Monetization of Facebook Apps

Tim O'Reilly has a very intersting article about facebook apps.  The data he's found is that even though there are 5000+ facebook apps, 87% of the usage comes from 84 apps.  This makes anybody looking at the data question how monetizable these apps are.  Techcrunch lists the top 20 apps below:

Facebook Application

1. Top Friends (Slide)
2. FunWall (Slide)
3. Super Wall (RockYou!)
4. SuperPoke! (Slide)
5. Video (Facebook)
6. X Me (RockYou!)
7. iLike
8. Movies
9. Graffiti
10. Likeness (RockYou!)
11. My Questions (Slide)
12. Quizzes
13. Mobile (Facebook)
14. Free Gifts
15. Booze Mail
16. Compare People
17. Honesty Box
18. (fluff)Friends
19. Vampires
20. Scrabulous

I know the developer of one of these top twenty apps.  It's not important which one it is, but it generates about 500k pageviews a day, and each pageview monetizes at $0.10 to $0.25 CPM.  If I take $0.20 as the average, it comes down to $100/day.  Tha's $3000/mo, or $36K/year.  Not bad if you are a sole programmer, but a far cry from making you rich beyond your wildest dreams.

The #1 app, Top Friends has 2.8M active daily users.  Can't easily tell how many monetizable pageviews they get per user per day, but even at this massive usage, it's hard to see them making more than $1000/day.  That's $360K/year, again not bad, but not a slam dunk.

When you look at how little these apps are monetized it's easy to dismiss how much money one can make from it, but I think O'Reilly hits the nail on the head with this comment:

"While the report focuses on the market for current Facebook applications, it seems to me that the future opportunity is less in Facebook applications per se, and more in the development of applications that use the social graph embodied in Facebook for entirely new purposes. "

I can't agree with this more.  We are seeing the first wave of apps, and I can safely say, that I know of a few other apps being developed that use the platform in a completely different way.  These apps take longer to build, distribute slower, but have much longer lasting value.  It's those kinds of apps that can possibly make a lot of money, and it won't be limited to advertising.  More to come on this.

Comments

[baris]

Update: If some apps have 4-26% click through rate, like I am hearing, the effective CPM goes up a lot, and there could be almost a zero next to some of the numbers I mentioned. That's not bad.

[The Facebook Marketing Millionaire]

Interesting post, I would've thought the top Facebook app creators would generate a bit more bank from that though.

[Syven]

I understand that a business person or venture capitalists primary responsibility is figuring out how to make money or at least sniff an opportunity to show the money, but do any venture capitalist actually look at this Facebook apps list and note how superficial, cras and facile it is.

I was born in the very year Newton Minnow wrote a piece called "Vast Wasteland":

Vast Wasteland by Newton Minnow

So I ask, if television was the vast wasteland back then, then what is the mainstream internet becoming today? At least television media is less of a humongous frat party, for television simply created zombies called couch potatoes, but mainstream internet is creating a "Shaun of the Dead" where as it happens I do feel like I am Shaun. What is the point of those who talk about the downfall and death of traditional media, if when mainstream internet is seemingly helping extend the scope and frat power of zombie nation.

No worries, because lets face it, nobody outside those who deeply cared for quality media in 1961 really appreciated what Newton Minnow was saying, and when its time the next lot of kids to go to university, I don't particular give a monkey's what they hand out in their Frosh week pack, I just hope that Gated Communities are built fast enough so there is a place on Earth one can exist in that isn't all mouth-watering dribble and foaming mediocrity.

If I was to paraphrase a part of Newton Minnow's speech for the modern era it would now say:

"When the internet is good, nothing--not the theater, not the magazines or newspapers or the television -- nothing is better."

I am not saying that we should stop venture capital going into creating crap media, but just to call a spade a spade. Crap is good for the adoption cycle, after all despite foundations pouring money into creating better, quality media is consumed by a small minority.

Indeed even today quality internet is a niche and not a mainstream thing, after all how many of the mainstream internet has an attention span long enough to appreciate what is intelligent in the following Snopes thread:

Snopes Community Members Talking about Betamax v's VHS Urban Legends

In this regard lets continue to blame education or some scapegoat for status quo in intelligence because that will really lead us to profound insights..duh. The IQ test was invented (a measure originally invented to separate stupid from the normal kids), so I think we need to devise a new test that can separate smart kids from normal kids, but the problem with that test is that its based on personal awareness, not public assessment.

When it comes to personal awareness, the mainstream internet is becoming no different to mainstream television - we keep talking about the word traditional (which is generational and time specific) rather than the word "mainstream" which crosses generations. Mainstream is mainstream, no matter how many apps one puts on Facebook, the fact that Facebook was born from a university background should mean excellence but in reality, it's exporting the frat party to all corners of the globe.

Ending VC funding of superficial media won't end the mainstream wasteland, but at least we need to acknowledge that if we are to talk about "changing the world", that it actually means "changing the wasteland".

Origins of the IQ Test

M.

[Syven]

It is amazing how small a world we actually live in. I went off today to John Furrier's blog to browse further down the blog time tunnel and I came across a link to a Kara Swisher piece about the inanity of Facebook applications.

I am actually not as concerned about the juvenile nature of applications as I am finding out about the applications that serve a greater purpose. IMHO it will come to no surprise to anyone in particular that we do live in a world fueled by idiocracy. Which strangely, is a topic that I ran into and duly observed on one of my Kwai Chang Caine type cyber-treks a few days ago.

The only reason people like me focus on the triviality is because we actually want to know or find out about the smart stuff and the irony of course is that we end up not serving our own purpose; for we inadvertently turn conversation to focus on weakness, rather than what we actually intended, which is a focus for discovering strengths. I will assume here that we all do write for the best of intentions and as I look at the Kara Swisher piece, it is an opportunity for me to continue to focus on what I can personally learn rather than get lost in the abyss of that which is personally unchangeable or at least out of the span of our own personal control.

The mindsets we plug into the web should not simply feed our ego's or agreements, but to observe, with same type of recognition as accepting that college football is woven into the fabric of American education; that the "facebook" concept is also one that we do relate to and it is this concept which might actually be scaling here and not simply a strategic construct - so what we might personally consider to be about an evidence based commentary, is more often than not filled with sentimentality or identification, that by itself can prove to become an insight or contribution to our own social awareness.

M.