How much money can Facebook apps actually make?

Nicholas Carlson — Tue, 26 Aug 2008 12:20:00 EDT

DeveloperAnalytics, a research firm which analyzes Facebook applications, put out an appealing bit of linkbait this morning that purports to show how much money popular applications could earn each month. It calculates the metric based on "hundreds of real CPM, and CPA/Virtual Goods revenue data points collected directly from developers and partners." That's CPM as in "cost per thousand" — the traditional way ads are sold, based on the number of people they reach — and CPA as in "cost per action," which is usually based on linking payment for an ad to its generation of sales, signups, or other results. Virtual goods? Those are the cheesy little icons you can send your friends on Facebook. Yes, some people pay money for them.

The list is topped by an widget called Mob Wars, which exhorts users to "Join the Mafia, and start your own mob. Band together with your friends to become the most powerful force in the elite criminal underworld of Facebook." DeveloperAnalytics says Mob Wars' users return to its page 60 times a day. Facebook's most popular application, Slide's FunWall, only shows up fifth on the list, because users load its pages just two or three times a day. Here's what DeveloperAnalytics didn't account for in running the numbers: Slide's opening an office in New York to sell its inventory to major brands, while Mob Wars ads ask if you want to take an IQ challenge.

Facebook applications chase Mark Zuckerberg's shadow

Tim Faulkner — Thu, 04 Oct 2007 12:43:13 EDT

Mark Zuckerberg's strategy of holding out for a Facebook valuation as high as $15 billion is contagious. Developers of the most popular Facebook applications have become mini-Zucks, unwilling to part with their astronomically self-valued creations. If Lance Tokuda, the chief executive of RockYou, sees any difference, it's only one of scale. Speaking about his companies popular Super Wall application, Tokuda, says "If you told me you were going to write me a check for $10 million, I'd say, 'Forget it.'" Why?

What Tokuda didn't mention to the New York Times is that Sequoia Capital, RockYou's venture-capital backer, is rumored to be shopping his entire company for a price between $200 million and $500 million. It's hard to say which is more inflated: Tokuda's price for Super Wall, a minor improvement on Facebook's built-in Wall message board, or Sequoia's price for RockYou's entire collection of "barnacles," as the Times describes its applications.

Tokuda and Sequoia, of course, are only being smart. Of course they should capitalize on the Facebook buzz while they can. (We hear that one large and notoriously gullible buyer may actually be interested.) And he's selling as fast as he can:

This is a completely new channel of delivering content to users and letting them communicate. Owning that over the long stretch can be worth a lot.

In other words, in the Facebook universe, profits don't matter. Heck, revenues don't matter! All that matters is that application developers are brave new pioneers on an untapped frontier. Never mind that that frontier is already filled to bursting with more than 5,000 (mostly useless) applications. And never mind that Facebook, at any point, should you come up with a genuinely useful tool, reserves the right to build that function into the site itself.

And that reality is hitting home for Tokuda. Facebook has already moved to copy some of Super Wall's features. RockYou itself splits its audience with a similar application, FunWall. Over the long stretch, Super Wall is completely irrelevant. Not that the long run matters. If anyone has actually named a price for SuperWall, or for all of RockYou, Tokuda should sell now. We call it making hay while the sun is shining.

Gawker: valleywag, funwall

How much money can Facebook apps actually make?

Facebook applications chase Mark Zuckerberg's shadow