Guest post: Frédéric Filloux, editor of Monday Note, which covers media, tech and business models, explains why death reports of paid-for models on the Internet have been greatly exaggerated and how Facebook might need subscription fees to survive in the current economic climate.
Death reports of paid-for models on the Internet have been greatly exaggerated. Granted: the network's genome carries the "free" nucleotide. As in both freedom and free goods and services. Like it or not, its publicly funded origins (universities and the Pentagon) led to the emergence of widely adopted services such as search engines or Wikipedia. In turn, these have sealed the fate of the paid-for model as the dominant one. Right. I intentionally emphasize dominant. Because like everywhere else, hybrid forms are likely to emerge.
In the news media sector, we've seen many attempts to make readers pay for Internet content. From Slate to The New York Times, almost every publisher tested its own recipe. They all came back to free. Truth is: the fully paid-for model doesn't work online, unless it is: a) highly specialized (financial information and services, for instance), or b) provides unarguable value added (e.g. premium dating, tax or accounting services). Now the free model is facing a new hurdle: with this recession, advertising is suffering way more than expected. Further, alarming trends preceded the recession: click-through rates were falling, and the display ad system was labeled as a no-future thing. Now, the stream of ads is drying up quickly: double-digit drops are not uncommon. All business models built on advertising are now in grave peril.
Take Facebook. The tip of the iceberg is shines brightly: 100 million users, most of them active, a trillion page views per year, about two hours spent per month and per user. (Write down "engagement", a new word, soon to be the de rigueur metric.) As it turns out, this assiduous crowd loves photography: 300,000 images are uploaded every second, creating by far the biggest photo library in the world with more than 10 billion images, four times Flickr's.
Under the surface (the huge part of the iceberg, expenses), numbers are equally staggering:
• 13,000 servers were running few months ago, and analysts say the company will need 50,000 machines next year (no wonder why Rackable Systems, the leading provider of datacenter equipment enjoys a 44 percent growth for Q2 08 vs. Q3 07 -- it draws 17 percent of its revenue from Facebook)
• a $1m monthly electricity bill
• another half-million per month for bandwidth
• the 2 terabytes of data (mostly photos) uploaded every day require the purchase of one NetApp 3070 (a mammoth storage systems) each week
• maintaining this infrastructure, dealing with the output of a half-million developers, requires a big staff. For this activity only, Facebook 's headcount is between 700 and 800, costing about $80m a year.
In other words, Facebook is burning cash like a furnace.
What about the coal, you might ask? Good question. Advertising was supposed to feed the beast. Which leads us back to this note's item #2: a shrinking supply of ads, a superb ignorance of the target group (just look at your kids -- or yourself -- how often do you click on a banner?) As a result, the financial community keeps raising questions. Emarketer estimates the 2008 revenue of Facebook to be about $265m. Unlikely to be enough to cover expenses. According to Techcrunch, most of the $500m raised by Facebook is already gone, and the company would turn to Dubai investors to get a cash infusion.
Facebook is learning the hard way that eyeballs, once they are counted by millions, are expensive to serve. What's the solution?
The online magazine Slate came up with an interesting idea: charging people. In fact, a small fraction of them. Introducing another flavor of the hybrid model: a tiny proportion of users paying a fee that will subsidize the vast majority of non-paid ones. This is the idea outlined in the story "A Radical Business Plan for Facebook":
"Judging from some of the folks in my social network," wrote Farhad Manjoo, "a sizable minority of Facebook users have hundreds of 'friends' and check in to the site multiple times a day--call them superactive users. Let's imagine that Facebook became a tiered service. A free plan would limit you to 200 friends, one status update per day, or some other non-Draconian combination of restrictions. But for $5 a month, the limits would be lifted. Certainly, many users would balk; tens of thousands would join Facebook groups to protest the new pay model. Let's assume that 95 percent of users will refuse to pay a dime. That still leaves 5 percent, or 5 million people, to pay $60 a year. That's $300 million in the bank."
Farjoo confesses to be inspired by David Heinemeier Hansson, a developer for 37signals, and advocate of the paid-for model.
Nothing quite new, in fact. In China, the software industry has been working that way for long: 80 percent is bootlegged versus 20 percent generating license fees, but the market is so huge that even a tiny monetized slice is sufficient to insure a sizable revenue stream for software makers (that goes also for entertainment products).
These are not the only examples where the free model can be a powerful commercial engine. Last week, at the Monaco Media Forum, Avinash Kaushik, Google Analytics' chief evangelist, mentioned the example of TurboTax, an American tax filing software and service company. For a limited period of time, TurboTax decided to give away its basic application. It has two effects: of course, taxpayers rushed to download the free version -- a zero-cost massive promotion campaign, since the production and delivery costs of the software are close to zero -- but more surprisingly, at the same time, the sales of the Deluxe version ($59.95) rose significantly. That was the free model as a sales engine.
To what extent the examples mentioned above could inspire the media industry is a complicated question. A part of the answers lies in the publishers' ability to conceive not only great news services but also clever applications and services that could draw an audience willing to pay for it, that will, in turn, subsidize the bulk of the readers/users enjoying free basic (and bait) content.
Frédéric Filloux is currently editor for the international division of the Norwegian media group Schibsted ASA and of Monday Note. In 2002, he was part of the team that launched the free daily 20 Minutes, which is now the most read newspaper in France with 2.5 million readers (the online version, 20minutes.fr, has about 200,000 visitors per day). Prior to that, he spent 12 years at Liberation, successively as a business reporter, New York correspondent, editor of the multimedia section, manager of online operations, and, finally, editor of the paper. He also has an experience in the advertising business after a one year stop at the Paris group BDDP agency (now TBWA). He is a graduate from the Bordeaux school of journalism. He lives in Paris.
SAN FRANCISCO--After a decade as the chief evangelist in the wilderness of software as a service, which has morphed into cloud computing, Salesforce.com founder and CEO Marc Benioff is having a more challenging time coming up with groundbreaking industry disruptions. But that isn't stopping him from enthusiastically preaching the cloud computing gospel.
Benioff and company have built a $1 billion business and gradually expanded a CRM application, run like Google runs search in the cloud, into a platform that greatly reduces the friction involved in business software development and delivery. With Microsoft recently entering the cloud-computing platform arena with Azure and practically every vendor staking a claim to the cloud, Benioff's vision has been legitimized and turned into the next big thing. But that just makes Benioff try harder. Salesforce.com is no longer the underdog, but Benioff is relentlessly touting his "no software" theme and irreverently characterizing Microsoft, SAP, and Oracle as dinosaurs.
Salesforce.com CEO Marc Benioff
(Credit: Dan Farber)At the Dreamforce annual customer conference here Monday morning, before a crowd of 10,000 adherents, a supercharged Benioff came out on stage, seeking to maintain his crown as the Pied Piper of cloud-based business software. "There has never been a better time for cloud computing and for Salesforce.com," he said. He was likely referring to the troubled economy, which makes cloud-based software services an attractive alternative to traditional software business models.
The news of the day is an evolution of the Force.com, the company's development platform for building and running business applications in the cloud. Force.com sites will allow customers to run their Web applications on Force.com, and takes care of the domain, URL, and RSS management. In effect, the new service further consolidates Salesforce.com's hold on a company's data and public Web presence. The company also announced Force.com for Amazon Web Services, which allows applications to be built between the Amazon and Force.com clouds.
In addition, the company announced Force.com for Facebook, which allows developers to use the Facebook APIs within Force.com applications and tap into Facebook social graph data via the Facebook Platform and Facebook Connect. The combination will lead to social CRM and social sales, Benioff said. "Facebook has over 300,000 pages run by businesses," said Facebook COO Sheryl Sandberg during the Dreamforce keynote. "By coming together with Force.com we are about to unleash enterprise apps on our network," she said.
Steve Fisher, senior vice president of the Salesforce.com platform, showed a Force.com recruiting application running within Facebook. The connection with Salesforce.com could also be another source of revenue for Facebook, beyond advertising.
Cloud computing is becoming mainstream and Benioff is trying to ensure that he is upstream from the competition. He may not remain in that position, but he will continue to push the industry a whole deeper into the cloud.
SAN FRANCISCO--Standing 52 stories in the air at the upscale Carnelian Room in the Bank of America building here, executives from Dell, Facebook, and Salesforce.com discussed the meaning and use of the latest technology buzzword, cloud computing.
The sky was blue and cloudless, but it didn't adversely impact the atmosphere of what turned out to be a Dell marketing event. It was pitched as an announcement about a partnership that involves "the next generation of cloud computing."
You might recall that Dell is the company that owns the URL Cloudcomputing.com, and made a failed attempt to trademark the phrase. Earlier this month, the United States Patent and Trademark Office rejected the company's application. Dell marketing head Andy Rhodes wasn't willing to comment on whether Dell would appeal the USPTO decision.
Despite the cloudless sky, the speakers offered genuine insights into cloud computing, an umbrella term for "hyperscale" computing that covers everything from delivering compute services like a power utility delivers electricity, to simply hosting applications off-premises (see also software-as-a-service and on-demand computing).
(Credit:
Dell)
Event host Forrest Norrod, vice president and general manager of data center solutions at Dell, defined cloud computing as an economic enabler for applications, not just for single applications but for platforms-as-a-service, such as Salesforce.com. He emphasized the economies of scale advantage that cloud computing has over client/server and previous generations of infrastructure deployment.
Forrest Norrod, Dell's cloud computing chief
(Credit: Dan Farber)Dell is currently a cloud computing arms supplier to companies such as Facebook and Salesforce.com. "Dell is focused on early adopters and large customers, about 50 worldwide, to provide optimized servers, storage, and data center infrastructure," he said. "Cloud computing is still an emerging market, with standards across the framework and software stack still emerging. We are trying to promote an ecosystem to build the software stack on top of the infrastructure. You will gradually and judiciously see us add capabilities up and down the stack.
Norrod pointed to recent Dell acquisitions--Message One, Silverback Technologies, and Everdream--as examples of Dell's focus on software, not just the hardware piece. Increasingly, both Dell and HP are building out their software stacks to compete with Sun and IBM for providing highly automated data centers running commodity hardware optimized for cloud computing.
Jonathan Heiliger, Facebook's vice president of technical operations, had some praise for Dell. "Dell is doing the most aggressive things possible to optimize for cloud computing," he said. "We think Dell is perhaps the furthest along and we see them as a thought leader." Facebook has more than 10,000 servers, Heiliger said, and it's safe to assume any of them come from Dell.
He noted the price of hardware is not the biggest issue. Vendors can even sell hardware at a loss or at a fixed margin cost to get the initial business. "What we have seen in the landscape is that most server providers are trying to provide Lexus quality products at a Toyota price. We are looking for Scion products at a Scion price," Heiliger explained. "(Vendors) have to be creative around power and airflow optimization. The cost of operating the hardware is key; you have to take down the operating cost, not just the server cost."
For Heiliger that means bare-bones servers. "We don't need fancy graphics chips and PCI cards," he said. We need one USB port and optimized power and airflow. Give me one CPU, a little memory and one power supply. If it fails, I don't care. We are solving the redundancy problem in software." Blade servers are not ideal, he said, because of the higher cost and proprietary lock-in that come with the lack of a standard chassis.
Check out the video interview I conducted with Heiliger about managing infrastructure hypergrowth as Facebook adds 250,000 users per day.
Claus Moldt, vice president of technical operations at Salesforce.com, offered similar comments to the previous speakers. The company is phasing out Sun equipment and standardizing on Dell servers (Dell is a customer of Salesforce.com). Salesforce.com has two data centers in the U.S. and one due to go online in Singapore later this year. Moldt said his biggest challenge is capacity planning, making sure that as customer usage patterns change, the Salesforce infrastructure can adapt instantly.
Dell is betting big on cloud computing to boost its enterprise footprint. At this point, Dell doesn't have plans to build its own cloud to provide hosting for external applications, Norrod said. But, there may come a time when being an arms supplier won't be enough for Dell to be competitive. In addition, selling bare-bones servers can't be much of a high margin business, which is why Dell is moving more into software and services. Norrod said Dell's cloud computing efforts have been a large component of Dell's recent market share growth. Dell's second quarter earnings due tomorrow should give a more precise indication of the impact of the cloud on company's business.
On this week's EIC Squared podcast, ZDNet Editor in Chief Larry Dignan and I discuss the news of the week. It was a big week for Microsoft, with several announcements and teases from its meeting in Seattle with financial analysts. Steve Ballmer is still bullish on the online space, but not on Yahoo. We also talk about Kevin Johnson's departure from Microsoft. (See coverage on the Microsoft financial analyst meeting from Ina Fried and Mary Jo Foley.)
We spend a few minutes debating the impact of Carl Icahn joining the Yahoo board and what it means for Jerry Yang's future. Larry thinks that Yang bought himself more time to turn things around. If so, he will need to speed up delivery on the Yahoo Open Strategy and build a social layer into Yahoo's collection of services.
Finally, we discuss the impact of Facebook Connect, which will let users access and feed their Facebook profiles and friends on any Web site. It's Facebook's way of extending its platform to embrace other services and get more data and pages flowing through its social portal.
This week, Facebook took a number of strategic steps toward its goal of giving people the "power to share and make the world more open and connected." That's how founder and CEO Mark Zuckerberg described the mission statement for Facebook.
With that mission statement, similar to Google's mission to "organize the world's information and make it universally accessible and useful," Facebook is highlighting its noble aspirations, but underneath the "make the world a better place" is the fact that both Facebook and Google, as well as Yahoo, Microsoft, MySpace, and others want to be the portal for the masses.
(Credit:
(CC) Brian Solis )
By portal, I mean more than just a place to share content with friends, search or wire up a social graph. If the Web is becoming social at its core, Facebook (90 million and growing at hundreds of thousands per day) and its competitors want to be the center of their members' lives in the same way that MyYahoo became a personalized home base for millions of users over the last decade.
As evidence of Facebook's portal ambitions, the company introduced Facebook Connect, which will let users access and feed their Facebook profiles and friends on any Web site. Facebook is the identity system and portal through which the content from other sites flows--all roads leading to Facebook, which is distinct from what Google's more open and distributed approach with Friend Connect. Facebook Connect is not yet generally available, but demos from Digg and Six Apart, among others, indicate that it has substance.
Video: Zuckerberg introduces Facebook Connect
Om Malik extrapolates from Facebook Connect that Facebook is building a money machine:
You are essentially telling Facebook's proverbial brain what topics -- blogs or specific posts -- with which you like to engage. In other words, you just told the system a little bit about yourself. Now imagine such information coming from dozens of Facebook Connect partners.
Each service adds a few more data points about you inside the Facebook brain, which is quite aware of your activities inside the Facebook ecosystem. The brain can then crunch all that information and build a fairly accurate image of who you are, what you like and what might interest you. With all that information at its disposal, Facebook can build a fairly large cash register.
The cash register is an advertising platform, a follow on to Beacon, that leverages the social graph and each member as a potential marketing engine. With all the data and user permissions, ad targeting could be more precise. Zuckerberg has also talked about a payments system, a la PayPal, for the platform. After getting Chat launched, Facebook is likely working on making its e-mail application more robust as part of building out the portal.
Microsoft is poised to bring its Web search and paid search results into Facebook's U.S. site.
With 400,000 developers, according to Facebook, working on the platform, thousands of applications--from e-commerce to games--and widgets with any kind of feed will be available for each user's Facebook portal.
Facebook also has more than 10 million users of its mobile services, which is the next major frontier for building user portals. For example, Facebook Connect for Mobile, due for release in the fall, will allow members to hook up with friends over mobile devices to play games with friends and learn which friends downloaded applications of shared interest.
Challenges for Facebook are scaling to support the increased amount of data pouring into its servers and adapting to different geographies. More than two-thirds of Facebook users are outside of the U.S., but all of Facebook's servers are inside the U.S. Decreasing latency, which leads to increased page views, will be a key to Facebook's ability to keep up with demand.
If Facebook can continue to roll out new features, maintain its growth pace and improve site performance, it will be on a collision course with the Web portal giants who were born in the 20th century. Of course, one of those Web giants may pay mega-billions to consolidate the market, but it's unlikely that Facebook will give up its independence any time soon.
A few weeks ago I talked with Jonathan Heiliger, vice president of technical operations at Facebook, about the challenge of innovating quickly and building stable infrastructure while 250,000 new members are added to the social network every day. Check out the video on ZDNet.
Jonathan Heiliger
(Credit: CNET News)Q: You've been at Facebook, I think, for about a year and it's been quite a ride I guess, scaling up from zero in 2004 to over 80 million today. How do you keep up with that hyper growth?
Heiliger: You're absolutely right--we've had a lot of growth. We add over 250,000 users every day, and that means a lot of infrastructure, a lot of servers, and constantly looking at new processes and looking at how we're doing things and ensuring that we're doing things the most efficient way possible, not just for delivering all the content to our users but to stay on top of what it costs to run the site.
How do you stay on top of the cost in terms of the kind of equipment you buy and how you work with the vendors? How do you prioritize those things?
Heiliger: One of the things we recently did was we ran an RFP process for the servers we buy from vendors and essentially did a bake-off with a number of different people looking at building servers on our own. What we concluded from that process was to continue to buy servers from a couple of major OEMs (original equipment manufacturers), but through that process we were able to lock in prices today and carry those prices forward as all the commodity components costs drop.
When you're buying those servers, and I assume you're doing just a huge scale out of commodity servers, what do they look like? How are they configured?
Heiliger: We're pretty lucky in that we run a wide variety of applications, literally tens of applications on our own and hundreds of applications for our platform developers that use Facebook as a distribution mechanism, as a way of interacting with their users. But one of the reasons we're very lucky is our engineering team has selected to use PHP as the primary development language. That allows us to use a fairly generic server type. So we, with a couple of exceptions, have three main server types and run a fairly homogeneous environment, which allows us to then consolidate our buying power.
You're different from Google in the kinds of applications that you run. They are mostly running search queries, and you're running all kinds of queries and bringing back all kinds of data from the social graph. How is it different in terms of the way you build out your data center from the inside?
Heiliger: Google has a tremendous amount of information that they index and archive and present to users, but fundamentally if you go to Google and type in a search for a "tiger" and I go to Google and type in a search for a "tiger" we're going to see generally the same results, so they're presenting that same information to both of us. Facebook is a little different in that the context for our data is all social. When you look at your friends and their status updates and their photos and the notes they may have written, you're going to see one set of data versus if I look at my friends and their photos and their notes and status updates, and those tend to be non-intersecting sets of data.
So it's much more dynamic?
Heiliger: Much more dynamic data set--and what that means is it's caused us to do a bunch of different things relative to caching and relative to federating all of that data up amongst thousands of different databases so that as a user requests all of that information we're not using one particular server every time for different data.
You recently introduced a chat application on Facebook, and it seems like it took a lot of time to test it to make sure it could scale having all those simultaneous conversations going on. Could you give us a little background and color on how that came to be?
Heiliger: Chat is actually one of our most recent launches. It started as a hack-a-thon project, which is one of the things we do about every other month. People get together and work all night and pick a project they don't have time to do necessarily during the day. From the time it really germinated as an idea to the time it launched and was available for our entire user base, it became a more formal development project. One of the things we did as part of that was actually built a new back-end service to be able to deal with all of the millions of simultaneous connections that we persist for users.
One other thing I was reading up on some of the work you've been doing--you say that clouds don't solve single points of failure in your stack. What are those single points of failure?
Heiliger: Interesting question, and the notion you are referring to there was part of the talk I give in regards to cloud computing is just a panacea, and for a start-up or even a more mature start-up like Facebook, isn't the answer to solving failure points in an application. By that I mean the underlining infrastructure that powers an application is typically the result of, or the outcome of, how the application is originally designed and how users interact with that application. If an application is poorly designed or designed to constantly reference a single set of data, the underlining infrastructure is going to be the victim of that. Guys like myself in the infrastructure world have to figure out how to best make that work.
As someone who is in operations how much impact do you have on the application development to make sure that once it gets into the data center that it can work properly and scale and not have the kind of failures we're seeing with some of the new applications?
Heiliger: I think it's a constant challenge in any organization, particularly a fast-moving one like Facebook, where we want to iterate quickly and get product out in our customers' hands so we can get feedback on that product and continue to tweak and enhance it over time. We have one force that's moving in that direction, and we have another force that says we want to keep the site up, we want the site to be reliable, and we want the site to be fast.
So there's a fine balancing act, where everyone in management and everyone in both the engineering and operations department constantly just sort of works, interacts, and goes back and forth, figures out just how to make those trade-offs. Sometimes we err too aggressively on the side of innovation and iteration, and put things out on the site in perhaps a small quantity that may break the site or cause the site to slow temporarily. Other times we air on the side of conservatism, of not releasing new functionality or new features, and that then delays the sort of user gratification of having that feature or fixing that bug.
What are the challenges that you see--let's say you're at 80 million unique users per month, 250,000 being added per day and 50,000 transactions per second. What happens when you get to 500 million or a billion if you ever get there?
Heiliger: Hopefully, tremendous things. I think we can only look forward to those days.
But what are some of the bottlenecks or barriers you have to overcome to get to that kind of scale?
Heiliger: Some of the bottlenecks we're facing are how we scale this extremely distributed set of data. One of the challenges we have is figuring out how to make that replicated such that it can exist in multiple places around the world and we don't also have to bring users back to the U.S. or back to one of our data centers. I think it's a challenge that most Web sites tend to face as they scale, which is you start in one location with a single database and then you have to figure out how to grow from there, primarily driven by the amount of latency or the amount of time it takes to reach the site and interact with the site. Being able to replicate the data across multiple data centers and across multiple geographies allows users to not just read their data from a local version but write that data as well. That is one of our key challenges over the next 12 months.
As you learn more about building up this very large scale infrastructure do you ever see the possibility that a Facebook could be a service provider?
Heiliger: What do you mean by service provider?
In the sense that right now you're just running the Facebook application but what if a developer or user wanted to do something similar to what Amazon is doing, using your infrastructure to run their applications in the cloud?
Heiliger: Gotcha. So one of the values of Facebook is the Facebook platform. We have over 100,000 developers and several hundred applications that have over a million users using them. We've talked about perhaps opening up or further opening up the platform by offering compute power for those application developers. One of the steps we've already taken to improve that development environment and improve the experience for our developers is just to open-source our platform, which we announced just a couple of weeks ago as well.
In this video interview, Jonathan Heiliger, vice president of technical operations at Facebook, talks with about managing Facebook's hypergrowth. Heiliger is a rock star infrastructure geek. He was the CTO of Global Crossing at age 23, worked at Marc Andreessen's Loudcloud and spent time as the head of Web engineering at Walmart.com.
During the interview, Heiliger said that Facebook has more than 10,000 servers and leverages mostly open-source software across a distributed architecture, with thousands of MySQL instances. "It's almost a new challenge every day," Heiliger said regarding the challenges of keeping up with the growth in users--about 250,000 new users per day. He said that Facebook is considering building its own data centers, but for now is renting.
The meaning of openness in the realm of social networks continues to be difficult to pin down. At a panel discussion Tuesday at Supernova 2008 in San Francisco, representatives from Facebook, Google, and Plaxo discussed their various interpretations of openness and got into the ongoing controversy between Google and Facebook over their friend-connecting APIs.
Kevin Marks, Joseph Smarr, and Dave Morin prepare to go onstage.
(Credit: Dan Farber)"The point is that the individuals have shared custodianship of it because they have overlapping knowledge of each other's connections," said Kevin Marks of Google regarding who owns the social graph data. Users understand that if they violate the implicit social contract, it will upset fellow users. "The goal of OpenSocial (Google's set of application programming interfaces for allowing applications to access a social graph) is to have an abstraction so the social contract can be enforced by the containers," Marks said.
"Open is when users are mashing up things and in control. It's driven by what is valuable to the user," said Plaxo's Joseph Smarr.
Facebook's Dave Morin defined openness as giving people control over the information they share and providing developers with the capability to build on top of the Facebook platform. Social data breaks down into three categories, Morin said: identity data, social graph data, and feeds and social actions. With 80 million users, Facebook has a responsibility to make sure that users understand what and how they are sharing information, he added.
"You should be able to take your identity wherever you go and keep social graph in sync," Morin said. The notion of "dynamic privacy" is at the core of Facebook's openness efforts. Users set up privacy controls inside Facebook to share more information and to be more open, and have it always in sync, Morin explained.
It's on the point of being able to take your identity across social networks that has put Google and Facebook at odds.
Last month Facebook blocked Google's Friend Connect service, claiming that it violated its terms of service. According to Facebook, Google Friend Connect's violation was redistributing user information from Facebook to other developers without the users' knowledge.
"When Facebook Connect initially launched and Google Friend Connect launched, both implemented different technology. We found Google to be in violation of our terms of service, so we asked to talk about it with them," Morin said. "We are in direct contact with Google representatives to find ways to work together. It's important that on this panel we are talking about this...It's important that we figure out how to make it work together.
Marks asked Morin what Google would need to change in Friend Connect to make it work for Facebook.
Morin answered, "We would like to work together on how to make dynamic privacy happen for everyone, so every privacy setting on our site works on other sites."
Marks was unclear as to what Google was copying from Facebook in its Friend Connect implementation, using OpenID, OAuth and OpenSocial, that would cause a violation in Facebook's terms of service.
Morin said he preferred not to talk about legal matters. "Our representatives are talking so a fight on the panel doesn't need to happen."
It wasn't a fight but Morin's answer that representatives are talking makes it seem that lawyers instead of engineers, who are at the core of the two companies, are running the show.
Smarr chimed in, "We see each other all the time, and we are all in Silicon Valley, so there are overlapping back channels."
"What Facebook is doing (with dynamic privacy) is very laudable--if you choose to share something in one place, it should appear in another. It's just not clear on how this dynamic privacy will work. If Facebook tries to do it by themselves and not with other people, it will be hard to make it really scale," said David Recordon of Six Apart, who has been involved in data portability efforts.
Facebook CEO Mark Zuckerberg and his new COO Sheryl Sandberg fielded questions from Kara Swisher at the D6 conference. The pair stayed on message. Zuckerberg has learned to simply state the company goals in answer to almost any question. It shows focus and the savvy of a budding politician. Sandberg brought serious chops to the monetization and marketing discussion.
Kara asked Zuckerberg why he chose to be the CEO, even as the company has grown to 550 people. He sidestepped the question and talked about the company goals--helping people share information, building products, and creating teams.
Mark Zuckerberg and Sheryl Sandberg
(Credit: Dan Farber)Zuckerberg offered up that the Beacon advertising program was a big mistake, but it reinforced the point that Facebook needs to give people complete control of their information. In other words, Facebook takes privacy seriously.
Sandberg talked about value in Facebook applications, including those that are whimsical and fun, such as Slide's SuperPoke. Kara asked how Facebook will change the advertising paradigm in the context of those applications. "The larger part of advertising is in demand creation and traditional brand advertising. Facebook has a really unique opportunity to fulfill that message. Users tell us what they like and what they do, and it provides us an opportunity to work with advertisers to provide things that are great for users. We think we can offer real users engagement."
Zuckerberg thinks of Facebook as a technology company, while Sandberg described Facebook as a media company that connects people and advertisers. The ended up connecting their viewpoints. "Technology can speed up the interaction between advertisers and users, and that's really good for users," Sandberg said. Making privacy and advertising work harmoniously will be a major challenge for the CEO and COO.
Zuckerberg talked about changes to the Facebook platform, especially getting rid of the box mentality--user pages littered with applications in boxes on pages. The net effect of the new Facebook platform is that the more engaging applications and those that users trust more will get more distribution, through feeds instead of boxes, he said.
Kara saved the Microsoft question for last. She asked Zuckerberg if he would sell Facebook to Microsoft for $15 billion. "The goal of the company is to execute on the things we talked about before, become more open, and share more information. The end goal isn't to sell the company or IPO. We evaluate how it will help us along the way," Zuckerberg said. Can they sell company without you?, Kara asked. "I don't think so," Zuckerberg responded. Facebook's VCs may have a different view on Zuckerberg's view on exit strategies, but it is refreshing to talk about building value.
Sandberg, who recently made her first visit to Microsoft, said the two companies had a good partnership. "No company can go it alone. We are a small company with 550 people, four years old and not very big," she said.
D6 co-host Kara Swisher and Facebook's Mark Zuckerberg and Sheryl Sandberg.
(Credit: Dan Farber)Zuckerberg told of Google's Sergey Brin and Eric Schmidt coming to his apartment for dinner. He didn't have the proper things to make dinner or enough chairs for his guests to sit. Kara asked him about working with Google. He danced around this question.
"They do a lot of interesting things. It would be good to work with them on something. The thing is Google is such a big company and doing so many things. They are also working social stuff. It would be good to talk to them about some stuff." In other words, we aren't really working with them. However, with all the Google refugees at Facebook, that could change.
Regarding the controversy with Google's Open Social initiative, Zuckerberg said that Facebook is watching how it evolves. "It's really just getting started," he said.
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The obsession with the ups and downs of Twitter among my friends has generated a great deal of bloviation, including my own. On a slow news weekend, Twitter's performance problems are fodder for a bit of theater and for getting some daily keyboard exercise.
The image below is meant to bring some perspective to the Twittersphere. On one hand, Twitter navel gazing (or any other navel gazing) is a waste of resources in the context of what is going on in the world. On the other hand, Twitter and its brethren are becoming viable communications vehicles for spreading the "word" and images.
For example, I first learned of the recent tragic earthquake in China via Twitter messages from people I follow on the service. To be clear, Twitter is not the Holy Grail of communications services--it's an extension of instant messaging and technologies such as RSS. Nor are the 140 characters in a Twitter message a substitute for a blog post or news article. But a "tweet" can be a network amplifier, providing a brief snapshot, innervated by followers and the followed, that can be broadcast around the world in near real time.
Twitter and related services are currently noisy, spammy, unwieldy, overrated, and often unreliable. But over time, the core concepts will become an integral part of the Internet's communications fabric.
