Brij Singh’s Blog

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Brij Singh’s weblog about entrepreneurship

Surely you are joking, Mr Open!

Ralph Waldo Emerson wrote this in the beginning of 19th century:

“Every man alone is sincere. At the entrance of a second person, hypocrisy begins.”

Let’s vandalize this statement to suit our current taste:

“Every vendor alone is sincere. At the entrance of a second vendor, hypocrisy begins.”

Social media segment is seeing an onslaught of hypocrisy like we’ve never seen before. This practice is not only institutionalized but it has evolved to a stage where you really need to have good filter in order to catch bs.

Technology movement called OpenThatGoddamnMarketWhichWeFailedToCaptureInTheFirstPlace!

This type of movement has a long history. Though in current context this can be traced back to the phenomenal success achieved by Google. Google indexed pretty much all the web, it has a near monopoly on $30 billion paid search market and has a near universal presence in all the web sites using Google Analytics and other javascript embeds. Google never launched OpenSearch or OpenIndex. They don’t have to as they rule this space. So the job of waving Open flag was left for vendors who were catching up.

At the entrance of a second vendor, hypocrisy begins.

Facebook rules social world. They have found a nice hack to do what Google did but with a lot less data center resources. Their Like model gains from user engagement. Like is a vote. Like is a Farmville style crowdsourced indexing of the web. This vote goes into huge Facebook ocean, where on the other end, massive data crunching monetization monster is waiting for it. Like is also an action which will grow to become a Buy button in near future. Stakes are high and so is the market size. So what’s going to happen now? Let’s recycle Michael Corleone:
We’re both part of the same hypocrisy, senator, but never think it applies to my portfolio.

There is plenty of commentary going on around ‘Open’. Read between the lines or better read author’s disclosure page: Facebook Open Graph, Open Like, Private Social Graph. Meaning of the Word Open. Open Than Thou. Facebook F8 good for open web. For the geekier version you can follow these resources: Open Graph Protocol, Data liberation, Open Like, OAuth 2.0

You can expect further erosion of user privacy and can very well expect more innovation in default privacy management. What I am more concerned about is the inclusion of engagement and game dynamics in user privacy settings. Argument will go like this: it’s fun and it’s designed to increase user engagement.

Facebook app for iPhone (243,482 daily active users, 45%). Big implications for ad networks?

http://photos-d.ak.facebook.com/photos-ak-sctm/v43/195/6628568379/app_3_6628568379_796.gif

 
In another example of how mobile-app-can-wreak-havoc-with-your-business-model, check the usage statistics of Facebook For iPhone.

There are 243,482 daily active users representing 45% of total. These are high numbers. It's fair to say that 243,482 iPhone owners are now using Facebook for their social networking experience.

Now compare the use % for applications which are higher on the leader board -


High active user number for iPhone application has serious implications for several Facebook developers. Especially Social Media, Lookery . These distributed ad platforms need to come up with a model similar to PinchMedia.

Now iPhone users are affluent (or maybe crazy!), spend more time online, and fall into compelling demographics. Ideal for ad targeting. Challenge lies in developing a new ad serving model which can exist within the constraints of App Store. Eventually acceptable format will show up but in the meantime iPhone will further damage monetizability of social networks.

Also every  user access Facebook from iPhone means one less ad impression on Facebook.com. In Facebook case ad is served by Microsoft. We can generalize this reduction in ad impression across all mobile social network apps.  That cool and  'clean interface' constraint of iPhone app is a natural ad blocker.

Keep an eye on 'active user' count for mobile social networking apps.  It's a leading indicator of how disruptive mobile apps will be.

Update: Just to add important data point here. Erik Schonfeld, over at TechCrunch, reports that Lookery is lowering guaranteed CPM to 7.5 cents. As I pointed out yesterday that meta social network ad plays will have to adjust their business model. This sums up best:

Lookery is hoping all of those pennies will add up, but it isn’t counting on it. CEO Scott Rafer says the ad network is running at break even in terms of gross profits. But his plan is to use it to “bootstrap a data services business.”

In other words its back to basics now.

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