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

I’m live at f8 at the Design Center in San Francisco, California. I will be providing live updates, podcasts and video of the entire event. If you would like to see the live blog of the Mark Zuckerberg keynote you can read it on our other site AllFacebook.com.

Driving in my car today I came to the realization that the current race of the social platforms is still to own my contact list. How I got to this conclusion is slightly abstract but let me explain. Over the weekend I began using an amazing application called Remember the Milk. The application is a web based to do list. Not remarkably innovative in terms of their technology but what makes them so valuable is their accessibility.

Within a day I had installed a Firefox extension enabling me to place my to do list within my Gmail inbox and access it via my iPhone in an easy to use format. Now there is no syncing for my to do list anymore. It is simply always there with me and always updated. Have you ever thought about all the other things you constantly need to sync?

Building My Contact List

If you lose your phone, often times you lose your complete contact list. If you are one of the lucky ones that has a smartphone and has synced their device to their computer, you will be able to recover from your loss. What if I never needed to worry about any of this information disappearing ever again? Technically I can, thanks to Facebook.

I simply load up my Facebook application and there are all of my contacts all with updated contact information that they’ve updated, not me! This idea is not a foreign one to many who remember Plaxo but the problem with Plaxo was that they spammed your internet to get to your contacts. Facebook has instead developed a platform where so much interaction is taking place between your friends and family, you cannot avoid joining.

Facebook is the first company that has realized the most important feature of their platform is to enable people to track and group their contacts. Today I track my contacts via multiple sources: my Blackberry, my laptop, my iPhone, Salesforce.com, Facebook and LinkedIn. The only things that are occasionally in sync are my laptop and one of my mobile devices.

Contrast that with my to do list in which I am always in sync and can access anywhere. While Facebook has a platform for applications, I would argue that their “killer application” is still their ability to track your contacts, group them and have granular privacy features for each. Soon enough, any system that you grant access to will be able to call the Facebook API and get your contacts to improve your experience with the software or device you are interacting with.

Rather than tracking all of my contacts in Salesforce.com, it would be easier to track sales information about specific contacts. This includes things like: when did I last contact this person, what was my communication history with that person, etc. In their current form, “social platforms” exist as websites in which companies can build applications like games and dating apps.

I think that the existence of “social platforms” as websites in which we spend a large portion of our time on is simply a facade. Right now these platforms have enabled us to “waste time” and peer into our friends lives but during all of this time being wasted we have slowly build a more efficient version of our individual “social graphs”.

The Future for Facebook

Now was Facebook simply designed as a really elaborate scheme just to get all of my contacts? Perhaps but at some point the company got diverted. Users don’t want complex tools. They want simple ones that make their lives easier or more enjoyable. Just as Remember the Milk simplified my task list, Facebook could easily simplify my contact list and suddenly become the center for managing our contacts.

Is such a tool worth $15 billion? I’d imagine so if you have the majority of the world’s population in your database. If a large portion of the world’s information (which Google has attempted to index) is worth around $165 billion today, Facebook should easily be worth a 10th of that. How about photo storage, video storage, application hosting and payment processing?

I see those as separate entities for Facebook. The most important feature is the contact list. And as for the other social platforms, where do they fit in? I would suggest that most of the other platforms have a chance at competing but not even MySpace has an accurate representation of my social graph. Ultimately, the most valuable thing to the social platforms is the contact list.

Without an effective contact list, these platforms are simply another distribution channel for content. While that’s not a bad place to be, it’s a completely different focus.

Last month Facebook released the first version of mini-feed comments. I claimed that it was another step for Facebook toward FriendFeed functionality. Apparently not enough people were commenting though because Facebook has since made a slight change as MG Siegler pointed out yesterday. Rather than displaying a plus sign which potentially didn’t signify “comments” for some users, so Facebook has decided to go ahead and spell it out.

Ultimately this is an extremely small change but if Facebook users aren’t commenting on mini-feed stories, perhaps the concept of FriendFeed is just a bunch of Silicon Valley hype. Personally, I think it’s a little hype combined with great functionality. I think what Facebook is instead missing is comments from their main feed. Most users don’t spend a lot of time navigating their friends mini-feeds (as far as I know).

Conversely when a user first logs into Facebook the first thing they see is newsfeed items. Rather than going to a user’s profile and posting on their wall about a news story, it would be easier simply to comment directly from within a news item. Even with good design, it may be that users simply don’t want to comment on each others’ news stories. If that’s the case, FriendFeed is officially a bunch of hype and will remain limited to an extremely small group of users.

I don’t think that’s the case though. Do you think FriendFeed is more hype then actually being useful? Are you a regular FriendFeed user? Do you comment on peoples’ mini-feeds in Facebook?