According to this July’s comscore data the fastest growing locations for search are Facebook and MySpace. MySpace had 539 million searches and Facebook had 173 million and posted 20 and 10 percent growth, respectively. My guess is that these searches are only domestic searches which would account for the large difference. Whatever the case is these numbers are far below Google’s search volume which fell just under 10 billion searches for the month with 4 percent monthly growth.

Last week I suggested that Facebook has a huge search monetization opportunity and this solidifies that argument. Facebook has a ways to go before it catches up to the large search giants (aka Google) but they are almost a quarter of the size of AOL in terms of search and almost half the size of eBay which has a shopping system which is practically built on search.

As the Wall Street Journal higlighted today, search is dominating advertising with the most growth. The article suggests there is as an increasing gap between search an other advertising models (primarily banner). Social advertising is a new form of medium though so growth is hard to measure, especially since Facebook and other social networks don’t publicly release their ad revenue.

While MySpace and Facebook are searching for non-traditional advertising methods online, their quick path to profitability may be staring them in the face. Then again Google’s search deal with MySpace has been under-performing according to Google. This is troubling news considering that MySpace accounts for more searches then eBay, Craigslist, Facebook and Amazon at this point.

It will be interesting to see how the advertising battle plays out but given that social advertising is still such a nascent industry, one can only expect to see growth. We have seen a massive influx of new social advertising solutions and according to people I’ve been speaking with there are more that are about to hit the market.

While most of the market is out experimenting it may be time for Facebook and other large social networks to try what has worked for the past decade: search.

Yesterday MySpace announced a record breaking month, surpassing 122 million visitors “according to comScore”. That last part of the statement means that the statistics should be questioned. As Caroline McCarthy points out, comScore stated that Facebook reached 144 million visitors. Yesterday though, Dave Morin claimed that the company just reached 100 million users (as Venturebeat points out.

comScore has been criticized for highly inaccurate numbers in the past and the most recent set appears to confirm that. Additionally, having a reach of more than 100 million is significant but when you think about it in terms of the world population, there is still a long way to go! MySpace has been striving to highlight that growth continues internally as they prepare to launch the highly anticipated MySpace music service.

Some could argue that the company’s image has become tarnished as Facebook hogs the limelight as it has surged past all competitors to become the largest global social network. It’s no wonder that MySpace is concerned as all global metrics show Facebook trouncing all other competition. Just take a look at the following Alex chart:

Not everything is doom and gloom for MySpace and painting such a picture would be inaccurate. The company continues to grow abroad and domestically MySpace continues to dominate all the other competitors. When it comes to publicity, the name of the game is continued growth and both MySpace and Facebook have managed to do that is most regards.

While domestic growth has slowed for both, international expansion has provided both companies with a substantial opportunity. As the months pass, analysts and journalists will both be looking for both companies to post stellar growth abroad. Otherwise we could soon hear of the “global social network downturn”!

Last week Law.com published an article highlighting a lawsuit filed by Facebook’s lawyers “against Adam Guerbuez, accusing the Canadian man of hijacking users’ accounts, impersonating them to send more than 4 million messages in March and April that market ‘offensive’ and ‘embarrassing’ products such as marijuana and penis enlargement pills.”

The Social Network Spam Problem

While there is no word on the amount Facebook is suing for, this is a continuing trend in the industry in which MySpace has been leading the charge against spammers. Users of social networks have not only been under attack by outside spammers though. Some social networks have even gone so far as to spam their own users. The most recent of the offenders is Reunion.com but many more have been offenders as well. The only difference is that the social networks have been able to avoid large settlements so far.

Spam is a critical issue on all social networks as it has been known to drive users away from the sites. The top social networks have increasingly dedicated more employees to fighting spam, some of which has actually compromised users’ privacy as I describe below.

Facebook’s Increasing Spam Challenge

The chief spammers that have been blasting out inappropriate content became more prevalent on Facebook in recent months. Facebook has been extremely aggressive in patrolling spammers though and this most recent lawsuit emphasizes how the company isn’t cutting any slack. Fighting spam is one of Facebook’s priorities and it isn’t surprising given the backlash that MySpace users had after receiving countless fake friend requests.

In the past few weeks spam has increased on Facebook and as Adam Rifkin wrote, even Matt Cohler had two spam posts on his wall. What is this new type of spam? Through effectively hijacking user accounts, spammers go and post wall posts that include a link which redirects users to insecure sites that request personal information.

I posted about this problem back in January but apparently the problem isn’t over. If you can’t shut the spammers down through technical methods, you might as well the sue them until they quit!

One of the primary issues facing consumers in the digital era is control of their private data. Yesterday I wrote about the Peter Jennings special “No Place to Hide” which covered a lot of the issues facing consumers. The reality is that munch of our transactional data is already tracked and used to create custom profiles of our identities. Online there is currently no way to manage that data and all one can rationally conclude is that somewhere along the line our data is being sold.

Give the Users Control

Facebook could provide an interesting solution: enable users to sell their data to advertisers. The pinnacle of this system has been discussed for years. A single system in which users can grant and revoke advertisers’ access to personal data at the user’s discretion. The reality is that such a theoretically beautiful system can’t compete with existing systems. That’s because advertisers can currently purchase your data and then they are free to do as they please.

With the assistance of personal privacy laws, Facebook could potentially give the consumers back control. With Facebook Connect, the users have control which contrasts to the first iteration of Facebook Beacon. In this new system, the users really do have control of the data that remote services can access. As one developer told me though “there is the terms of service and then there’s the laws of physics”.

Challenges Ahead

In other words the system makes a lot of sense as long as the developers abide by Facebook’s rules. Facebook has already had issues with this on the existing Facebook platform. We saw this issue arise when it became clear that users that had used Slide’s Fun Wall application had their entire profiles exposed to other users. Eventually Facebook realized the problem and shut down the application until Slide resolved the issue.

Policing the net isn’t scalable though. Automated systems are important in digital enforcement which means Facebook must focus on automating their policing activities. Facebook is being careful as they roll out Facebook Connect because any flaws in the system could prove catastrophic. Luckily for Facebook (and potentially not so lucky for the developer) users’ personally identifiable data is still protected by Facebook.

Taking One Step Forward

While we may not have complete control of our data in which we can grant and revoke access to advertisers, Facebook Connect is one step in the right direction. The reality is that users must have control of their data. Even Facebook doesn’t give users complete control yet though: users still have their personal data locked within Facebook’s databases and it’s not coming out anytime soon.

There is clearly a competitive rationale behind not giving users’ complete control. Is it possible to give users complete control of data access while limiting data ownership? Definitely and that’s exactly what Facebook is attempting to do. This doesn’t work as a long-term strategy but in the short-run it will most definitely help move toward giving the users back control.

For now we must accept that this is a step in the right direction yet still remain critical of future moves. Privacy is something that consumers lost control of long ago. Perhaps these new social services can begin to give the control back to the users.

The MySpace platform has long-been a secondary platform for application developers. The primary reason is that most MySpace applications fail to attract as many users as they do on Facebook. Unfortunately there is no longer any way to determine the total number of users that have ever installed an application on Facebook and as such it will no longer be possible to do an effective comparison of what sites are more effective based on public data.

All we have left to go on is the last total install data that Adonomics provides on their site. According to Adonomics the top MySpace application has over 6.7 million installs whereas the top application on Facebook has more than 46 million. This is the last we’ll ever know about the top number of users a Facebook application has but it’s clear that MySpace is still a fraction of Facebook when it comes to application installs.

How about when it comes to Facebook monetization? According to Alley Insider, Offerpal Media (who is also a sponsor of Social Ad Summit) has been paying developers around $75 per 1,000 daily active users on MySpace and Facebook and $150-$200 for “higher engagement” applications. MySpace is generating about the same amount. So how much does this break down to for CPMs?

No idea because there is no measure of what “high engagement” amounts to on Facebook or MySpace. Both sites are known for having an extremely high number of pageviews and as such this could amount to $0.75 or $75 CPMs. Chances are good that it’s much closer to the former estimate. While some developers are rumored to be generating over $1 million a month on Facebook, the majority are not generating that much off of a single application.

It’s great to see that applications across multiple platforms are monetizing equally, but overall the industry needs to figure out a way to increase the overall CPMs.

Looking to buy some hot Facebook stock? It looks like you may be able to start purchasing shares from insiders at a $4 billion valuation starting this fall according to Eric Eldon. Eric cites some “well connected” sources about this new ability to sell out early. The employees can’t sell all their shares though, only up to 20 percent for the time being.

Given the rumors of a number of employees trying to sell out early on and given that Facebook won’t be going public anytime soon there’s a good chance that a number of employees will take this option. It also provides them with an incentive to stay on longer while increasing the liquid value of their nest-egg. How are buyers going to be able to value the company exactly?

I have no idea given that buyers most likely don’t have access to internal company financials. Instead the buyers will need to rely on publicly available information that is published by the press. If you have a ton of cash and are eager to invest some of it in a hot tech “start-up”, you might want to consider purchasing some Facebook shares.

How exactly do you buy these shares? Well you can either start to randomly ping Facebook employees on the Facebook website or you can opt to try to reach out to large financial intermediaries that will most likely sell these shares on behalf of Facebook employees. Are you going to jump at the chance to buy some of these shares?

Over the past couple years, we saw an upward trend of profile aggregator start-ups hit the market. As we registered for one site after the other, we quickly realized that there was a serious problem with not having a central identity. As a result, thousands of people have tried to release services that help solve the problem. Some of those solutions came under a commercial organization while others were set up as organizations that were run by the collective (e.g. OpenID) and weren’t for profit.

This morning Corvida at Read/Write/Web wrote about one of those profile aggregators that rather than trying to be the destination serves as a control panel for users. It makes a lot sense in theory except for one problem: this is what Facebook Connect, MySpace Data Availability and Google Friend Connect are trying to accomplish.

The Battle for Our Identities vs Center of Communication

While the few hundred thousand people reading Read/Write/Web, Techcrunch and similar sites will now know about this service (and a small portion will end up using it), the mainstream user will never know about this site. I don’t want to be the pessimist but I think when it comes to the center of identity, the large social networks and potentially the large email providers (GMail, AOL, Yahoo, etc) will become the center of our identities.

In addition the battle for our identities is another battle taking place: the center for our communication. Currently the most likely winners for the center of our communication are the same people winning the battle for our center of identity. There are some new players though as a new form of communication has become ubiquitous: status updates. Suddenly a large group of users are communicating via short-form messages via profile statuses and “micro-blogging” tools.

Statuses have been around for a long time but only recently did we begin to think of those status updates as a two-way conversation. The current platforms winning in this space are Twitter, Facebook statuses (with commenting) and FriendFeed. AOL Instant Messenger (AIM) also has status updates but for now it’s still not a two-way communication. That’s because most people sent instant messages as a follow-up to a status on AIM.

As statuses have become available across a number of platforms we are seeing the launch of status pinging tools such as Ping.fm. While all of these tools are great for communication, it still begs the question: how are these companies going to make money?

Are These Businesses?

So Twitter, FriendFeed, Ping.fm, Atomkeep (the tool covered by Corvida this morning) are all useful tools but how on earth are these going to make money? Many of the companies (such as Twitter), will say that they don’t need to make money, they just need to build critical mass and then figure it out. That makes a lot of sense but what happens when Facebook and MySpace adapt and create what is nothing more than a feature change?

On the web, trying to analyze any company’s business model is a relatively mundane task because for the most part there is no model aside from advertising. So why don’t these sites just slap up some ads and start making money? Honestly, I have no idea! Whether or not their future could be doomed by changes that Facebook and MySpace make, they should try to make money while they have the traffic.

Do you think that these companies can generate legitimate business models? Do you think their existence lays in the hands of Facebook and MySpace?

Today, Dave McClure wrote a post suggesting that the unlaunched Facebook payments platform in conjunction with Facebook Connect is the future of social commerce. I agree and I’ve also suggested that with Facebook Connect, the Social Ads service could also be extended to the rest of the web. Regardless of reports to the contrary, most of us were hoping that Facebook would reveal their payments platform at f8 on Wednesday.

Unfortunately that didn’t happen and as Mike Arrington illustrates, many were flat out disappointed. As Apple continues to wow the tech community with a new product release year after year, it is much more challenging for smaller companies (like Facebook) to do so. With all the disappointment, Facebook did in fact release a new product: Facebook Connect.

Unfortunately they announced it weeks earlier. Just as virtual goods have swept through Asia over the past few years, many expect the same to happen when Facebook offers their payment platform. Additionally, we may just be looking at the future of social shopping. While Beacon was a PR disaster, the idea behind it was a really great one.

Now Facebook has a second time to release Beacon under a second name: Connect. Just as Beacon partners could publish information to a user’s feed so too can any developer with the new program. Theoretically I consider Facebook Connect and Beacon pretty much the same thing with Connect now offering greater features. It’s a great program and while Facebook may not be monetizing it the way that they originally hoped, Connect has a much better chance of spreading.

Social commerce is not going to happen overnight though as many of us wish that it would. It will take time for developers to build upon the various social platforms and it will require the ongoing education of consumers. Right now the average person doesn’t understand the power of Facebook Connect if they know about it at all. Over the coming months though I have a feeling that they will begin to understand it and soon enough they will be leveraging it to make purchases.

Yesterday Facebook announced the launch of Facebook Connect and with it the opportunity for sites around the web to easily integrate into the largest “social graph” on the web. The pre-f8 hype along with MySpace’s Data Availability initiative and Google’s Friend Connect program ended up muting much of the buzz that was intended for Facebook Connect. Whether or not it was buzzed about, Facebook Connect could have a substantial impact on the future of the web as Om Malik points out.

I agree with Om and I think that Facebook Connect could truly be game changing. As many industry thought leaders were saying last night at f8, Facebook Connect is the alternative to OpenID. It’s also the first time that mainstream users will understand the power of an OpenID-like system, something that only geeks previously understood.

Mike Arrington previously suggested that there is currently a land grab for user identities by becoming the largest OpenID issuer. I agree that there is a land grab for user identities on the web but OpenID may not be the answer that many thought leaders were hoping for. Instead Facebook, MySpace and Google are all racing to create their own standards which are essentially abstract OpenID copycats.

I fully support the concept of Facebook Connect aside for one thing: I don’t have access to a user’s personally identifiable information. As a business implementing an OpenID system I at least get a user’s email when they register for my site. This contrasts Facebook where all I know is what a user’s friends Facebook IDs are. Theoretically, in a worst case scenario Facebook could switch all users’ Facebook IDs to protect user identities.

This would leave all the businesses without a way of reaching out to their user base that registered via Facebook Connect. One of the most valuable assets that large web companies have are user email addresses and phone numbers. It provides the companies with a valuable marketing potential. Now Facebook will force me to contact users through the Facebook API.

Am I going to rely on Facebook’s algorithm to arbitrarily decide how many emails I can send out every day to my users? If I want to spam my registered user base I should be able to. It’s my own business decision. So while I’m all for Facebook becoming the center of my identity online, I’m not cool with Facebook telling me how I should run my business outside of their finely pruned walled garden.

I gave a pretty thorough overview of the Mark Zuckerberg keynote over on AllFacebook earlier today. If you missed it and would like to listen to the audio version, I’ve included the podcast below. Some of the audio is not that loud but it should come through clearly. I’ll be posting more podcasts over the coming hours. Stay tuned!

 

 Mark Zuckerberg f8 Keynote [82:46m]: Play Now | Play in Popup | Download