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.
Get updates by email:
21 responses so far ↓
1 Hashim Warren // Oct 19, 2007 at 12:44 pm
Great thoughts. I’m surprised more non-app sites, likes news sites and blogs don’t collect data on their users.
I disagree with this though -
“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”
Competition is not the only thing. Distribution for apps on the web currenty sucks. Some apps rely on their 10 pages in Google’s index to attract more users, while there is a world of activity behind the registration wall.
Facebook is a new method of distribution for these apps. It’s the difference between opening up a store on a random city block, and opening up one in the mall.
2 Scott Karp // Oct 19, 2007 at 12:49 pm
@Hashim
Is it that “distribution for apps on the web currently sucks,” or that distirbution for apps that are derivative or one-feature toys that no one needs currently sucks on the web.
Facebook Platform is sheltering a lot of apps that can’t survive out in the wild, mostly to Facebook’s own benefit — but the reality that is, even with help from Facebook distribution, apps that don’t create tremendous user value will ultimately die.
3 Alexander van Elsas // Oct 19, 2007 at 1:20 pm
Scott, I don’t think I agree with you on this. Data is static, it doesn’t have any real value in itself. It is the application or usage of data that creates value. I am convinced that real value comes from interaction. It is the interaction between people that creates more value than anything else. That is why Facebook and all social networks will have a hard time in the end. They concentrate on 1) network value and 2) profile data. Forget about it. From a user’s perspective these elements provide no real value. My profile is my interaction with others. We need more user centric thinking instead of network or data thinking to move away from the web 2.0 trap.
http://vanelsas.wordpress.com/2007/10/17/the-future-of-social-networks-lies-in-interaction-not-perse-in-voice/
4 Chris Brogan... // Oct 19, 2007 at 1:36 pm
I love love love that you’re pointing at the data. I’ve had this thing in my noggin for too long about how my platform isn’t me- it’s the tool. I’ve talked about a time when RSS is the blog, and it’s just whichever shiny reader/aggregator/smartpicker spits stuff out the way I want to see it.
It’s the plural of data, data, that makes this story even more fun-boggling. Semantic web stuff, and what if the Techmeme’s-next-competitor figures out a way to really thread the web so we can start to see stuff that lines up into a thoughtful narrative without a lot of hard work? What will that be for me? It will be nirvana.
I’m with you, Scott. I’m in love with post and hope it brings some more agreement.
5 Eric // Oct 19, 2007 at 2:24 pm
This is exactly right, and why what Facebook is doing is actually back asswards wrong.
Compare it to Flickr, as a random example. Flickr also released a “platform” ages ago; it’s the API. And today, thanks to the popularity of Flickr, there’s a huge ecosystem of applications built on the Flickr data – blogs, screensavers, mashups and more. The same is true for a host of other services which have become underlying “platforms” for the web. In each case, an API gives developers access to data, whether it be user generated (like Flickr) or not (Google Maps), enabling the creation of better applications than would otherwise be possible.
The Facebook “platform” is basically a glorified widget engine; while I don’t think there’s anything , what they should have done (and still should do) is create an API to let other web sites leverage the Facebook data, that would let developers really build on top of Facebook, rather than within Facebook.
I think that if Facebook doesn’t adopt this approach, it’ll suffer in the long run and eventually fade to irrelevancy. If there’s one immutable law of the internet, it’s that open beats closed in the long run.
6 Mark Forman // Oct 19, 2007 at 6:53 pm
Goo post Scott. Get’s back to-forget about the hat and the rabbit coming out of it. Always follow the money trail.
7 Dodgypress // Oct 20, 2007 at 6:51 am
Interesting Observations. I have a tiny question for you though…..Could the precursor to facebook, Linked In, Ever Catch Up???
Or are they way too late to the Game.
Also could the owners/developers of wordpress.com, replicate in some way the dynamics, and success of facebook. Could the value (data) that they have inside the wordpress.com ecosystem be as valuable as that inside facebook/myspace…etc….???? Really lookforward to your thoughts, and indeed, anyone else’s on the matter …..
8 Olivier Issaly - Kiad dot owrg ! » Blog Archive » It’s all about your data ! // Oct 20, 2007 at 7:06 am
[...] à mon précédent billet, voilà une autre manière de dire les choses. Scott Karp explique pourquoi ce ne sont pas les applications qui comptent, mais bien les données qu’elles véhiculent, en s’appuyant sur la déclaration [...]
9 free market research report // Oct 20, 2007 at 8:22 am
No doubt data is real asset for any business model however, data’s accuracy and rightly format are the biggest factors to take any leverage out of it and facebook may not have enough to lure advertisers.
10 Rick Behnke // Oct 20, 2007 at 10:31 am
At what point in the value chain is the data monetized? Is it when data is converted into advertising? Is this the only business model that we have at our disposal? When we speak about data are we really speaking about the demographic the data attracts? At the Web 2.o Summit Mark Zuckerberg said that Facebook isn’t focused on revenue, and he thought it should run break-even while it grows. But what is it growing into? How can it productively leverage this data in the value chain? As an ad machine for application consumption? Is this really what Web 2.0 is all about — a network for better demographic profiling? Sorry for venting. It’s just that I think intuitively focusing on the data is correct, but I’m not sure what can be creatively done beyond advertising to extend the value it creates. Maybe it’s the overall experience that can be created for the originating point of the data — the user. If that’s the case then it really is about the Web as an over-arching platform, as Jeff Huber said. But doesn’t that just bring us back to the beginning?
11 Doug // Oct 20, 2007 at 6:47 pm
Great post Scott.
Alexander – I agree with your sentiments.
The media continues to underestimate Facebook – I really think its a generation gap issue.
Its more than data – its like a party everybody’s attending at all the time (I’m sure younger users of would agree).
While I’m not one of those users – I can see how the company could be worth $10B five years out.
12 RONS DIXON // Oct 21, 2007 at 7:24 pm
@ Rick, you are absolutely correct, at what point is the data important and relevant enough to be monitized.
13 Plus Editions » Data is king, forget the platform // Oct 22, 2007 at 4:51 pm
[...] comme nous vous regardez Facebook pour en comprendre le pourquoi du comment, je vous recommande cet article du blog Publih2. La thèse est simple : l’avantage compétitif se construit non pas sur la [...]
14 Adri // Oct 26, 2007 at 12:26 am
Agreed, it does come down to the ability to act as a “node” by bringing together users and their content and that represents the real value of a site. But the “platform” with which this happen is the key to moderation (manual or automatic, a lot of it or less). Moderation has a lot of power on how you bring together users+content and therefore, it’s IS important we understand and think of these platforms in web 2.0
15 Ethan Bauley // Oct 26, 2007 at 11:03 am
That interview with O’Reilly is the most important strategic info on the web.
People need to think outside the box…there are untold of thousands of classes of data that haven’t been organized and made accessible. So many different domains.
16 Google’s assault plans on social networks « Alexander van Elsas’s Weblog on new media & technologies and their effect on social behavior // Oct 29, 2007 at 11:28 am
[...] I have written on the Google strategy before, and it seems that a lot of the things written down then are now becoming a reality. Google plans to open up all their applications, creating a social layer across all of them. But, in contradiction with Facebook, Google seems to have plans to open up the network two ways, not only allowing a user to us this layer across many different Google applications, but also across different social networks. It’s what many call “the web as a platform”. Scott Karp dismissed that term a while ago, quoting Google’s Jeff Huber: [...]
17 Adam Martin {Fat Man} // Nov 7, 2007 at 5:30 pm
In whole hearted agreement which leads us to post the question, how do we display the data? Data visualization is an artform, turn Alexa into a pretty dynamic scatter graph and you’d have us hooked.
But it also raises another question, if it’s all about data then the monetisation is all about advertising, and how much more ad based business modeling can we take!!
18 Fat Man - interactive design & development collective | the a-word // Nov 8, 2007 at 11:26 am
[...] really doing by accepting our digital content for free is generating lots and lots of lovely data for ad number crunchers to use to serve us more Sugar Daddie ads on Facebook or banners inviting me [...]
19 The Coming War Over Data On The Web - Publishing 2.0 // Jan 3, 2008 at 11:54 pm
[...] Data is POWER [...]
20 Data And The Future Of The Web - Publishing 2.0 // Jan 5, 2008 at 6:38 pm
[...] I asserted several times that data is the key to the future of the web, Umair Haque gave my head a good spin by asserting that data is in fact a [...]
21 Data And The Future Of The Web « Veille Technologique // Feb 2, 2008 at 4:20 pm
[...] 2 février 2008 Source : Article de Publishing 2.0 After I asserted several times that data is the key to the future of the web, Umair Haque gave my head a good spin by asserting that data is in fact a [...]
Leave a Comment