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If you don’t “get” Facebook and Twitter, read this NY Times article September 8, 2008

Posted by jeremyliew in facebook, microblogging, social media, social networks, status, twitter.
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The NY Times is often considered the US newspaper of record, and it lives up to its reputation with an excellent article in today’s Sunday NY Times Magazine about the ambient awareness enabled by Facebook status updates, Twitter and other microblogging tools.

Even readers familiar with both popular microblogging tools and their history should read this article. High points:

Microblogging enables ambient awareness of your broad friendship group:

In essence, Facebook users didn’t think they wanted constant, up-to-the-minute updates on what other people are doing. Yet when they experienced this sort of omnipresent knowledge, they found it intriguing and addictive. Why?

Social scientists have a name for this sort of incessant online contact. They call it “ambient awareness.” It is, they say, very much like being physically near someone and picking up on his mood through the little things he does — body language, sighs, stray comments — out of the corner of your eye.

Ambient awareness comes not from any single tweet or status update, but from the aggregation of the data.

Haley discovered that he was beginning to sense the rhythms of his friends’ lives in a way he never had before. When one friend got sick with a virulent fever, he could tell by her Twitter updates when she was getting worse and the instant she finally turned the corner. He could see when friends were heading into hellish days at work or when they’d scored a big success. Even the daily catalog of sandwiches became oddly mesmerizing, a sort of metronomic click that he grew accustomed to seeing pop up in the middle of each day.

This is the paradox of ambient awareness. Each little update — each individual bit of social information — is insignificant on its own, even supremely mundane. But taken together, over time, the little snippets coalesce into a surprisingly sophisticated portrait of your friends’ and family members’ lives, like thousands of dots making a pointillist painting. This was never before possible, because in the real world, no friend would bother to call you up and detail the sandwiches she was eating. The ambient information becomes like “a type of E.S.P.,” as Haley described it to me, an invisible dimension floating over everyday life.

“It’s like I can distantly read everyone’s mind,” Haley went on to say. “I love that. I feel like I’m getting to something raw about my friends. It’s like I’ve got this heads-up display for them.” … And when they do socialize face to face, it feels oddly as if they’ve never actually been apart. They don’t need to ask, “So, what have you been up to?” because they already know. Instead, they’ll begin discussing something that one of the friends Twittered that afternoon, as if picking up a conversation in the middle.

“It’s an aggregate phenomenon,” Marc Davis, a chief scientist at Yahoo and former professor of information science at the University of California at Berkeley, told me. “No message is the single-most-important message. It’s sort of like when you’re sitting with someone and you look over and they smile at you. You’re sitting here reading the paper, and you’re doing your side-by-side thing, and you just sort of let people know you’re aware of them.” Yet it is also why it can be extremely hard to understand the phenomenon until you’ve experienced it. Merely looking at a stranger’s Twitter or Facebook feed isn’t interesting, because it seems like blather. Follow it for a day, though, and it begins to feel like a short story; follow it for a month, and it’s a novel.

Ambient awareness helps maintain “weak ties”. Sociological research has shown that a large network of weak ties is more likely to be helpful than a small network of strong ties when trying to do things like get a job, find a mate, and other socially tinged objectives

Many maintained that their circle of true intimates, their very close friends and family, had not become bigger. Constant online contact had made those ties immeasurably richer, but it hadn’t actually increased the number of them; deep relationships are still predicated on face time, and there are only so many hours in the day for that.

But where their sociality had truly exploded was in their “weak ties” — loose acquaintances, people they knew less well. It might be someone they met at a conference, or someone from high school who recently “friended” them on Facebook, or somebody from last year’s holiday party. In their pre-Internet lives, these sorts of acquaintances would have quickly faded from their attention. But when one of these far-flung people suddenly posts a personal note to your feed, it is essentially a reminder that they exist.

Microblogging, ambient awareness and maintaining weak ties has the sideeffect of making it impossible to move away and “reinvent yourself” as your past will always be with you.

This is the ultimate effect of the new awareness: It brings back the dynamics of small-town life, where everybody knows your business…

“It’s just like living in a village, where it’s actually hard to lie because everybody knows the truth already,” Tufekci said. “The current generation is never unconnected. They’re never losing touch with their friends. So we’re going back to a more normal place, historically. If you look at human history, the idea that you would drift through life, going from new relation to new relation, that’s very new. It’s just the 20th century.”…

“If anything, it’s identity-constraining now,” Tufekci told me. “You can’t play with your identity if your audience is always checking up on you. I had a student who posted that she was downloading some Pearl Jam, and someone wrote on her wall, ‘Oh, right, ha-ha — I know you, and you’re not into that.’ ” She laughed. “You know that old cartoon? ‘On the Internet, nobody knows you’re a dog’? On the Internet today, everybody knows you’re a dog! If you don’t want people to know you’re a dog, you’d better stay away from a keyboard.”

Again, read the whole thing.

Facebook selling digital gifts at a $35m run rate September 2, 2008

Posted by jeremyliew in business models, digital goods, facebook, gifts, virtual goods.
121 comments

In January of this year, we estimated that Facebook was selling digital gifts worth $15m per year. We based this estimate on an analysis of the number of each gift available each week over a 7 week period.

Facebook creates a certain fixed number of each type of gift. When the number remaining for any particular gift drops below 100,000, Facebook displays the number left. (The most common size runs are 100,000 and 1,000,000 but they range as high as 10,000,000 and as low as 15,000.). For those items where less than 100,000 remain, we can track how many gifts had been sold in the preceding week by subtracting the number remaining from the number remaining the previous week.

We updated the analysis this month and found that Facebook has dramatically increased its sales rate of digital gifts. As before, we tracked the number of digital gifts available of each type (where data was available). We ordered the items by bestselling (as defined by Facebook) and, because data is sparse, we divided the list into groups of 20, took the average of each group of 20 items and applied that sales rate to all items in each group.

Once we excluded the free gifts, the averages looked like this:

By multiplying each average by 20 and adding the totals we came up with virtual gift sales of between 390,000 and 600,000 per week, with an average of around 470,000 across the three weeks.

The vast majority of facebook gifts are bought from the first screen of gifts in the directory – almost 80% of the total sales come from the group of the first 20 gifts. This points to the self reinforcing nature of popularity (the crowdiness of crowds rather than the wisdom of crowds) when popularity data is made public.

We need to take into account seasonality. In most retail environments, something like 40% of sales occur in the last 8 weeks of the year. Judging from the high number of holiday themed gifts over the holiday period last year, the same seems to be true of Facebook:

Holiday themed gifts (e.g. Santa hat, eggnog, Happy New Year!) dominated the list of top selling paid gifts, averaging 4,755 sales per week.

If we apply this assumption to our weekly average sales numbers, we multiply by 73.3 (instead of 52) to get to an estimate of annual sales. Using this estimate we get a range of between 28,500,000 and 43,500,000 in annual Facebook gift sales, with an average around 34,500,000.

Unfortunately however, as only one item in the first 20 had “number left” data available each week (Bear Hug), this also makes our estimate prone to significant error. Bear Hug was consistently around 6 or 7 among the most popular gifts, behind most of the birthday gifts, so hopefully it approximates the average popularity of the top 20. Applying 25% uncertainty to the average of the top 20 bestselling gifts creates a similar range of between 28,000,000 and 42,000,000.

In both cases, these estimates are double the number that we estimated at the beginning of the year which was around 15,000,000 digital gifts. That estimate was based on data drawn during the holidays and may have been high on a run rate basis.

Given that Zuckerberg has estimated that Facebook will do between $300-$350 million in revenue this year, digital goods constitutes a meaningful secondary revenue stream for the company.

People like to have fun. Who would have thunk it? July 16, 2008

Posted by jeremyliew in apps, facebook, iphone.
1 comment so far

There has been much handwringing about how silly facebook apps are, and how it would be so much better if they were more useful. But Facebook users have voted with their mouse buttons, as the O’Reilly report in May showed:

According to a Medialets survey, it seems that iPhone users have voted in exactly the same way, with almost half iPhone apps being games or entertainment:

Girls (and boys) just want to have fun.

Top Friends still missing after 5 days; marks change in Facebook’s approach to app developers July 1, 2008

Posted by jeremyliew in apps, facebook.
1 comment so far

Inside Facebook has an interesting post about Facebook’s evolving approach to platform management. Justin notes that Slide’s Top Friends app has now been suspended for the platform for 5 days, the most serious punishment for any app so far. He notes that while initially Facebook tried to control app developer behavior with rules, it is now singling out ‘bad actors’ for direct punishment, as much to be a symbol to other developers as to punish the infringing app.

Earlier in the year, Facebook responded to abuse by outlawing the tool being abused (for example, in the case of forced invites). This would be akin to outlawing something like assault rifles that almost everyone agrees are harmful to society. However, in more complex cases, outlawing the tool at hand is not necessarily what’s best for the system. For example, removing APIs that access profile data from the Platform altogether because of one application’s privacy concerns would hurt the overall Platform economy significantly: many developers and users would be negatively impacted. This would be somewhat like outlawing kitchen knives because they were once used in a crime. Instead of removing knives from society, the better solution would be to hire a district attorney and set up a court system and bill of rights: news of verdicts and sentences would deter many future cases. Of course, that’s a very expensive proposition, and sufficient accountability must be enforced for stakeholders to have faith in the system.

As he summarizes:

Facebook’s approach to platform governance is becoming decreasingly dependent on algorithms and increasingly based on policy-enforcement.

This is the same approach that Myspace has followed since inception. This change in approach is an important sea change for app developers as it makes direct relationships with Facebook more important than previously. This will likely benefit the larger app developers over the smaller ones so ong as they are acting in a way that Facebook likes.

Hi5 platform stats May 16, 2008

Posted by jeremyliew in facebook, hi5, platforms, social networks.
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Hi5 launched its developer platform at the end of March, opening up access to its 80m+ registered users. It is a top 20 traffic site globally, although not as popular in the US.

Unlike other platforms, Hi5 does not publish a ranked application directory, so it has been hard to get real data on how quickly apps have penetrated the user base. Because Hi5 launched with viral channels open, penetration has been as fast as Facebook’s platform launch in the first 45 days, if not faster. Inside Facebook reports on some stats as to just how quick penetration has been – stats I have not seen elsewhere:

Hi5 Platform Totals

* 617 applications
* 1 million total daily installs
* 14 apps have been installed on more than 1 million profiles
* 6.5 million total daily canvas page views
* 9 apps with more than 10 million total canvas page views so far

Amongst Active Users

* 3.7 apps on average
* 52% have at least one app
* Max apps installed by any one user is 23

Hi5’s user base is primarily international, and anecdotal evidence from Facebook developers suggests that international users are more willing to install apps than US users. This may have influenced Hi5’s fast start out of the gate, despite repeated instability in their platform. (Facebook’s platform was equally unstable at launch, and still suffers outages from time to time).

While it may prove to be harder to monetize the Hi5 international user base through advertising in the short term, we may well see alternative monetization models emerge. Note slide 48 in Ben Joffe’s excellent comparison of social network business models between the US and Asia.

Would love to hear any data from readers on how their apps have performed on Hi5.

Special events in MMOG and virtual worlds drive usage March 26, 2008

Posted by jeremyliew in facebook, game design, social games, social gaming, social media, social networks, virtual worlds.
3 comments

There are a couple of nice wrap-up articles on the Easter themed special events in MMOGs and Virtual worlds that took place over the weekend.

Massively surveys MMOG events in World of Warcraft, Lineage 2, Final Fantasty XI, Lord of the Rings Online and Second Life, noting:

Seasonal events are often the most popular in-game events in many of today’s MMOs. But each game’s designers have to find a way to slip these real world celebrations into the lore and mechanics of their persistent worlds.


Izzy Neis covers Easter events in kids online worlds
, including Club Penguin, Buildabearville, Moshi Monsters and Nicktropolis. She says:

Perhaps I’m just picky, but I honestly think you cannot have a healthy, uber-strong sense of citizenship in your youth-based virtual worlds WITHOUT acknowledging real world excitement. I am consistently impressed by the thriving movement of the community in Club Penguin– they’re very good about giving their users the tools to play, instead of dictating to the users the play. Kids are actually forming their own civilization under the eyes of the moderators & site runners

My friends at Gaia tell me that they see a massive bump in usage during their theme events. As an example, last years invasion of vampires into Gaia on Halloween brought the site down several times during the event.

I think this idea of creating special events around real world events is incredibly powerful. It introduces the shared social context that the players and users of the MMOG/Virtual world which helps shape and condition responses to events. Facebook gifting spikes around the holidays for exactly the same reason; users import conventions and context from the real world.

I’m interested to hear anecdotes and specific data that readers can share about the success of tying in world events to real world events.

Facebook is more than just a marketing channel March 24, 2008

Posted by jeremyliew in facebook, games, games 2.0, gaming, social games, social gaming.
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Venturebeat reports that some game companies are planning on launching teaser games into Facebook primarily to promote the sale of their “full” games at retail:

Unlike the one-off casual games you’ll generally find on the internet, Gnosis makes theme packages like Candie’s Factory, which is billed as an action / puzzle game. The plan is to split off individual mini-games and place them on Facebook to gain brand recognition for the retail product.

“We’re trying to build up an audience on Facebook where you can develop the brand association, so when you see that same brand at retail, you’re already familiar with it,” says Threewave’s CEO, Dan Irish. “I think for this year, the retail proposition is still the most important.”…

Threewave’s ideas do seem to be in line with Electronic Arts ‘ plans. EA has a stealth division called Blueprint that is reportedly creating “brand extensions” for its games to be distributed on social networks.

This reminds me of the old saying that if all you have is a hammer, then everything looks like a nail. I am excited about the innovation that is happening in social games where the gameplay occurs within Facebook itself (and other social networks). I think we’ll see far more innovation coming from startups who are focused on these new opportunities than from established game developers who may have trouble with the innovators dilemma in dealing with disruptive technologies, in this case, social games.

Games as a hit driven business March 17, 2008

Posted by jeremyliew in business models, facebook, games, games 2.0, social games, social gaming, social networks.
10 comments

The games business has always been hit driven, and the move online hasn’t changed that. World of Warcraft alone commands 62% market share of all MMOGs. In the casual games business, the top 20 games constitute 75% of total industry revenue. As more games have launched onto Facebook, we still see a hit driven business. There is an order of magnitude change in the number of daily actives in just the top 25 games on Facebook:

Game, Daily Actives (‘000s)
Scrabulous, 697
Friends for Sale, 672
Texas Holdem Poker, 581
Compare people, 393
Lil Green Patch, 338
Speed Racing, 260
(fluff)Friends, 240
MindJolt, 189
Vampires, 156
PetrolHead, 144
Who Has The Biggest Brain, 135
Scramble, 126
Jetman, 121
My Heroes Ability, 96
Mesmo TV, 93
Have You Ever???, 86
Zombies, 85
Blackjack, 83
WereWolves, 79
Slayers, 77
Parking Wars, 68
Scratch and Win, 67
Fight Club, 64
Hotties For Sale, 59
WarBook, 56

The graph below makes this point even more dramatically, showing a strong power law distribution for the 2190 games on Facebook:

Facebook Games by Active Users

Game 100 has 6,000 daily actives, game 500 has 150 daily actives, game 1000 has 23, game 1500 has 6 and games 2000 and up have no daily actives at all.

In an environment with as long a tail as this, companies need to take a portfolio approach to their games. Zynga has taken the approach to cross promoting their new games on launch, to good effect:

Zynga Games

Although Zynga’s games also show a power law distribution as well, all but one of their games has made it to the top 100 in daily actives.

Social Games Network has built its portfolio through a combination of cross promotion and acquisition.

SGN Games

Their power curve is not as pronounced because they have bought some successful games to fill out their portfolio.

The difference between SGN and Zynga is really one hit game, Texas Holdem Poker.

Social games companies that learn how to repeatably create and launch hit games will become very valuable.

Rock You CEO on social network platforms March 15, 2008

Posted by jeremyliew in apps, facebook, myspace, social networks.
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Lance Tokuda, CEO of Rockyou (a Lightspeed portfolio company) is interviewed over at paidContent.org about apps on social network platforms. Read the whole thing.

Virtual Goods and Real Money Trade: Paving the paths March 13, 2008

Posted by jeremyliew in business models, digital goods, facebook, friendster, games, games 2.0, gaming, myspace, social networks, virtual goods.
2 comments

As I read the coverage about the real money trade in MMOs panel at GDC, I was reminded of danah boyd’s thoughts on why MySpace took off and Friendster did not, which notes in part:

Friendster killed off anyone who didn’t conform to their standards, most notably Fakesters and those with more creative non-photorealistic profiles. When MySpace users didn’t conform, they were supported and recognized for their contributions to evolving the system.

A good analogy to both situations is what to do when faced with a nice green lawn on a college campus. Some students will always cut across the grass, leaving worn paths. There are three solutions to this problem:

(i) Erect a fence around the lawn and put up some “keep off the grass” signs. This keeps the grass green and pristine, exactly as the landscape architect imagined it, but forces unhappy students to go the long way around to their classes.

(ii) Do nothing, let students cut across the grass and tramp mud into classrooms.

(iii) Pave the paths. Students take the shortest paths, no mud in classrooms, and the rest of the lawn stays green.

Friendster put up “keep off the grass” signs. Myspace paved the paths.

Now if you ask students as to what should be done about the muddy paths, they’ll probably suggest option number one. But its those same students that created the paths in the first place! It is more important to watch what users do than what they say. Facebook is facing a similar dilemma with its apps right now.

Games companies have the same issue with virtual goods. The abundance of real money trading markets for virtual goods tell us what users want to do (despite their vociferous claims to the contrary). If game developers don’t pave these paths, they risk muddy classrooms or unhappy students.

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