Facebook – Fruit Flies for Applications

Geneticists have long used Drosophila melanogaster (a.k.a the fruit fly) for their experiments to see how mutations affect future generations. The fruit fly is inexpensive, has a short life span and multiplies rapidly.

In many ways, FaceBook has become the fruit fly for application developers. It provides an environment where a developer can quickly implement a new application and launch it to 30 millips prospective users.

Some applications fall by the way side, discarded for lack of interest of user appeal – other are embraced and their use grows rapidly. Those applications that take off and achieve wide usage can be studied to try and determine why one particular application (feature, UI element etc.) prevailed while others failed.

Today's WSJ has an article on this phenomenon – "Why so many want to create Facebook Applications". While the path to monetization for many of these applications remains to be seen, the FaceBook environment is conducive to experimentation:

• Initial development is fast and inexpensive
• Leverages t he FaceBook API and the social network around individual users and their tastes
• Close to zero sales and marketing costs to hit an available "market" of 30 million users
• Rapid feedback to test new features, user interfaces or even whole new concepts

I'm sure that other companies with large user bases are looking at the FaceBook "open application" environment with an eye to seeing if they can monetize their user base in the same way. FaceBook is not the first to go down this path as SalesForce opened their AppExchange some time ago. Unlike AppExchange, FaceBook doesn't require captive data and has a much lower friction path towards creating a marketplace for new applications.

There is an interesting market developing for low cost applications – not necessarily low development cost or low functionality but applications that are made available under a subscription rate of a few dollars per month. I've subscribed to a number of low-cost applications such as FlightBrief ($4.95/month weather service for pilots) and Personal FlightExplorer (a service for tracking flights under instrument flight rules). I continued my subscription to these applications for a long time – they provided convenience, high utility and the cost was low enough that if I only used it once or twice per month, it was still a good deal. Renewals were automatic via my credit card and I only cancelled them when they ceased to be of immediate need or I found alternatives.

For these kinds of applications to become a significant market, you need:

• Low friction and low cost access to large numbers of prospective users (the Internet becomes your sales, marketing and fulfillment channel).
• Self service – the user has to be able to sign up online and rarely (preferably never) speak to a customer service representative.
• Instant gratuity – high personal value delivered on the spot.
• Sticky – whether through data or uniqueness

I suspect that a lot of users would sign up for applications with value like this for a few dollars per month and probably more than just one application. If you take the number of potential online users, this can develop into a market of size in a hurry.

It will be interesting to see how this develops – watch for:

• Other companies with user bases opening their APIs (LinkedIn, Google, Yahoo…_)
• The emergence of new programming tools and platforms to takes advantage of standard APIs for rapid development
• Analytics and tracking statistics that focus on "micro" applications

Just be wary of one thing…

"They told us that MySpace is over, it's just not cool anymore; Facebook is still cool, but that might not last much longer; and the biggest thing in their life is word of mouth. That's how they hear about music, bands, everything."

This quote comes from an article in the Sunday NY Times Magazine on Rick Rubin and the music industry (of which more in my next post). It offers a cautionary note to not focus exclusively on one set of APIs… or users!

Comments

[Rodney Rumford]

Nice observations. Paid applications on facebook are coming.

The fruit fly analogy is spot on for 1 dimensional applications. Short life span and not very engaging.

Useful applications are on facebook and monetization can be done in a variety of ways with these apps.

Rodney Rumford

[Paul Reilly]

Great analogy, although some of the applications are not showing any slowdown in net installation growth. Which is mirrored by the seemingly unstoppable growth of facebook itself.

It will be interesting to see how saturation begins to effect app growth over the next 6 months.

Paul Reilly

[Live TV]

It's also a great testing ground, instant access to millions of potential users or audience.

But it's over saturated now.