Monetizing Facebook applications

http://blogs.zdnet.com/social/?p=215

[Facebook allows] developers to display unlimited advertisements. On par with advertising as a source of income, some developers, like myself, have come to prefer the use of affiliate links (finding leads for eBay, Amazon, etc) instead. Part of the reason is that Facebook does not allow developers to embed JavaScript within their code; hence making it difficult to enable Google Adsense for the content. Moreover, as is the case with MySpace, contextual advertising is not targeted enough to earn sizable revenues.

My own application is a mashup between Facebook and Amazon API’s to recommend, share, and comment on books. The “My Favorite Books” application is designed to earn through the 4% profit earned off every successful referral to Amazon. Combine this with Facebook’s 24 million active users and a business model instantly emerges.

Future plans for “My Favorite Books” could be to expand on the affiliate model by providing users the opportunity to monetize their own profiles through revenue sharing. Nevertheless, a healthy balance between providing users a much needed application and earning opportunities is required for it to grow by word-of-mouth. There are, however, a few concerns regarding building a business on top of Facebook. Developers worry that Facebook applications will lose their “hype” too quickly. Any new feature cannot remain viral indefinitely, and this is certainly the case with some people on Facebook who already feel overwhelmed with application invites. The setting is similar to MySpace wherein the hype around MySpace bulletin lasted less than three months. It is likely that as more and more companies develop applications for Facebook, the signal to noise ratio will become overwhelming for the users to spread applications by word-of-mouth.