BricaBox CEO (and Tweet Of The Day winner) Nate Westheimer has advice for developers and entrepreneuers: Instead of debating whether you should build apps for Facebook or for MySpace’s new platform, think again — you’re almost certainly better off building your own site. You can read a longer version of Nate’s post on his blog.
What’s more valuable — a Facebook user or a Web user? There’s no debate: A Facebook user is worth 10% of a conventional web user, tops. Don’t take my word for it. Here are the stats:
- According to USV analyst Andrew Parker, people report the going rate for Facebook App M&A’s about $1.00/user
- InsideFacebook put the Slide acquisition of favourite Peeps as low as $0.046/user
- The “insane” price for the Where I’ve Been app was supposed to have been $3 million, with 2.4 million users, or $1.30/user. [Ed.: That deal has yet to materialise, but for the purposes of this argument it’s the reported sales price that matters]
While this is an early market, it’s clear that even with enormous hype surrounding Facebook, the per user value is nowhere close to what a user in a standalone app on the Web generates:
- My Web 2.0 Valuation project found (see spreadsheet) that $20 – $25 per user is a ball-park average in this industry across several years.
- Recent evidence includes Last.fm’s CBS deal — $18/user ($280million/15 million users)and Photobucket’s MySpace deal — $6.25 per user
- Facebook itself, at 35ish million users and a $10 billion estimated valuation is over $200/user
Looking at these numbers, it doesn’t make a lot of sense for a lot of people with “great” ideas to be laying down their bets on Facebook‘s poker table.
There’s always a flip-side, right? Sure. There are reasons to create Facebook applications. First of all, at scale, low $/user figures aren’t a problem. If you can crank out app after app and get 10X more users than a successful WWW app, then all the more power to you (hello, Slide and RockYou!). But the odds are stacked against you, as O’Reilly showed.
As a smaller app builder, there are still some benefits, but only if you actually create technological value for Facebook or other major app providers. Let’s say Brooklyn’s Kaltura proves that their Facebook video app is leaps and bounds better than Facebook‘s own app, that Facebook acquires it for its technological value rather than someone else acquiring it for the user value. This is an obvious win for Kaltura and proof that in some cases it pays to build a single app for Facebook.
Otherwise, it’s hard for me to imagine your life is 10X (or more!) easier building an app on Facebook. Sure, the immediacy of getting 10,000 users feels awesome, but those users are “worth” less than 1,000 in the “real world.”
And if you have to value your users 10X less on Facebook, that means they’re going to value you 10X less as well. Go have fun.