Because there are fewer applications on Facebook than there are on the web, so there is less competition — at least for now. That’s it.

But Facebook will eventually be overrun with apps, just like the web. So will MySpace’s new platform. So will every application with lots of users that turns itself into a platform.

Platforms are already commodities. Because the WEB is the real platform. Google’s Jeff Huber said it well at Web 2.0 yesterday:

A lot that you have heard here is about platforms and who is going to win. That is Paleolithic thinking. The Web has already won. The web is the Platform. So let’s go build the programmable Web.

Sounds like an attack on Facebook Platform and all of the me-too platform plays, right? Maybe on the surface. But I’ll bet if Facebook’s Mark Zuckerberg was listening at Web 2.0, he was smiling to himself.

Because Facebook Platform is just one big feature development and testing scam — and a brilliant one at that. But Zuckerberg and Facebook know that’s not where the real value is.

The real value is in the DATA.

Facebook has been attacked for not letting users export their data and use it on another social networking service.

Well, DUH. How else are they going to create any business value?

Applications — the front end technology — are no longer the core business asset, at least not in the long term. It’s way too easy for anyone to clone anyone else’s application.

And that means applications built on another service’s platform aren’t the real asset either — it’s too easy to reproduce. Just watch MySpace’s platform catch up with Facebook’s platform.

So what is the business asset? The users — and their data. The “social graph” is what drives value for users on Facebook. They have all their data on Facebook. Their friends have all their data on Facebook. That’s it. Done. The users are happy. They’re locked in, but they DON’T CARE.

Users put data into Facebook. Their friends put data into Facebook. Facebook kicks back a lot of value. Everyone is wins.

All the silly platform applications — it’s just a game for Facebook. Test a bunch of new features. Test how users respond. Test new ad models. All with free labor. Brilliant — but still a sideshow.

Facebook isn’t building its business around apps — it’s building it around data — by making that data hugely valuable to advertisers.

Try to think of a successful web company who asset is anything other than data. YouTube’s videos (including the copyrighted ones). Facebook’s social graph. Google’s indexed web pages. Amazon’s user purchase history.

Tim O’Reilly had been evangelizing DATA for a while now, but somehow the message hasn’t gotten through to everyone:

That goes back to a major theme of web 2.0 that people haven’t yet tweaked to. It’s really about data and who owns and controls, or gives the best access to, a class of data.

All you have to do is look around to see that it’s all about the data.

The most successful companies on the web are those that created a virtuous cycle between their users and their database, where the more data users put in, the more value they get out. That’s the essence of Web 2.0. Data has limited value locally, or walled off on a single site. But pool that data, and the whole becomes much greater than the sum of its parts, allowing everyone who puts data in to take much more value out.

That’s what drives the search economy. That’s why NYTimes.com realized they were better off putting their content (data) into the search engine index (database), because they derive more value from putting data into the search ecosystem than they do keeping it to themselves.

YouTube, MySpace, and Facebook didn’t get big because they created technology that couldn’t be cloned — their applications were cloned dozens (hundreds) of times over. They got big because they were the FIRST to create a well-designed application that drove a virtuous cycle of data input and data output for a particular group of users, e.g. college students. And once they got the data, no competing applications could create the same value for users, because they weren’t sitting on top of the same massive database.

Got data? Got users who thrive the more data they put in. You win.

Scott Karp

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