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.

The appeal of blogs to marketers is their singular brand identity, making it possible to accurately target their ads. Copeland: “Advertisers say, ‘I know I can trust Blog X, but I also know that Blog X has 100,000 readers – and God knows what those
100,000 readers are going to say.’

This is why completely open systems of “user-generated content,” e.g. social networks like MySpace and Facebook, and social news sites like Digg, still have so little commercial value relative to their scale. It’s not that advertisers don’t value how the web has opened the door to new voices or enabled new, dynamic, networked media models — it’s that they still need a reason to trust these new voices and to trust how these dynamic media operate.

The big problem with open systems is anonymity — when you don’t know who the users are, as in blog comments or on Digg, you can’t really trust or predict in any meaningful way what they might do.

That’s why Copeland praises Gawker Media’s invite-only comment system, where anyone can comment…but only if they EARN the privilege by applying to be a commenter:

He praised Gawker publisher Nick Denton for maintaining a controlled environment around its sites’ various comment pages. For one thing, Gawker Media requires commenters to formally apply and those that break the rules can have their commenting privileges immediately revoked.

As competition intensifies for a share of the online advertising pie — especially for a share of big brand advertising dollars, which are still mostly spent on trusted offline media — online media companies will need to provide highly trusted environments that brands will feel comfortable with, even in the context of new media models.

Sites built on open systems, which turn content creation and publishing into a free for all, will find it increasingly difficult to get their share of brand advertising dollars. Sites that that can harness the dynamism of the web, and can do so in a defined context that provides advertisers with the right degree of predictability and comfort (think Google search results), will likely be the big winners.

The archetypal consolidated media company was, in many ways, the newspaper chain, which consolidated monopoly media channels across non-competitive local markets, guaranteeing that the whole would exceed the sum of the parts. But on the web, EVERYONE competes with EVERYONE. You buy one website and it steals traffic from another that you own.

How can media consolidation possibly function in this zero sum game for attention online, with hyper-fragmentation, long tails, and people creating media here, there, and everywhere? It’s tempting think that the media business is no longer about scale.

But media has always been — and always will be — about scale, and there is only one trend in media now that matters — the only trend that has ever mattered — consolidation to achieve scale. What’s changed is not that scale has stopped driving the media business — what’s changed is HOW you achieve scale.

Google is the only REAL media business success story of recent years — arguably of this century — because they figured out how to consolidate and monetize the ENTIRE web, by consolidating the attention of media consumers who are searching for other companies’ content — and then they extended the monetization through the AdSense network to sites where that attention went. Google’s announcement today that YouTube is now a platform for distributing video content and associated ads through the AdSense network is part of that consolidation.

The media industry didn’t see Google coming because traditional media companies didn’t recognize that the web had fundamentally changed the dynamics of scaling and media consolidation. But that is beginning to change, at least among the savviest media companies.

The new media consolidation includes:

• Buying and selling links to influence search traffic — a practice Google is cracking down on to protect its own consolidation
• “Citizen media” sites like the NowPublic, AssociatedContent, and the recently acquired Newsvine, which consolidate independent content creation activity
• New York Times bringing the Freakonomics blog onto its domain and cranking out new blogs (over 40 now) in order to crank out more and more content at a fraction of the cost of its traditional print content operation
• Vertical ad networks that comprise mostly niche sites you’ve never heard of but that get tons of traffic from search
• Traffic networks — a larger strategy that encompasses ad networks, blog networks, affiliate networks (e.g. Glam, Reuters’ new Affiliate Network) — networks like CNN’s partnership with Internet Broadcasting’s local TV sites, which created the largest news “site” after Yahoo News

These represent one of two principal new media consolidation trends, i.e. the consolidation of content creation. The second trend is consolidating the power to decide WHICH content gets attention.

Search is the leading edge of this second wave of consolidation — what we might call the consolidation of “attention allocation,” to give it a larger frame than search.

What Google discovered was that consolidating all of the search behavior on the web is actually a form a media consolidation. It used to be that the content and the distribution were one and the same — newspapers, magazines, TV networks, etc. — Google was the first media company to successfully arbitrage the separation of content from distribution.

But search is only half of the equation. Search has consolidated the allocation of attention for people who know, generally or specifically, what they are looking for. The other half of the attention allocation equation for media is people who don’t know what they are looking for — they just want to know what’s NEW. I may be interested in technology, or celebrity gossip, or foreign affairs, but I’m not looking for anything in particular. I just want the news.

This is why the online news market is heating up. This is why Google has started to develop the Google News product after letting it run on automatic pilot for so many years. This is why Digg has captured everyone’s imagination — it has the attention allocation power of search, but applied to news.

But there’s a problem with these two approaches to media consolidation — they remain separate.

In one corner you’ve got all of the capacity to create content, from traditional media brand networks to citizen media consolidators, all the way down the long tail to independent blog publishers.

In the other corner you have the aggregators, from search to audience-powered social news, increasingly dominating how attention gets allocated to all of this content.

It seems unlikely that the the big media players are going to be content with half the pie.

And so this separation is starting to dissolve, e.g. Conde Nast acquires Reddit, Google starts hosting news wire content, Forbes acquires Clipmarks, Digg hosts massive comment threads that dwarf what you find on the original content items.

This is where consolidation converges, where content creation meets attention allocation — new media companies are realizing that they have to do both.

But Digg has introduced an interestingly disruptive element into that equation, because it has empowered the people CONSUMING the content, i.e. the audience, readers, etc. — to allocate attention. And that still leaves the people who consume content acting separately from the people who create content.

But what if the content creators, the people with the deepest involvement and stake in media, powered the aggregation? This is what Google achieved implicitly by capturing the link votes of web content publishers. But what if you could do it explicitly? You see this on small scale in bloggers’ del.icio.us links — but what would it look like on a large scale?

What I realized is that, actually, it’s NOT free. To read the New York Times or any other newspaper online, I have to be connected to the internet — and that, in most cases, is definitely NOT free.

Broadband internet access at home is still in the $40-50 range. I pay Verizon extra to access the internet on my Blackberry. I pay extra to use my Blackberry as a tethered modem. Traveling to the New York the other day, I paid for WiFi access in TWO different hot spots because my tethered modem kept dropping the connection (not a coincidence I think). Companies pay for high speed lines for their employees. And we of course pay a lot for the computers and handheld devices that we use to access the Internet (e.g., iPhone).

I realized as I kept pulling out my credit card for public WiFi access that it’s the ISPs who now wield much of the monopoly power once enjoyed by newspapers. I read the New York Times everyday — and I still pay for the privilege. It’s just that I’m not paying the New York Times.

This is the fundamental flaw in the thinking about the future of news — the assumption is that newspaper subscribers used to PAY for NEWS, and online they get it for free.

But the reality is that newspaper subscribers didn’t pay for just for news — they paid for DISTRIBUTION. They paid for a highly useful package of information to show up on their doorsteps every morning…which was the ONLY way to get access to that information. That package included news, and many subscribers valued that part of the package, but they also valued:

• Movie listings
• Employment listings
• Real estate listings
• Cars for sale listings
• Comics
• Sports scores
• Style section
• Coupons
• FSIs
• Ads for sales at retail stories

Everyone is thinking about the shift in the economics of content in terms of paying for content, but what publishers are really facing is a shift in the economics of distribution. We’re still paying for a bundle of information to be delivered to our homes — it’s just that now that bundle is traveling via fiber optic cable rather than newsprint.

It’s not that “content wants to be free” — it’s that Internet access ISN’T free, and now that distribution and content have been unbundled, people are reluctant to pay TWICE — once for distribution (i.e. internet access) and again for content (paid subscriber wall).

So as news organizations seek new models to “pay for news” — to staff the newsrooms that do the reporting that create the news — they need to stop asking why consumers won’t pay for news anymore. Because they ARE paying to access news.

What needs to be reinvented is the economics of content CREATION, which has been cut loose from the economics of distribution. Fewer and fewer people are paying news organizations to distribute news — so they need to find a model that pays strictly for the creation of news.

That is…unless news organizations can once again become hubs of distribution — a destination for consumers to access a rich package of information. Right now, most news organizations are merely offering the same package of information online that they do offline — but the web is much, MUCH bigger than that.

That’s why search engines like Google, along with ISPs, have taken over the information distribution business — search offers people the whole web, while news organizations still offer the same old finite package.

It’s time to get out a clean sheet of paper.

Or perhaps more apt — a new Wiki or Google Doc — figuring this out is going to be a collaborative effort, like Jeff Jarvis’ Networked Journalism Summit.

Jeff is right to focus on the network. The new economics of news won’t be based on monopoly distribution channels — it will be based on networks.