Music apps for Facebook – revenue?

FacebookThere is lots of talk about the new Facebook platform and lots of applications are cropping up. In the music space, iLike is the current Facebook dominant player, but new ones appear almost everyday.  iLike has stated that their goal is to be the biggest Facebook player – and figure out revenue later. That statement captures a couple issues as I see it – first a “typical” web 2.0 issue and second a Facebook issue. 

There seems to be a misconception in the web 2.0 space that having lots of users/eyeballs on your site is the end-all-be-all of an application. To me that is rather silly – I always thought that running a for-profit company was about revenue.  What happens when you need to show a profit? And maybe worse, when you need to find some revenue, what will your user population do when they have to start paying for the current free service?  Not to mention that with iLike the mythology of their first few days as a Facebook app include having to scrounge for servers to keep their systems running. Ouch on the expense side.

In terms of the Facebook model, the other issue is the user population.  Well, there is actually nothing wrong with the user population as a group, but there is a problem with their expectations. The Facebook platform is free and advertising driven. Users who go there expect a free service. I am not sure you can successfully mix in non-advertising revenue models into the space and gain any traction.

So – what’s an iLike to do?  No revenue model (for Facebook), a large user population with expectations for free usage?

In my view, it’s better to keep your model consistent and drive forward with it. Brand and consumer expectations are the hardest things to change – why risk it to say you have huge numbers? You’re just going to get into trouble.

Posted on August 3, 2007 in Competition, Market

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