Last week I attended Graphing Social Patterns West and reported on the sessions that took place down in San Diego. It was a great event with lots of content.

After a bit of reflection, these are my top 10 takeaways from the event.

1. Hollywood and Video Game Players were MIA. I went through the attendee list and could not find anyone in attendance from traditional media or big gaming companies like Disney/ABC, NBC Universal, CBS, Activision, EA etc. The only person from a traditional media company was a developer from Condenast. Given the amount of time people are spending on these social networks and the growth of social gaming, the social networks are perhaps some of the biggest competitive threats and opportunities for traditional media. I was shocked by the chasm between the techies and the media.
2. The social application space has gotten big fast and will get a lot bigger. Over the past 8 months, the Facebook application space has exploded and real companies have emerged to take advantage of the space. This is only going to get bigger as OpenSocial opens up more networks and data portability finally starts being a reality.
3. Social objects are at the center of healthy micro-communities. I had not thought about this before, but social networks are not just about looking at each other, talking to each other and helping each other. Social objects like books, movies, cars, etc. are powerful mechanisms for building networks that link together people who don’t know each other.
4. OpenSocial apps will grow rapidly in next six months. For the past few months, OpenSocial has been in a development mode. In the coming weeks, it will be released at MySpace an other places opening up huge new markets.
5. MySpace will get Facebook like functionality. I got this from listening to what seemed to be a subtle conversation about the differences in the platforms and concerns by the Facebook app developers that MySpace had been self expression oriented and that Facebook had been communication oriented. Whether true or not, it seems that the effect of the open APIs will be to make all of the social networks more alike through the integration of third party applications that plug functionality gaps. No one talked about this explicitly, but when I brought it up with some of the leading developers I would get knowing smiles, but no comments.
6. There’s money to be made, and advertising is only part of it. Virtual goods and virtual currencies are a very important part of the social business model. Advertising will play a big role, but it’s not the only way to monetize the communities that are being built by these applications.
7. Social shopping is coming soon. Facebook will add credit card functionality and with it will come social shopping. Look for this to emerge later this year.
8. Social networks are a powerful new force for fund raising. Beth Kanter showed that she could use social networking and social media to raise $200,000. The Obama campaign seems to be using it to raise huge amounts of money. Every organization that needs to raise money should be paying attention.
9. We need better data. The data we get now is ok, but we need more if we are going to be able to learn and drive innovation systematically. We need data beyond page views. We need data that reflects on not just users, but also social objects.
10. Social application development is a learnable skill. Stanford is teaching it and I’m sure other schools will too. Stanford was able to teach students to develop 50 applications and learned a lot by sharing experiences. This means that others can do this too. This is good news for traditional media as their content can be at the center of the social object, and a good social object is the basis for the good application. It’s also good news for organizations that need to raise money or that want to use social networking to build their relationships with other stakeholders.

 

 Digital Podcast 42 [15:43m]: Play Now | Play in Popup | Download

Jia Shen, Chief Technology Officer and co-founder of RockYou, and R. Tyler Ballance, lead developer of Slide’s Top Friends application, spoke at Graphing Social Patterns West about social application development.

Both Jia and Tyler flew through their presentations so I had a hard time keeping up. I have enclosed Jia’s slides below.

Jia focused on a three phase approach to application development that map to the lifecycle of the application. It starts with marketing and validation. You need to decide the target audience, the messaging you will use and the channels to reach them.

Understanding what audience you are targeting helps to define which social networks will work best based upon their demographics. Once you have defined the audience you need to determine what application verticals and what channels will be important. On Facebook, these channels include news feeds, notifications, email profile, news, email profile, invites, profile action nonuser pages, and profile pages.

On Facebook, these channels include news feeds, notifications, email profile, news, email profile, invites, profile action nonuser pages, and profile pages.

The next phase is the growth phase. Here you need to break the viral barrier and drive up the viral multiplier. You are seeking to get it up above 1 user causing at least 1 other user to install. From there, you need to tune growth. You can track every thing and look for the trends.

Next part of the process is engagement. You need to tune the application to improve engagement and drive monetization. In this phase, email, profile and non-user pages become more important channels. It’s important to balance virality versus engagement to maximize growth and retention.

OpenSocial giving ability to add functionality. Still open questions about will it help with distribution and monetization still an open issue.

The audience is different than Facebook’s audience with a different use case. MySpace has been more about self-expression. We need to find out what will be successful with OpenSocial.

Open social channels include news feed, profile main page, bulletins, messaging, invites, non user pages.

Tyler pointed out that we need to understand the platform – the functionality, the data models and relationships provided are different. This should drive differences in what gets developed.

Part of this discussion also hinted at the differences between MySpace and Facebook as it relates to activity feeds in Facebook that may cause more viral spread of applications.

SLIDES

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[tags]gspwest08, Graphing Social, social application development[/tags]

Eric Eldon (VentureBeat), Jeff Clavier (Softtech VC), Jason Beckerman (Teach The People, Dank Apps), Lee Lorenzen (Altura Ventures) spoke about investing in social network applications.

Why the space valuable? Size and growth of audiences is driving value. The opening of the API’s at MySpace and OpenSocial is driving huge opportunities.

Application developers ask VCs why should they take the money when they are making good money with their applications. The answer according to the panel is that they can help build the company into something with substantial scale.(my note: this is a standard VC pitch, so make them prove they’ve done it if you are taking their money for this reason. A much better reason is their connections and how they can help you raise more money in later rounds.)

Each sector may provide one or two leading applications, but can any individual segment get to scale. Maybe there is a play in consolidating leading applications across sectors.

What are the big opportunities for a small Facebook developer? Build something good, get good reviews and use that to drive adoption. Growth may be slower, but users wills be more valuable.

Focus on building your business. Build a model that pays for your servers, then your salaries, then makes a profit. If you need inspiration, go to Borders. Look at the magazine racks and find a niche that you can serve.

As for valuations, make its a discussion.  In the end, make sure you feel good about taking the investment.

[tags]gspwest08, graphing social, Facebook application funding[/tags]

Jim Scheinman (Charles River Ventures), Seth Goldstein (SocialMedia.com), Scott Rafer (Lookery), Troy Young (VideoEgg), Murtaza Hussain (Peanut Labs, Inc) spoke at GSP West about monetizing applications on social networks.

Global advertising spend on the internet continues to grow rapidly. There are a whole variety of ways to monetize via advertising and transactions.

Application monetization networks like SocialMedia and VideoEgg have emerged to aggregate applications into advertising networks. To turn this into a big business, we need to get the brands to start spending more seriously to reach these audiences.

Marketers need to think about very new things when marketing in applications and games, such as where/when their ad gets shown within the application flow. Once the user is more engaged there is more likelyhood of getting the user to do things with advertising.

Murtaza observed that CPM can pay some bills, but real action is in virtual currency used that can be bartered for services and goods, both physical and virtual. Troy says that people can drive high media value they can make the money needed to drive revenues.

Seth observed that the best that Google has been able to do for Adsense is an effective CPM of $0.50, and that we need to do better than that to be successful.

What’s the new measure – revenue per active user according to Murtaza.  The ad network guys on the panel still focus on effective CPM.

(My note: This panel was very skewed to advertising.  There was very limited discussion of monetizing options beyond advertising.  Virtual transactions, lead gen all have much more potetial as CPM is not going to go up in my opinion.  Large publishers such as Yahoo have huge amounts of unsold inventory and it’s not going to get better as the world of content continues to expand faster than the amount of user’s discretionary time.  My bet is with Murtaza.)

[tags]gspwest2008, graphing social, application monetization[/tags]

Justin Smith (Product Manager, Watercooler), Andrew Chen (Futuristic Play), Blake Commagere (Mogad.com), David Gentzel (SocialMedia), Jia Shen (RockYou) spoke on a panel today about designing viral applications.

Andrew started the conversation by describing viral marketing as a marketing system where your customers sell your next generation of customers. Jia pointed out that the time frame now has been collapsed by the social networks so there is an accelerated viral opportunity.

There’s been a long evolution of viral from word of mouth, through email and other tools that have been turned into features of the social networks. Now instead of starting with the product, you can start from the customer and work back through the social networks as distribution channels.

Jai pointed out that early on Facebook did not put much restraint on how many invitations could be sent which created a gold rush effect that allowed an eco-system to grow as developers chased the growth. Now Facebook has put constraints on viral marketing tools which will make it much harder for new players to grow. The newer APIs are also being more conservative and that means they may have more difficulty building the same kind of ecosystem.

The differences in functionality across sites drives difference in application strategy. For example, on MySpace the focus will be more on applications that are self-expression, canvas oriented and less the viral, messaging applications.

Andrew highlighted that you can learn a lot from games in helping to make applications more successful. Things like reward schedules can drive use.

If you can build something that catches on you will know after the first couple of thousand users. If it’s successful with this group you can be confident that you can grow the applications penetration. Less viral applications will take marketing money to grow.

Being viral is not all it takes. If you’re getting lots of visitors and trials, and are not converting them into active users you are missing the opportunity. You need to make sure you’re measuring retention and repeat use of different visitor cohorts to ensure long term success.

It takes both viral growth and engagement to be successful.

[tags]gspwest08, graphing social, viral applications, viral marketing[/tags]

Roger Magoulas of O’Reilly presented some statistics they have collected regarding Facebook Applications.

Application count is up from 500 new applications per week to over 600 new applications per week, climbing up to over what appears to be 17,000 applications. The top 5-10 applications have really been the most successful in terms of usage, with a steep curve downwards for many other apps. 1% of apps account for 77% of volume, 2% account for 86% of volume, 10% account for 98% of volume and 20% account for 99% of volume.

Update: Found a Facebook Analytics site with some good date here.

[tags]gspwest08, Graphing Social, Facebook statistics[/tags]

Jeremy Liew (Lightspeed Venture Patners), Mark Pincus (Zynga Game Networks), Shervin Pishevar (Social Gaming Network), Michael Lazerow (Buddy Media), John Hwang (Tripmonger) spoke at GSP West about social games.

The panel talked about what they are doing and how they are making money. It all starts with how social games are different?

The opportunity is to create the very personal social gaming experience that we see when families play the Wii. Creating games like this online is the goal of social games. It’s about bringing people together, whether they be strangers or friends or family. The psychology of the games becomes more important in social games. The perspective is on an easy way for people to hang out together, not on game technology.

Experiencing the internet together is more fun than doing it on your own. A good rule of thumb is, if it can’t be made better using Facebook don’t do it. Users enjoy the light weight nature of these apps. Social gaming takes share from casual gaming.

Scarbulous is the breakout game. It’s so simple that it allows you to interact with lots of people in a light weight asynchronous interaction. Long playing synchronous games are played in a single session that doesn’t create a reason to come back. Asynchronous games give you a reason to come back. This can cause powerful viral effects.

Branded games are the key to monetization right now. It’s highly efficient way to get major brands and media companies reach their audiences. Average deals right now are about $100,000 for Buddy Media and they are sold out of inventory right now, so they are working on monetizing other company’s games. Another great opportunity for monetization is virtual goods. The amazing thing is that all the companies on the panel were profitable and they think there is still more upside if they can close brand deals.

Are social games a hit driven business? Games are hit driven. The big ones get bigger and the rest fall off. The is definitely a cycle of growth, use and then fatigue. The end level though may be higher than what is seen elsewhere on the web. A number on the panel are working on how to create networks to help leverage existing installed base of applications, either through click networks, APIs, partnerships, platforms that can be rebranded or acquisitions.

[tags]gspwest08, graphing social, social games[/tags]

Jim Benedetto, Vice President of Technology for MySpace, presented a technical overview of MySpace’s Developer Platform. The presentation covered where MySpace is now and where they are headed in opening up the MySpace API.

MySpace has had a history of a strong ecosystem

• Youtube , Photobucket, Slide, RockYou are all examples

MySpace values are driving there developer platform.

• Minimal creative restrictions
• Encouraging self expression
• High level of customizability
• Beneficial to user, developers

MySpace API overview

OpenSocial APIs

• javascript/html for embedded apps
• with myspace extensions

REST APIs

• server to server comm
• Oath authentication

Actionscript APIs

• flash support

Why OpenSocial?

Openness

• openness key to Myspace success
• openess helps everyone

Portability

• developers can spend more time building a great product rather than rebuilding for every social network

Leveraged existing technologies

• no need to lerrn proprietary development languages

OpenSocial Support

• full support of public spec
• currently support V0.6 with support for V0.7 soon
• MySpace specific extensions for MySpace specific features
  • bulletins
  • additional attributes for bands

Platform surface

• Profile surface
• Canvas surface
• User homepage surface (private space)
  • User specific surface
  • Enables the application to show specific data to a user
  • eg ebay bids, tweets from friends
• Application Gallery
• Application Profile

Security, Privacy and Safety
Applications will go through safety review process makes sure it doen’t spread bad or rogue code or viruses, keeps data secure and protects against rogue actions from other users

Apps will be governed by same privacy controls that are in place for members
will be using new technology to ensure that applications are safe for end ocnsumers

• Caja – MySpace and Google Joint Javascript Sanitizer
• Proprietary MySpace Technology

Balancing Virality and user Experience

Virality vs User Experience

• take long term approach to growth and distribution
• ensure clean applicaiton experience

Spam based growth is not needed for good applications

Measured approach to application growth

• Workflow limited to sending message 1 to 1

Restrictive early on, slowly increase communications channel

[tags]gspwest08, graphing social, MySpace[/tags]

Patrick Chanezon (Google), Chris Schalk (Google), Kevin Marks (Google), Lou Moore (hi5 Networks) spoke on a panel about building OpenSocial applications at Graphing Social Patterns West.

What does Social mean? We look at each other, talking, laughing, we help each other, we read together, we do projects together. We also have social objects that we tell stories about.

The challenge is how do we socialize objects online without having to create yet another social network?

OpenSocial designed to do this. OpenSocial is one API that works with many websites. Just now getting through gartner technology hype cycle over the last 3 months. OpenSocial is now on version 0.7

Core OpenSocial services include people, activities and persistence. After a tour through some of the code used to make the API work, Kevin Marks described two open source projects designed to help build appliations – Caja is project designed to help prevent things from going bad. Caja is an optional Javascript sanitizer for use by developers. The panel recommended using Caja or at least tesing using Caja.

The second project is Shindig. Shindig is a reference implementation of the OpenSocial and Gadgets stack that is designed to accelerate development and deployment. The panel said that now is the time to start developing.

Update: Here is the slide show:

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And a post by panel member.

[tags]gspwest08, graphing social, opensocial[/tags]

David Glazer, Director of Engineering at Google and leader of Google’s OpenSocial team presented at Graphing Social. He started with a perspective that the cloud is here.

Fast, easy, open, and everywhere are key reasons why cloud computing wins. The cloud is about getting the computer out of the way so that we can be more productive.

How does this matter in the social cloud? Getting the computer out of the way so that we can interact more easily and be more productive. People are the killer application of the web. This is not new. Getting me to the information I want has a long history. email, newspapers, bookstores, ftp, gopher, bbs all were the beginning of this. Social used to be spelled c-o-l-l-a-b-o-r-a-t-i-o-n.

Need to get the accidental barriers out of the way.

When Google thought about social they started by asking where would it be better to do things with friends. ie add “do it with friends” to end of sentence such as – You will plan a trip with your friends.

Hard problems still out there. These are accidentalt barriers.

Fragmented authentication is a problem. Different logins across sites cause people problems. OpenID is a good start, but has a ways to go.

Fragmented social connections. Too many places to set up friend.

Fragmented applications across sites – not the same everywhere my friends are.

Goal is tomake the social web better. The end result any app, any site, andy friends without having to think about it.

First step is to share the pain.

OpenSocial’s goal is to allow you to

• Invent it
  • xxx with your friends
• build it
  • standard web app (html/javascript)
  • new JS APIs(who I am, who I know, what I do)
• Run it
  • on any social site that runs api

There were a number of surprises from launching OpenSocial:

1. Breadth of interest. Classic social networks wanted to use it, the business oriented sites wanted to use it, enterprise software wanted to use it, communities wanted to use it. Lots of different types of uses, all with the same basic use case.
2. Open source is a good idea. Shindig in Apache incubator was set up, thanks to Brian McCallister at Ning. Clear mission, open license, engaged community and real world use.
3. Execution is hard. The idea is ahead of the execution. This is what’s next.
4. Questions about can you also help with… connections across networks that extend the solution to other aspects of connecting people, apps and sites.

What’s next?

1. Get the spec and build apps
2. Contribute to Shindig
3. Join the group and grow the spec

[tags]gspwest08, graphing social, OpenSocial[/tags]