Are Facebook widgets on the way?
Facebook, which says it's making a big announcement this week, is trying to keep details under wraps. But that hasn't stopped the Internet's rabid gossip mill. — Last month, word began to circulate that Facebook was working on a deal to introduce third-party widgets …
Context & Ripple Effects
Facebook has spent the past week confirming the pieces around this rumor: it is staying independent despite the acquisition chatter swirling around it, it has begun opening its Pages to fuel growth, and it is adding 100,000 to 150,000 users a day with Canada alone passing 2 million active users — about 10% of its base. Against that backdrop, reports of a deal to bring third-party widgets inside Facebook land differently than they would for a smaller network.
The strategic tension is laid out in Business Week's same-day piece on sharing the widget wealth: widgets siphon ad revenue off social networks, and Facebook and its rivals are weighing how to recapture it. Letting third-party widgets run inside the walls — rather than fighting them — is one obvious remedy, which is why the gossip mill has fixated on this week's announcement.
First-order effects
- If the rumored deal is announced this week, third-party widget developers gain sanctioned distribution inside a network growing by six figures daily, and Facebook keeps the audience engagement — and ad inventory — that currently leaks off-site.
Second-order effects
- Rival social networks losing ad dollars to widgets face pressure to answer with their own openness-or-revenue-sharing terms before developers standardize on Facebook as the primary distribution channel.
Third-order effects
- A confirmed move would push social networks from walled profile pages toward application-platform economics, where whoever controls distribution inside the network captures the value widgets previously carried away — and Facebook's refusal to sell keeps that decision in its own hands.
The trend: Social networks are shifting from closed profile sites to open application platforms, with Facebook's growth making it the decisive test case for whether openness recaptures or accelerates ad-revenue leakage to widgets.