Just saw a very nice analysis done by Tim O’Reilly and his research team about Facebook applications. A very small excerpt from his post called “Good News, Bad News about Facebook Application Market: Long Tail Rules
The good news has already been widely disseminated: there are nearly 5000 Facebook applications, and the top applications have tens of millions of installs and millions of active users. The bad news, alas, is in our report: 87% of the usage goes to only 84 applications! Only 45 applications have more than 100,000 active users.
A lot of discussion on in in the comments as well. The Graphics provided show a very steep long tail, where really only a few companies are probably making any money on Facebook applications. Interesting enough, if I am a Facebook application developer I can easily get investors interested.
When reading through the post two things come to my mind:
- Writing a Facebook application is easy! Writing an application that provides the user with such value that he will actually use it is,….. well, just like on any platform, hard. Don’t think about leveraging Facebook as a network or platform, think about providing users with value.
- The business model for a Facebook application is not a very positive one. According to this research there are only 45 applications with more than 100.000 users. I haven’t read the report yet, but judging on the data Tim provides, of those 45 there are few reaching more than 1Mln users.
I can’t help but think that there will only be very few companies that can actually create business models that are based upon creating value for the users on the Facebook platform.
So what are all those investors and developers doing out there? I can’t see this lasting very long in this way? Are we slowly closing in on a Facebook shake out, or am I missing the point here? What is your opinion on this?