Facebook Starts Selling Shares of its News Feed?

-Newsfeed Shares-One of the most sought after items in Silicon Valley currently is stock shares of Facebook, but potentially more valuable is shares in the Facebook newsfeed. Valleywag’s Owen Thoman even suggests that Facbeook is auctioning off shares in their news feed:

Digg, the popular news-discussion website founded by Web 2.0 playboy Kevin Rose, is rumored to have struck a deal with Facebook that guaranteed a level of News Feed placement before it agreed to sign up with Connect. And app developers are advising other potential Facebook partners to get similar guarantees in writing.

Can Facebook really be offering guaranteed levels of news feed placements? At first glance this seems like a ridiculous notion but considering that most of the agreements have been with other media companies, it makes some sense. Facebook can exchange a minimal level of placement in exchange for a user’s identity. If you aren’t going to get access to a user’s email, you’d probably want some sort of promotional benefit that will substitute what could potentially be a decrease in user marketing potential.

As long as Facebook leaves email channels completely open with their API for new users, there won’t be a decrease in marketing potential. That means there really isn’t a reason not to offer Facebook Connect to a site’s new users. Well, there is that whole competitive information thing but I’m sure companies aren’t really concerned about sharing that information with Facebook, right?

Facebook Becomes Democratic

Google’s famous PageRank algorithm is known for its democratic nature. Pages get valued by the content on the page, but more importantly by incoming links to each page. While it isn’t a perfect democracy since some votes count more than others, it’s one of the most widespread democratic discovery systems on the web. Through Facebook Connect the news feed can now become democratic as well.

Imagine if every time you visited a site that visit was a vote for the site. While Google currently tracks clicks to sites and can theoretically track usage through Google Analytics, Facebook will now be able to track sites based on how often Facebook users share information on them. That sharing of information is essentially an alternative to a link, which leads me to Facebook as a search engine.

Potential for a Search Engine?

As of today, almost a quarter of the U.S. internet population is on Facebook and around 60 percent are using Google according to Compete.com data. That means that whether or not users are searching for something when they visit Facebook, they are definitely looking for and looking at something, and they’re spending a lot of time doing it. With all that activity and “sharing”, Facebook clearly has the potential to take a shot at entering the search space.

Granted, the company is far behind when it comes to search technology but what they could rapidly build is one of the best voting systems for content. While not all content will be indexed in Facebook, all the content that matters will theoretically be there. If it’s good enough to share then it must be good enough for others to view.

Conclusion

The search potential with Facebook is serious speculation. In the short term the real question is how many people will join Facebook Connect and what barriers currently exist. Additionally, what incentives do sites have to integrate with the Connect service? Facebook could theoretically be giving more placement to select partners but ultimately that ends up decreasing the value of the news feed algorithm in the long run.

While search may not be the future of Facebook, developing the best news feed algorithm is critical and Facebook Connect will help them improve that algorithm. User activity on external sites will be weighted based on the volume of activity for an individual user, their friend network, and Facebook as a whole. All of this adds up to one very efficient way of discovering content.

So is Facebook really selling off parts of their news discovery algorithm? Doesn’t this mean Facebook would immediately be a more biased news source? What do you think Facebook’s reasoning is?