Webware

HALF MOON BAY, Calif.--Facebook's business playbook takes a page from those of the early dot-coms: build it and then figure out how to make money.

Sheryl Sandberg, the chief operating officer of Facebook, said here in a panel interview Tuesday that Facebook's primary goal is to grow its social network. Second is monetization.

"Our focus is on growth--we believe this is the moment people are joining social networks," Sandberg said here at the Fortune Brainstorm Tech conference, a three-day gathering on technology and media. "Then it's monetization to support that growth."

Her comments were in answer to a question about Facebook's reported $15 billion valuation after Microsoft invested and struck a strategic partnership with the company last year. David Kirkpatrick, a Fortune writer who's working on a book about Facebook, asked about whether the company is feeling pressure from investors to produce revenue and take the company public. Her answer was no.

"We're not public (and we're not feeling that pressure)."

Sandberg joined Facebook in March after six years with Google, where she was vice president of global online sales and operations. At the time, it was a big loss for Google because she oversaw the search giant's advertising engine AdWords. At Facebook, she's founder Mark Zuckerberg's right arm in charge of business operations and developing an economic engine for the company.

She said that after six years in advertising at Google, she believes that there's an "unusual and extraordinary opportunity" for advertising at Facebook. That opportunity is somewhere between major brand advertising like Super Bowl commercials and the direct-response search ads that Google sells.

"This isn't search and it's not monetization of search--that's direct response. We're not trying to compete with direct response," she said. "We do see a huge opportunity in performance and brand marketing. More than 90 percent (of marketing dollars) spent in the world are not in direct, but in brand, and that's (about) generating awareness."

The unusual situation Sandberg spoke of is that Facebook members create and share content with each other. The opportunity is for marketers to insert themselves into that swap of information. For example, she said Facebook helped Mazda run a design contest on the site recently that let members rate new designs from the car company, or create their own. Three hundred people submitted designs to Mazda, and Facebook members voted on the best one.

Fitzpatrick asked if that kind of relationship with marketers can scale enough to justify the company's valuation.

"All of the tools are publicly available--Mazda used groups and pages, and we worked with them to put that together," she said. "We need to do a better job to work with advertisers so that they can use the tools."

Sandberg said her biggest challenge at Facebook is growth, rather than figuring out how to make money. More than half of the site's users are based overseas, and as a result, the company recently launched versions of the site in 18 different foreign languages. She said that overseas usage is accelerating because of it.

Facebook's already in the cat bird's seat when it comes to social network traffic in the United States. According to ComScore, Facebook pulled in 123.9 million unique visitors in May, beating MySpace's 114.6 million visitors that month.

The company is also working on projects to develop Facebook for the enterprise, data portability technology, and settings to help people differentiate types of friends on the site.

And the company is enjoying a fast rate of growth on mobile applications, including the iPhone, she said. She would not say how many people are using Facebook on the iPhone, but she said the company is not yet focused on monetizing mobile traffic. "We're not very far in this. We're focused on that for the site."

Sandberg sloughed off the bubbly notion that Facebook is focusing on "if you build it, they will come."

"We're growing users and we're growing revenue along with it," she said.

Amazon.com announced Thursday that it has acquired audiobook company Audible.

The deal comes with a price tag of about $300 million in cash and short-term investments, and it is expected to be completed by the second quarter of this year.

Audible, which was founded in 1997 and operates services in the United States and United Kingdom, as well as operations in Germany and France, sells more than 80,000 audio versions of books, newspapers, and magazines, as well as television and radio content.

"Audible.com offers the best customer experience, the widest content selection, and the broadest device compatibility in the industry," Steve Kessel, Amazon's senior vice president of worldwide digital media, said in a statement from the two companies. "Working together, we can introduce more innovations and bring this format to an even wider audience."

Amazon's interest in the digital-content market has become more and more evident in recent months, with the November release of its Kindle e-book reader, which can play audiobooks. Last year, Amazon also launched Amazon MP3, a music store that competes directly with Apple's iTunes.

A BurnLounge 'storefront'

(Credit: BurnLounge)

Well, the music offerings at South by Southwest are heating up, and we'll keep you posted on the good ones. I mentioned BurnLounge in a Hoooka, which is a start-up that lets you sell music through a MySpace widget. BurnLounge, which has been around for a while longer, has a similar model: create your own music store, choose the music in it (WMA format), add your own reviews and recommendations, and (optimally) profit. But until this point, it had been just that--standalone personalized music stores, lacking additional functionality that most people think of when they think of new Web brands, such as social networking features and embeddable widgets. Today, however, the NYC-based BurnLounge unveiled its latest incarnation, known as "BL2." It's now open to current BurnLounge retailers, and will be accessible to the public next month.

The original BurnLounge concept was a Web-only product, but BL2 now offers downloadable music-store software--it is, however, only compatible with Windows thus far. This is extremely ambitious, since it puts BurnLounge in direct competition with that other download for buying and playing music, you know, the one run by Apple. But BurnLounge is focusing on customization so that it can outsource its subscription-based software to music artists: retailers now can sell merchandise, tickets, ringtones, and other music-related paraphernalia.

The BurnPages social network.

(Credit: BurnLounge)

In addition to the "BL2" revamp, BurnLounge has also introduced a social networking feature called "BurnPages." You don't need to have your own music store in order to operate a BurnPage, which you can then customize with a blog, photos, music playlists, profile data, and just about everything else you could likely stick into a MySpace page. Additionally, BurnPages now offer widget functions that you can stick on external blogs--which could be enough to put something like Hoooka out of business. BurnLounge already has an established clientele that includes Justin Timberlake and Kanye West, and it's in this arena that the company appears to have had the most success thus far.

Nevertheless, it still goes without saying that a social network is only as good as its user base. So the jury's still out on BurnPages.

BurnLounge, in my opinion, is a company to watch, as it's making a noticeable effort to bridge the gap between a consumer-oriented piece of webware (complete with social networking) and a tool that can be licensed to corporate clients. This kind of business model, catering to both markets, is an interesting one. Plus, with all these next-generation music companies starting up, it's almost like Web 2.0 all over again. So what is this...Web 2.2? Web 2.4?

Wii

Now that Nintendo's coveted Wii is equipped with an Opera browser, the gaming console is now capable of all kinds of Web-based fun! One of the cool gimmicks that I'm pretty pumped about is the fact that you can now control iTunes with your Wii remote. It's possible thanks to the Dot.Tunes application, which can stream music from your iTunes library to any number of devices: other computers, Web-enabled cell phones, and PSPs. On the Wii, you can use the Opera browser to access Dot.Tunes, which has a Flash interface that you can navigate with the Wiimote.

Keep in mind, however, that Dot.Tunes is not freeware: it'll cost you $30 once your 15-day free trial expires. But I'm anticipating that we'll be seeing more tie-ins between popular webware and the Wii browser within due time. And, optimally, a few of them won't cost you an extra cent.

Dot.Tunes on the Wii

(Credit: Listening Post)

Note that I didn't implement the corny term "Wiitunes" a single time in this post. One, it's a bad pun. Two, Wired's Listening Post blog got there first.