It’s ScamVille, the lawsuit. And we’ve spoken to one other law firm considering a class action claim against these companies.

Will users be vindicated and get their money back? Maybe part of it. A recent class action settlement against WebLoyalty for post transaction marketing scams led to a $10 million settlement, just a tiny fraction of the total revenue pulled in by these offers. The law firms are the ones who get a payday.

Gawker, which broke the story, makes a good point though. That video of Pincus looks bad enough on a blog. Imagine what a jury will think of it. And services like Offerpal have now admitted that what they did was questionable. This will likely settle quickly.

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

In an email to RockYou’s publishers, they say that they will begin complying with Facebook’s rules on offer scams (and like you, we’re not sure why they haven’t been complying all along, but lax enforcement is likely the cause).

Two interesting nuggets from the email though. First, RockYou says that from now on you’ll only see “clean, safe surveys from top tier brands advertisers.” All of the surveys we’ve seen are mobile subscription scams, so I’m not sure there’s such a thing as a clean, safe survey.

Second, the email says “the Facebook compliance team will be keeping a very close eye on offer walls starting tonight.” We’d heard that Facebook is coming down hard on app developers around scams right now, but Facebook won’t comment about it other than to say that they have always been monitoring application offers and enforcing the rules. From what we’ve seen, that enforcement didn’t bring much in the way of results, but perhaps they’re more serious about the situation now.

The full email:

Subject: RockYou Offers: Facebook Offer Wall Compliance Update

Hi RockYou Publishers,

You may have heard the recent controversy around the types of offers that are being run by most offer wall providers (Offerpal, SuperRewards, etc.). If you haven’t heard, take a look at this post on TechCrunch:
http://www.techcrunch.com/2009/10/31/scamville-the-social-gaming-ecosystem-of-hell/

The Facebook compliance team will be keeping a very close eye on offer walls starting tonight.

Since the RockYou Ad Network is the largest display network on the Facebook platform, we have a long history of working directly with the Facebook compliance team to ensure that we always maintain the highest standards of compliance and ad quality.

We will apply the same level of quality assurance to our RockYou Offers platform.

Some thing to keep in mind that set us apart from the other offer wall providers:
* 100% Facebook compliance starting this evening, and on an ongoing basis
* Clean, safe surveys from top tier brand advertisers
* High quality brand campaigns ranging from video ads to free sample offers
* Cost-per-install campaigns for other Facebook applications

We believe we will continue to outperform the competition based on our diverse advertiser base, and we will do so while always maintaining full compliance with Facebook policy.

Our technology provider for RockYou Offers, PeanutLabs, has also posted an interesting research study they ran over the weekend that clearly outlines how users feel about the scammy offers that have been so prevalent on offer walls:
http://peanutlabs.wordpress.com/2009/11/02/survey-finds-arrington-has-a-point-given-choice-users-overwhelmingly-prefer-direct-payments-and-research-surveys-to-cpa-offers/

We believe the new Facebook policy enforcement is in the best interest of Facebook users and the entire platform ecosystem, and we look forward to working with you as a safe and effective monetization partner.

If you have not yet switched over to RockYou Offers, all you have to do is:
1. Log in to your publisher account at ads.rockyou.com
2. Click on the RockYou Offers tab
3. Follow the 4-step integration process

If you have any questions or issues with integration, please contact Chris or Aaron:

Chris Akhavan
[redacted]

Aaron Choi
[redacted]

Thank you,
RockYou Offers Team

Crunch Network: CrunchBase the free database of technology companies, people, and investors

Widgets were all the rage last year. And the trend seems to be growing. Widgetbox, a widget creation and distribution platform, is reporting 500 million impressions worldwide in the past month, according to Quantcast. Widgetbox says that the vast majority of activity exists across hundreds of thousands of publishers who embed the widgets in blogs each month and through partners who integrate Widgetbox’s widget galleries.

That being said, Widgetbox is still behind other widget makers in the space, including competitor RockYou, which had 9.5 billion impressions in the past month, according to Quantcast. Clearspring also seems to have more of a reach than Widgetbox, but we don’t have the comparable Quantcast numbers. Clearspring’s widgets had 520 million unique visitors in April of 2009, according to comScore.

We also received these comScore numbers of uniques for April 2009 for most of the widget producing platforms:

Widgetbox, provides tools for both novice and advanced developers to create a variety of widgets, from simple embeddable RSS feed readers (called “blidgets”) to full social network applications for Facebook, Bebo, MySpace and others. Although Facebook represents only 1% of the widget maker’s traffic, Widgetbox says that they are specifically targeting Facebook as a growing priority, recently launching Facebook Connect integration for users and widgets (which can be published in the Facebook feed). Perhaps this is because of Facebook’s steady growth in the U.S. and its popularity abroad.

Last fall, Widgetbox launched a blog network. To be part of the network, a blog owner needs to embed one of the 29 channel-specific widgets created by Widgetbox. Each widget displays the same leaderboard content as the Widgetbox homepage, which allows users to browse through a network’s top blogs without having to frequently return to the Widgetbox site. The majority of Widgetbox’s impressions come from blogging platforms Blogger and Wordpress, with a fair amount of traffic also coming from Bebo and MySpace.

While Widgetbox is seeing success as a startup, it is competing in a crowded space of other more popular widget makers, including Rockyou, Clearspring, and Slide.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

RockYou VP Business Development Ro Choy apologized in the comments to our previous post, saying “We take privacy of all our partners very seriously and have reviewed and corrected the process that enabled this.”

Despite Choy’s assurance that the problem had been fixed, they did the same thing on November 25 (we gave them a pass that time). And now they’ve done it a third time. In a thinly veiled mass mailing advertisement, RockYou asks scores of developers to buy some of the “600 million impressions that we deliver each day.” And once again, they cc’d everyone, which annoys the recipients to no end. The message is below.

On an unrelated note, if you are looking for advertisers for your Facebook application, I’ve got a very high quality list for sale.

Subject: RockYou Ad campaign

Hi,

Thank you so much for working with us as a pub and/or advertiser. I
wanted to check in and find out if you need help reaching new users to
install your app or engage with your site.

As our long-term partner, we want you to have access to the over 600
million impressions that we deliver each day across our network. We’ve
been running ad campaigns consistently with most of the top 20 app
developers on Facebook and MySpace– driving over 30,000 installs per
day for several clients– so there’s no reason why we can’t help you
grow your application or site through an ad campaign.

If you’d like to find out more about setting up an ad campaign with us
to drive thousands of new users to your site in a matter of hours,
please shoot me a response email or feel free to give me a call. Thanks
a lot!

Regards,

Danielle

—
Danielle [removed]
Ad Sales, RockYou
Email: [removed]@rockyou.com
Office: 650-421-[removed]
Website: rockyouads.com

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Pretty run of the mill stuff, except RockYou included every email address in the CC field, providing every recipient (and everyone it’s been forwarded to, including us) with a complete contact list of every major application developer and potential advertiser on the Facebook platform.

Nice.

Hundreds of reply-all’s flowed in. Some of my favorites:

Why, hello everyone in the world who makes Facebook apps.

LOL, did anyone else just get an email from Zynga asking if they wanted a job making games on FB? I love it. Also, which one of you is gonna sell to SpeedDate next? [several yes answers to the Zynga question followed]

Hmm, I didn’t get one. Sucks. Well, we’re hiring too: http://www.seriousbusiness.com. We have really big monitors. And nice chairs. And Ruby. And come on – hands down: WAY cooler logo.

zynga has even bigger monitors, even nicer chairs, and 2 chef cooked meals every day! and siqi is welcome, pending a grueling interview, of course

You fucked us RockYou!

I’m down for a meet up too…Hows Palo Alto everyone? =)

Sounds good to me, I am in Palo Alto until Thursday afternoon if anyone is meeting up. “The Rock You Errant CC Spontaneous Meet Up”

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

Facebook is continuing its war on Facebook apps that push the limits on acceptable user interaction. Last week it was Slide’s Top Friends App, which it briefly suspended. Later Facebook also suspended another popular app, Social Me.

This time they’re targeting Slide’s rival RockYou and their Super Wall application, which tends to have a lot of spammy user content. But instead of shutting down the application wholesale, they’ve simply turned off the viral components of the app – invitations, notifications, etc.

The consequences have been just as dramatic. A month ago Super Wall had 2.4 million average daily users. Today it’s 600,000 and falling fast.

RockYou CEO Lance Tokuda confirmed that Facebook had shut down features of Super Wall, but says they’re working with Facebook to fix the issues and expect things to return to normal soon.

One thing is clear in all this: Facebook is serious about slapping down app developers who go too far in their efforts to grab new users.

Crunch Network: CrunchBase the free database of technology companies, people, and investors

No one was surprised to hear that arch-rival RockYou would soon close a big round of their own. And we have not been dissapointed. Today RockYou is announcing a $35 million Series C round, led by DCM. Previous investors include Sequoia Capital, Lightspeed Ventures, and First Round Capital—none of which are mentioned as participating in the current round. The company had raised just $16.5 million over two previous rounds, bringing their total to $51.5 million.

RockYou is the second-most popular creator of applications on Facebook (after Slide), and says that its widgets are seen by 87.5 million people a month across the Web (compared to Slide’s 63.7 million). The company also offers OpenSocial applications that have been installed 10 million times. RockYou sells social-networking ads against the audience for its widgets. At 2.7 billion pageviews a month, that’s a lot of advertising inventory.

Now it just has to figure out how to get more people to click on them.

The stress between these two similar startups to compete is brutal. Sarah Lacy explained in her book how when either company would release a new feature or application, the other would race to duplicate it within hours:

This has all been building to a nasty war between Slide and RockYou, with each maintaining it is larger, each ripping off the other’s products. Having an enemy has helped focus Slide, and for now, it beats RockYou on every count.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

The Mountain View-based firm raised a previously undisclosed $4M in Series A funding from Canaan Partners this past September. While it’s been developing Facebook apps since July 2007, it just recently launched a corporate website to provide a more unified front to its efforts.

While you may not associate the name “Watercooler” with the more famous app developers Slide and RockYou, as well as SGN and Zynga, the company has created over 700 community-building apps. Watercooler’s installs and active users earns it the #9 spot on Adonomics top Facebook developer list.

Watercooler’s apps focus on particular shows and teams, and give fans an opportunity to discuss recent events, share photos, and take quizzes. The applications can also communicate with each other, allowing for interaction between rival groups, even across the supported social networks. The company’s platform allows the company to produce these applications very quickly, each tailored to a particular show or team.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Today, Henry Blodget & Co. at Silicon Alley Insider try to peg valuations on 25 private Web companies. Facebook is at the top of the list, but it is valued at $9 billion instead of the $15 billion that Microsoft’s investment put on the company. Why? Because everyone knows that the $15 billion is too high, so SAI decided to apply a 25X multiple on Facebook’s 2008 revenue forecast of $350 million. Does that make its valuation correct? Probably not. But in the absence of any true market pricing, anyone can go ahead and make a guess.

The same goes for any of the valuations on the SIA 25 list, which puts Wikipedia’s worth at $7 billion, Craigslist’s at $5 billion, Mozilla’s at $4 billion, LinkedIn’s at $1.3 billion, Ning’s at $560 million, RockYou’s at $325 million, and Spot Runner’s at $250 million. Note that three of the top five (Wikipedia, Craigslist, Mozilla) are essentially not-for-profits sitting on very valuable assets. The valuations for those three are based on what they would be worth if they were run differently with an eye towards maximizing revenues—which, of course, could impact how consumers interact with them, which in turn would impact their valuations.

Another 25 startups make up the contenders list, which includes Federated Media ($245 million), Yelp ($225 million), Meebo ($220 million), Mahalo ($150 million), Digg ($125 million), Etsy ($115 million), Powerset ($80 million), and Twitter ($75 million). A full list that changes dynamically every 20 minutes, based on changes in the Nasdaq, can be found here (although, exactly how the valuations are linked to the Nasdaq is never clearly explained)

Some of these valuations have more merit than others. Some have none whatsoever. For instance, SAI gets at its $125 million valuation for Digg by “splitting the difference” between a $200 million buyout rumor we reported and the $60-to-$80 million that Kara Swisher came up with. Splitting the difference between two rumors is not exactly the height of financial analysis.

But what are you gonna do? At least SAI acknowledges that the list is an imperfect work in progress. Don’t get too caught up in the actual numbers. It is more useful really as a starting point to think about relative valuation between different startups. Is Meebo really worth three times as much as Twitter? Is Ning worth as much as Slide? Let the parlor game begin.

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

The company has raised $14.5 million from Hummer Winblad, Sequoia Capital and Northgate Capital. Hummer Winblad has been around since 1989 and has invested $620 million of so in startups. Price feels that Widgetbox is poised to take advantage of the huge surge in widget usage. And if the AOL acquisition of Goowy and the recent Slide valuation is any indication, there’s lots of room to grow for Widgetbox.

I asked Price to write a guest post telling us why he made the decision to leave a very safe and very lucrative job and enter the very unsafe and risky world of startups again. His post is below, although it can largely be summed up in this post, too. If you want to follow Price’s regular updates, his blog is here.

My name is Will Price and until yesterday I served as a General Partner at Hummer Winblad Venture Partners, an early stage venture capital firm that was founded in 1989 (investments include TheKnot, Napster, HubPages, Omniture, Powersoft, Hyperion and others). While passionate about the firm and the venture industry, I am leaving Hummer Winblad today to take the CEO role at one of the startups I invested in – Widgetbox.

Michael Arrington kindly offered me the chance to explain my decision to leave venture capital and to join Widgetbox as the CEO. While the detail follows, in summary the combination of my personal aspirations to return to an operating role and my passion for the widget market and the company (which I helped seed fund) made this a no-brainer move for me.

My logic:

The best markets and the best companies ride the tide of history. Widgets are such a market.

The Web’s tide is open, distributed, standard, user-defined, and, in many ways, the most powerful force of the modern era. Widgets are not a fad, or web 2.0-hype, but fundamentally they are the unit by which users are assembling and defining their web experience.

Widgets are portable applications that are user-defined, user-assembled, and consumed independent of the source of the underlying content, commerce, and application functionality. The combination of user-control and decentralized interaction to important services represents an important paradigm shift in how users discover, select, and consume the best of the web.

In Nov 2007, Comscore reported that 650m global uniques, or 65% of the web universe, interacted with a widget. The growth in widget adoption and social media speaks to users’ unmet needs and frustrations with traditional web models. Today, brands, developers, media companies, and established Internet players are racing to understand the forces driving user behavior and the power of a more componentized and distributed web. While widget penetration is at 65% of Internet users and growing, spend in the widget category in 2007 was less than $20m, or 0.1% of the total online ad spend
market.

The 650x differential between spend and the record growth in user adoption is very powerful to consider. Users are always ahead of the market, as evidenced by the systemic under-allocation of ad dollars on-line; 21% of media consumption is on-line vs. 7% of ad spend. However, this 3:1 imbalance is steadily eroding and the widget market will prove to be no different and no less transformative. Traditional portal models that aggregate users and resell that aggregation are fundamentally at odds with the emerging paradigm of user and community defined experience and distributed consumption.

Marketers need to fish where the fish are, however, in an early market there are often more questions than answers. While widgets are enjoying end-user success, the commercial relevance of widgets remains unclear to many. Are widgets a new marketing channel? If so, are they effective? How do you build them, buy them, track them? What is the unit of value; an impression, an install, an engagement…? What type of ecosystem will form around the phenomena? In order to move beyond fad status, an economic model for the widget ecosystem needs to be better developed and measurable value delivered to both end-users and marketers.

Widgetbox, along with Slide, Rockyou, Goowy, Clearspring, Gigya, and others, is working to enable users, developers, brands, media houses, and incumbents to ride the tidal wave of web componentization.

Widgetbox, backed by Hummer Winblad, Sequoia Capital, Northgate Capital, and Michael Dearing, is the web’s largest gallery of widgets. Widgetbox’s growth in the past year has been extraordinary, with a current monthly audience of 30m uniques, 400m monthly widgetviews, and widgets installed across 230,000 domains.

For those of you who read my blog, you know that I am passionate about the venture capital industry and its importance in supporting innovation and entrepreneurship. As a General Partner at Hummer Winblad, I enjoyed the exposure and access to some of the key innovators and drivers of the new economy; company’s like Omniture, Move Networks, Mulesource, Widgetbox, and many others. At 36, however, I felt a persisting and important pull to embark on a new journey of growth, discovery, and learning.

In my career to date, I have found that if you follow your heart, work tirelessly, and fish in good waters, good things will happen. For Widgetbox and our colleagues in the space, good things will continue to happen if we stay true to the web’s architecture of openness, distribution, and standardization and to users’ passion for empowerment, expression, and need for community.

Crunch Network: CrunchBase the free database of technology companies, people, and investors

Their first product was a Flash-based webtop or alternative operating system. But later they went into the widget space with their YourMinis product, and that is the reason AOL has acquired them.

AOL SVP of Social Media, Messaging and Homepages David Liu said this was a deal they’ve been considering for the last nine months, and that they plan to integrate Goowy’s technology into both user-facing AOL products (to widgetize them) as well as their Platform A advertising network. Expect Platform A to launch significant new advertising products in the widget space soon, Liu says.

This is a significant win for Goowy founder and CEO Alex Bard, who has run a tight operation over the years. The company has just six employees and raised a single round of financing from Mark Cuban in April 2006 (the size of that round remains undisclosed, but it was almost certainly under $1 million). He says the Goowy team will remain in San Diego for at least the short term.

Goowy competes with a number of startups in the widget advertising space, including Widgetbox, ClearSpring and Gigya. VideoEgg, Slide and RockYou also compete in this area.

AOL has been busy acquiring promising young startups – they bought Israel-based Yedda last November as well.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

This is a market-share play for Lookery. By offering a guaranteed rate, it hopes to attract enough application publishers to get to a billion impressions a month, up from 170 million in December. Lookery is smaller than the other major social-app ad networks, like Slide, RockYou, and Social Media. On social networks, more so even than on the Web in general, advertising is obviously a volume game. And Lookery is trying to catch up to the larger app ad networks, which may very well have higher average CPM rates, by taking all the low-hanging penny inventory that is out there.

Find out more here.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Now, the servers of our partners can say, “I want to create a room.” It automates the creation process on a server-to-server basis. Also, we will be putting advertising into these rooms.

In addition to the APIs, the company is also announcing the Meebo Network, which will serve ads inside Meebo Rooms across the Web, splitting the revenues with the Websites hosting the rooms. Since each Meebo Room is formed around a particular interest, ads can be targeted. And to the extent that sites participating in the network have demographic data on their members, that can be used for ad targeting as well. Only Meebo Rooms created through the API will show ads, not the ones created manually.

The launch partners joining the Meebo Network are Piczo, Revision3, RockYou, Social Project, and Tagged. Revision3, for instance, will create a Meebo room on its site where fans can watch a synchronized loop of Web TV shows while chatting. Access to the full APIs and the ad network is by invitation only at this point. Social networks could use the new APIs to automatically add chat rooms to every group page. Rock bands or movie sites could add Meebo Rooms to their sites for visiting fans.

Comparisons can be made here to Userplane, a white-label chat service which was bought by AOL in 2006 and powers many of the chat rooms on MySpace. But there are subtle differences. Most notable is the fact that Meebo Rooms can spread anywhere on the Web. Anyone can grab the embed code and put it on their blog or MySpace page as I’ve done below. Notes Sternberg:

A user cannot take a room off of MySpace and throw it somewhere else. We have all our rooms networked. A user can take the CBS Jericho room, and throw it on their Wordpress blog. Our chat rooms are networked versus islands within Websites.

It is very hard to get a synchronous conversation going. You won’ get enough people on your MySpace page to have a conversation. But with Meebo Rooms, most of the traffic is coming from somewhere else. It solves the problem of the Web being so distributed.

The power of Meebo Rooms is that they let anyone create live conversations on their site by aggregating people with similar interests from other sites. In fact, it links people between sites. And that, hopes Sternberg, will give it enough scale to become an ad network of sorts. Meebo has raised $12.5 million from Sequoia Capital and Draper Fisher Jurvetson.

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

Last year, salaries of up to $70,000 were common for the best students. This year, Facebook is said to be offering $92,000, and Google has increased some offers to $95,000 to get their share of graduates. Students with a Masters degree in Computer Science are being offered as much as $130,000 for associate product manager jobs at Google.

Apparently the popular Facebook Applications class is getting a lot of attention from other startups, too. Slide and RockYou are both recruiting hard. One source says that RockYou is approaching students and telling them they aren’t hiring them, they’re “acquiring” their “companies” and will let them continue to work on their applications after graduation. That is, of course, some serious smoke blowing – any code they’ve been working on in the class is likely to be shelved by RockYou. Still, it’s a great way to recruit by making these students feel like they’re entering into some kind of an M&A transaction.

Something tells me the Pitzer students who’ve enrolled in the Learning From YouTube class aren’t getting the same types of offers.

If you are a CS student at Stanford or another top university, tell us what’s happening with recruiting.

Update: Good comments below from students confirming these (and even higher) salaries.

Crunch Network: CrunchBase the free database of technology companies, people, and investors

San Francisco based PlayFirst was founded in 2004 and is focused on creating “shared casual game experiences around lasting original brands” that includes game play “rich in story and character.” PlayFirst titles include Wedding Dash, Chocolatier, and Dream Chronicles.

Accompanying news of the funding was a new deal between PlayFirst and RockYou. Under the deal RockYou will distribute PlayFirst games through its widget and social networking service, with Wedding Dash the first title to be made available to Facebook users. PlayFirst sees the deal a way of tapping into the growing popularity of social networking sites as a gaming platform. According to PlayFirst, Wedding Dash has so far been downloaded 200 million times by users on PC, Mac, mobile and handheld platforms.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

In a press release touting that it is now better than Slide, RockYou also claims to run the biggest ad network on Facebook. But it is unclear how many of these ads are circular links to other apps. There is a lot of funny money on Facebook. Rock on.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

A developer who goes by the alias “theharmonyguy” and describes himself as “just an amateur” claims to have compromised the RockYou OpenSocial application on Plaxo called emote (see the Plaxo blog for details on the application). Specifically, he claims to have added a number of emoticons to Plaxo VP Marketing John McCrea’s profile within 45 minutes of it launching.

In an email, McCrea said he added all of the emoticons himself and his account doesn’t appear to be hacked. But when I asked theharmonyguy to hack my Plaxo account he did, within minutes, adding four quick emoticon messages such as “michael arrington is getting my bling on” and “michael arrington is w00t” (see image to left, none of those were added by me). theharmoneyguy then added one more to McCrea’s account, which will be difficult for him to deny:

theharmonyguy also pointed out specific problems with RockYou’s code, including some fairly humorous comments:

Some interesting code in there. For one, the app still doesn’t seem to be live for most of us (John McCrea from Plaxo has used it somehow) – it currently loads a “Please wait” iframe that never changes. But check out these code comments:

// TODO: no error checking – we’re bold…
// TODO: figure out why this is necessary???

Also, the code constantly branches between Plaxo and “default,” which appears to be Orkut. In fact, there are some hardcoded names that I bet showed up in some OpenSocial screenshots somewhere:

if (getContainerType() == “orkut”)
{
friendIds[iNumFriends] = “11285577331363942034″;
friendNames[iNumFriends] = “Raymond Chan”;
iNumFriends = iNumFriends + 1;

friendIds[iNumFriends] = “15479081059638046412″;
friendNames[iNumFriends] = “Jia Shen”;
iNumFriends = iNumFriends + 1;
}

theharmonyguy says he’s successfully hacked Facebook applications too, including the Superpoke app, but that it is more difficult:

Facebook apps are not quite this easy. The main issue I’ve found with Facebook apps is being able to access people’s app-related history; for instance, until recently, I could access the SuperPoke action feed for any user. (I could also SuperPoke any user; not sure if they’ve fixed that one. Finally, I can access all the SuperPoke actions – they haven’t fixed that one, but it’s more just for fun.) There are other apps where, last I checked, that was still an issue ( e.g. viewing anyone’s Graffiti posts).

But the way Facebook setup their platform, it’s tons harder to actually imitate a user and change profile info like this. I’m sure this kind of issue could be easily solved by some verification code on RockYou’s part, but it’s not inherent in the platform – unlike Facebook. I could do a lot more like this on FB if Facebook hadn’t set things up the way they did.

Oh, Facebook apps can also be prone to injection – I can insert any FBML I want onto the canvas pages of one popular app. But once again, I can’t really do anything, because to interface with the app requires me to have code related to that app, which isn’t generally available. Not sure if Google’s iframe implementation will be the same way.

Of course, the ability to change emoticons isn’t a particularly malicious hack; but the ease in which this was done suggests that Google has some work to do in getting its new platform stable. If they don’t, more damaging stuff may be on the way.

Update: Joseph Smarr, Plaxo’s Chief Platform Architect, says he has taken the application down for now:

Hi, just caught this thread now. Michael-thanks for the info. It does look like something isn’t quite working right. While I suspect it’s benign, e.g. some of the rockyou code not distinguishing between the “owner” and the “viewer” of the gadget (this stuff is not always easy to keep straight), I want to err on the side of caution, so I’m going to de-white-list the gadget for now.

As is, we’re maintaining a strict white-list so we don’t have any random would-be hackers messing around, and the platform itself is still a work in progress. Hopefully the benefit of seeing some real working OpenSocial code in production is worth bearing with a few kinks that need to get ironed out.

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

What they haven’t done is launch yet another social network platform. As more and more of these platforms launch, developers have difficult choices to make. There are costs associated with writing and maintaining applications for these social networks. Most developers will choose one or two platforms and ignore the rest, based on a simple cost/benefit analysis.

Google wants to create an easy way for developers to create an application that works on all social networks. And if they pull it off, they’ll be in the center, controlling the network.

What They’re Launching

OpenSocial is a set of three common APIs, defined by Google with input from partners, that allow developers to access core functions and information at social networks:

• Profile Information (user data)
• Friends Information (social graph)
• Activities (things that happen, News Feed type stuff)

Hosts agree to accept the API calls and return appropriate data. Google won’t try to provide universal API coverage for special use cases, instead focusing on the most common uses. Specialized functions/data can be accessed from the hosts directly via their own APIs.

Unlike Facebook, OpenSocial does not have its own markup language (Facebook requires use of FBML for security reasons, but it also makes code unusable outside of Facebook). Instead, developers use normal javascript and html (and can embed Flash elements). The benefit of the Google approach is that developers can use much of their existing front end code and simply tailor it slightly for OpenSocial, so creating applications is even easier than on Facebook.

Applications can have full functionality on profile and/or canvas pages, subject to the specific rules of each host. Facebook, by contrast, limits most functionality to the canvas page, allowing a widget on the profile page with limited features.

OpenSocial is silent when it comes to specific rules and policies of the hosts, like whether or not advertising is accepted or whether any developer can get in without applying first (the Facebook approach). Hosts set and enforce their own policies. The APIs are created with maximum flexibility.

Launch Partners

Partners are in two categories: hosts and developers. Hosts are the participating social networks, and include Orkut, Salesforce, LinkedIn, Ning, Hi5, Plaxo, Friendster, Viadeo and Oracle.

Developers include Flixster, iLike, RockYou and Slide.

What This Means

The timing of OpenSocial couldn’t be better. Developers have been complaining non stop about the costs of learning yet another markup launguage for every new social network platform, and taking developer time in creating and maintaining the code. Someone had to build a system to streamline this (as we said in the last few sentences in this post). And Facebook-fear has clearly driven good partners to side with Google. Developers will immediately start building on these APIs to get distribution across the impressive list of hosts above.

And they’ll do it soon, too. It’s clear that the developers who arrived early to the Facebook Platform party won easy customers. Those that came later had to fight much harder. Developers found their new gold strike, and they will soon all be there, mining away.

Crunch Network: CrunchBase the free database of technology companies, people, and investors

It also shows the steady maturity of Facebook from a college network to a full on world network, where friendships, business contacts, family and other types of relationships need to be more fully described. And this is also as much about privacy as it is about organization – users will be able to limit the information that certain friend groups receive.

A few existing applications are going to be affected, like Slide’s Top Friends application, the most popular third party app on Facebook. Lots of other applications will likely need to be tweaked to work properly when this launches (so many of them access the friends list). And this will shut down at least one “startup” we’ve been tracking that was creating this exact feature as an application. At least they can quit now and stop putting good time and money after bad.

Building Facebook applications is a big dice roll. If it’s too popular or too obvious of an idea (even if it hasn’t been done yet), Facebook is just as likely to compete with you as pay a few bucks and just buy you (they are probably more likely to compete with you than buy you, actually).

Some developers will probably wonder if getting a cash grant from Facebook’s just-announced fbFund will lessen the likelihood of direct competition from the company. Only time will tell.

Update: Wired is writing about a slew of Facebook ad networks and the almost inevitable fact that Facebook will be competing with them directly, too. We’ve covered most of these: SocialMedia, VideoEgg, Lookery, fbExchange, and RockYou. Also mentioned are Cubics and Appfuel. Lots of brave souls racing to build a business before Facebook comes in and stomps all over the scene.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

Slide provides widget based photo slideshows that users can embed in a range of social networking sites including MySpace, Facebook, Bebo and Friendster.

Slide has impeccable backing, being founded by PayPal co-founder Max Levchin and funded by Mayfield Fund, Khosla Ventures, BlueRun Ventures and Founders Fund with a rumored round of $20million in November 2006.

Slide’s Facebook apps alone have a combined usage number in excess of 10 million users. comScore reports that Slide was serving 117 million unique visitors a month as of April 2007.

Slide competes directly with services including RockYou, Flektor, and Photobucket.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

There are two ways application developers are breaking the rules to get new users. The first: When a user looks at an application on his/her profile the application can show something different than when other users view the profile. So a user adds an application that looks nice to them. But everyone else sees, say, a big yellow box with an advertisement that says the user wants you to add this application, too.

The second and more devious scheme is being used by many of the largest application developers. They all involve some sort of notification fraud. Generally, you add an application. Then, every one of your contacts is notified that you’ve “written on their wall” or “have asked them a question,” even though you never did. To view the content the contact must add the application. They then find out there is no wall comment, or its a canned question like “is it ok to kiss on the first date?”

Super Wall (RockYou, 4.5 m installs), My Questions (Slide, 6.9 m installs) and FunWall (Slide, 3.6 m installs) all do this (and users complain loudly in the comments area to the apps – see here and scroll down).

Facebook Hits Back

Facebook took measures today to stop these kinds of activities. The first is dealt with in the new release (1.1) of FBML, the markup language used to build Facebook applications. Developers will no longer be able to show a different profile to friends than the one the user sees him/herself:

One of the key parts of the success of the design of the Facebook profile is that the user is always aware of exactly what their profile looks like to their friends who stop by to view their profile. This enables users to understand exactly how they are expressing themselves to others by simply deciding whether or not they like an application’s profile box and the content that the developer has decided to put into the box.

Right now, we have made a few FBML tags available that are causing users to not trust the content in the profile box. Tags such as: fb:if-user-has-added-app, and other fb-if tags. These tags are currently being used to deliver content to profile boxes which users are unaware of. Content such as big yellow boxes which say “ADD THIS APPLICATION!” or “ADD SOME OTHER APPLICATION!”.

Starting today, these tags will no longer be available for use in profile boxes. We will be migrating FBML to version 1.1, and adding a new set of tags called fb:visible-to-. They are:

fb:visible-to-owner
fb:visible-to-friends
fb:visiible-to-user
fb:visible-to-added-app-users
fb:visible-to-app-users

Facebook also notified developers today that they will be blocked from sending misleading notifications to users. This will stop Slide, RockYou and others from mass spamming users with false notifications:

Over the last few weeks we have noticed several developers misleading our users into clicking on links, adding applications and taking actions. While the majority of developers are doing the right thing and playing by the rules, a few aren’t – and are creating spam as a result. Going forward, if you are deceptively notifying users or tricking them into taking actions that they wouldn’t have otherwise taken, we will start blocking these notifications. The bottom line is that if the notifications you send are the result of a genuine action by a Facebook user and that action is truthfully reported to the recipient so they can make an informed decision, you should have no problems. If you do find some notifications blocked, it was probably because this wasn’t the case and we will be happy to inform you of some best practices by other developers that have prevented this issue.

Facebook has done a great job in managing their platform since opening it up to developers of applications. They have had to accommodate application developers while at the same time protect users interests and the general security of the site. The changes that Facebook have made today, while they may inconvenience some application developers, have clearly been done to protect users from spammy tactics that some applications have employed.

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

fbExchange

The first out the door was FBExchange, a copycat of the LinkExchange idea from the nineties. It was created by the 30Boxes Calendar team – Narendra Rocherolle, Julie Davidson and Nick Wilder. Display others’ ads on your facebook application and build up credits, which can then be used to run your own ads on other apps. It’s a cheap and easy way to get exposure for your application, should the viral Facebook machine not create enough growth to keep you happy. See GigaOm for more. The company says they’ve booked $200k in revenue after just two weeks live.

Lookery

Lookery, founded by serial entrepreneur Scott Rafer, is a straight up advertising network targeted solely at Facebook applications. They say they’ll have access to deep demographic data on users and can therefore target ads to users with very specific characteristics – a woman between the ages of 20-25 in New York, for example. That theoretically will lead to much higher advertising rates. I like the idea, but Facebook itself has access to the same data and more and has had trouble selling high CPM ads at scale. Lookery needs big scale to be successful, and so will likely struggle in the early days. For now, Rafer says, they are passing 100% of revenue to content providers and will start to take a cut in a month or so when the economics support it.

RockYou

RockYou has been quietly testing their own idea of an advertising network – selling “users” to other applications. They’ve had a tremendous amount of success building viral applications on Facebook so far. Their Super Wall app, for example, has nearly 3 million users and is adding hundreds of thousands of new users each day. It’s basically what it says – a better “wall” where friends can leave messages. With Super Wall, people can add pictures, video and other rich media.

They’re offering to promote third party applications on Super Wall, and charging on a per-user-acquired (CPA) basis. When a user is signing up for Super Wall they are asked if they’d like to also add a additional application (the advertiser). See the screen shot to the right (click for large view).

The test so far are going very well. CEO Lance Tokuda told me today that they moved $30k in inventory in just four hours. They are testing various price points, but the low end seems to be around $0.30 for each user they sell to another application, and they believe they can get as much as $1 over time. The effective CPM (or revenue per 1,000 pages) is a “multiple of $20″ he says. This make them possibly the first Facebook application to have found a real way to monetize users and pageviews.

Tokuda also says they have developed an API for Super Wall and will give free access to other applications to build their functionality into it. This can make your head spin a bit – Facebook is now widely considered a platform, and now Super Wall is a platform on top of a platform. It’s a good thing I guess that no one is slowing down long enough to really think too hard about how quickly the online world is evolving. Instead, they’re experimenting wildly. And some of this stuff is going to stick.

Crunch Network: CrunchBase the free database of technology companies, people, and investors

Competitors like Slide and RockYou allow users to create photo slide shows with various effects and transitions, and then embed those slide shows onto MySpace pages and other profiles. These services are growing rapidly. Newcomer Flektor wants to carve out a piece of this market for itself, and we think they have to tools to compete with these more established startups.

Slide

Slide’s most recent financing, rumored to be in the $20 million range, is a reflection of this growth. According to Hitwise, they have grown by more than 2,000% in the last year.

Slide tells us that they are delivering more than 150 million daily slide show views and that more than 200,000 new slides shows are created daily (a press release will be issued later today).

Flektor

The new kid on the slide show block is Flektor. It just recently came out of beta and has few users so far, but we’re hearing they are getting a lot of attention from potential acquirors.

Flektor’s founders, Jason Rubin and Andy Gavin, previously co-founded game developer Naughty Dog (Crash Bandicoot and Jak Daxter), which was acquired by Sony Computer Entertainment in 2000. These guys are experts in creating attractive user interfaces, and Flektor is a generation ahead of Slide and RockYou in ease and flexibility in creating slide shows and related products.

Like Photobucket’s recent offering, Flektor allows users to create slide shows using video, photos, text and effects/transitions, something Slide and RockYou have yet to release (Slide and RockYou also don’t do effects, which are like Photoshop filters – users eat this stuff up). In our testing we also found the Flektor creation wizard to be far easier to use than the current Slide and RockYou offerings. Click on the screen shot for a larger view.

Slide and RockYou have valuations that prohibit speculative acquisitions. Flektor is brand new and doesn’t have the capitalization complications of the older startups. My bet (and rumors around the valley back this up) is they may be acquired in the next six months by one of the social networks, perhaps one of the up and comers looking for as many tools as possible to compete with MySpace.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

All outside data sources suggest RockYou is second to Slide, which raised a large round of financing late last year. However, an investor, Lightspeed partner Jeremy Liew, argues that RockYou is actually bigger than Slide in a comment to our previous post.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Slide is the undisputed leader in this space in terms of usage, although PhotoBucket has the most recent Flash tools that allow slide shows containing video, photos and music (look for RockYou and Slide to launch these tools promptly as well). Recent competitor FilmLoop is in the TechCrunch DeadPool after their largest investor, ComVentures, threw them under a bus.

RockYou was involved in a legal dispute last year over the ownership of the original intellectual property used to create the company.

Update: Lightspeed Partner Jeremy Liew has a good comment below, and also see his blog post from last month discussing his thoughts on RockYou and other widget companies.

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.