It’s odd to see a powerhouse like Facebook scrambling to become more like Twitter, a relative upstart with no visible means of revenue. The reported rejected acquisition bid could play a role in a “If you can’t buy them, copy them” way. But clearly, this is what is happening.
First Facebook changed its user interface to a adopt more Twitter-like activity streams. Although this style of user interface is arguably more like Friendfeed than Twitter, they all seem to be converging on a similar model built on real time feeds of what friends and contacts are doing right this very instant. Who cares what anyone was doing or thinking about an hour ago anyway, right?
The second move came this week when Facebook opened up their APIs to third parties. This is a far more welcome, meaningful and risky move for Facebook. One of the reasons Twitter has caught on is that it is easy to build applications on top of the Twitter service using rich interfaces. These applications range from the sublime to the ridiculous, providing mobile access, different styles of clients, monitoring tools, analysis and aggregation.
For most heavy Twitter users, these third party tools define their Twitter experience. Twitter doesn’t really seem to mind, since it has maintained a pretty utilitarian UI on www.twitter.com. it hasn’t changed much except for the addition of a (fairly well-hidden) search engine and a few tweaks seen recently like showing replies when the @symbol is anywhere in the tweet instead of only at the beginning; useful, but hardly revolutionary. There isn’t much need to go there except to change profile information, which doesn’t happen all that often.
Unlike Facebook and most other sites, Twitter doesn’t need to bring people to their site in order to make money by pushing advertising at them. For reasons discussed in an earlier post, I believe Twitter is concentrating on building volume and loyalty, with monetization to come later. Of course. “later” cannot become “never;” eventually they need to bring in some money. For the moment, that doesn’t seem to be a priority, however.
The threat to advertising revenue is why this is such a risky move for Facebook. When anyone can build a flashy AIR-based client to follow their friends activities, or gadgets that pull selected data from the Facebook stream, then there is less reason for users to actually visit www.Facebook.com, which is when the cash register jingles at Facebook HQ. So far, Facebook has done everything it could to keep users coming to its site rather than sending its data to someone else’s. I think that Facebook is counting on three factors in favour of opening up:
- More activity means more visitors
If the third party apps bring in more punters, than eventually they will visit Facebook.com with its full range of functionality. What they lose in visits they gain through more visitors.
- Other revenue sources will open up
Advertising is not the only source of money for social media. Expect to see more emphasis on sponsorship, partner fees, value-added services, and joint ventures.
- If they don’t, Facebook could become irrelevant.
Right now, they are at the top of the social media heap, recently having passed Myspace, which in turn replaced Friendster as the place to be. Losing some advertising revenue is better than being replaced.
I believe that last reason is the real clincher. The first two are throws of the dice; new money could replace or even surpass what they could miss. The risk of becoming the Last Big Thing in social media rather than staying the current big thing is more like flirting with disaster. A forward-leaning strategy encouraging more partnerships and activity certainly makes more sense in this space than building walls, so I think this is fundamentally a good move on Facebook’s part. It can be scary to put a painfully developed revenue stream at risk, but in the social media market, trying to protect it by erecting barriers will eventually prove disastrous.
By the way, I’m sure that the role of Twitter and Facebook will come up often at Gartner’s PCC conference in Orlando in June.