Facebook Growing Pains


A few weeks ago, the social application developer Slide announced that movie and TV star Ashton Kutcher would headline an original Web series on Facebook.

Around the same time RockYou, another major apps provider, made some noise about a new product that it claims offers advertisers access to more robust behavioral targeting data than Facebook itself can offer. Meanwhile, Facebook -- which spent last week dealing with a highly publicized revolt by its users over proposed changes to its terms of use -- doesn't see a dime from Slide and RockYou.

But as the company continues to struggle to find a sustainable revenue model while catering to an increasingly vocal user base, many believe that Facebook will soon impose some sort of tax or revenue sharing requirement on apps companies. "A deal of that sort is probably in the works," observed Anton Denissov, digital media analyst, Parks Associates.

Adam Shlachter, digital practice lead for MEC Interaction, agreed that such a scenario is  possible, since apps companies like Slide offer an increasingly viable alternative for advertisers to reach users on social networking sites, while also driving up the number of page views these sites generate and need to sell. "I wonder if it becomes a problem eventually," he said. "I do imagine it has to be something they are thinking about."

Max Levchin, CEO of Slide, has spent a lot of time thinking about this issue, and perhaps surprisingly, he's in favor of some sort of apps tax. He even proposed the idea to Facebook executives about six months ago -- his contention being that if Facebook were incented to promote Slide's apps: "That's better for all individuals," he said.

Chris Cunningham, founder and CEO of the apps rep firm appssavvy, says that though he's heard "rumors and murmurs," he doubts that Facebook will start charging companies apps fees. "I'm not worried," he said. He estimates that the apps business will generate $125 million to $150 million in 2009. Solid, but perhaps not enough to get Facebook -- which has been valued at $15 billion -- overly excited.

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