It can be rational to pursue “fame” because fame is a valuable complementary good in the tech community - Fame is useful in the tech community, as it is in most community. Fame gets you access to cool people, good ideas, and interesting opportunities. Look at Robert Scoble- he’s famous and he gets access to lots of interesting opportunities due to his notoriety. Being well-known in some area makes it easier to get a job, sell your services as a consultant, get access to smart people, and generally be “in the know” – in short it’s a complementary good for many other traditional businesses.

The vast majority of people who are doing things on the Facebook platform cannot be motivated by the revenue potential – There simply isn’t a lot of money to be made for app developers on the Facebook platform at the moment. I suspect this will change at some point. Even if it does, how will it be distributed? Will the majority of the revenue accrue to the largest of the large, with the smaller providers trying to feast on crumbs? My guess is that the biggest of the big (Slide, RockYou) are in the best position to figure out the business model that works as they have the most traffic, the most exposure, and the tightest links with the platform providers.

Also, it’s worth noting that I am focused on revenue, not “making money” – there will be Facebook apps that get bought for prices where the teams do well. There will also be folks who are able to raise money from angels or venture funds to build applications. I just don’t think the current revenue-generating potential is a strong attraction for most of the people developing these apps today.

The pursuit of fame is driving people to create apps that are famous for being famous. They don’t persist and more energy is being put into driving adoption and installation than actual ongoing usage. This is the one thing that I do find mildly humorous. Perhaps I am being naive, but viral marketing is a tool, not an end in and of itself. Getting reach and adoption ought to be part of your plan, but it shouldn’t be your whole plan. Lately I see an increasing number of applications that have done a great job of being clever in their viral loops and marketing plans but the applications themselves are really disappointing. They’re not that much fun nor do they have much ongoing entertainment value or utility. Simply put, there are a lot of folks who seem focused just on driving installs at the expense of building applications that will drive continued usage once they’re installed. It feels like the ends and means have been confused here.

This whole situation feels a lot like blogging 3-5 years back. A number of folks have built decent revenue-generating businesses from their blogs. A larger group has achieved fame that helps them in their professional life (selling consulting services, their personal job search, finding interesting investment opportunities). For the vast majority, however, the principal return is personal satisfaction and the occasional nod or pointer from a more popular blog. I think we’re already starting to see that with Facebook apps today. We have a few “professional” app developers who are building apps that are engaging and persistent and could conceivably turn into real businesses. There’s another handful of folks who are building apps and have already achieved some level of fame for being “big on Facebook” and have managed to convert that fame into something valuable (angel financing, consulting agreements, conferences, etc). The vast majority, however, are likely going to have to content themselves with personal pride and the joy of the process, neither of which should be undersold.

At the end of the day, developers care about increasing the audience for their applications and/or making more money. At the end of the day, end-users (also known as normal people) care about a great user experience and a compelling services.

With these goals in mind, here are a few thoughts about the open social movement:
1. OpenSocial is a set of APIs, not an actual product – Despite all of the speculation about what it will be, I think the press releases are pretty clear about what it won’t be. What’s being contemplated is a set of APIs that will make integration social data easier and allow developers to pull from a wider variety of sources. It’s not actually a product or service in and of itself. The onus will still be on the community to build cool stuff that makes use of the platform. And the underlying data has to actually be useful – this alliance has to have profile data about people and entities that are actually interesting to developers.

2. Open systems tend to work best when competing against truly closed products. There are a lot of posts on the web that keep citing the “fall” of AOL and the triumph over the web. Two quick things I think bear mentioning. If being valued at $20 billion recently is a “fall” then I bet a lot of companies would be happy to fall. AOL is no longer the force it used to be, but it hasn’t exactly disappeared. A better example is the case of open source software in the enterprise. In the case of OSS, the vendors were so intent on maintaining control that there was a real market opportunity for more open entrants. Facebook is not completely open, but it’s certainly more open than MySpace. It will be interesting to see if an extremely open system can beat an open system.

3. Having open APIs does not remove the need to build really great products. Openness is a product decision. Being more open than your competitors does not guarantee success. It doesn’t guarantee adoption. I do think, though, that it gives you more flexibility to be clever about how you integrate with others. Simply opening up does not remove the requirement to build products that take advantage of that openness to build better products and services.

One of the undertones in a lot of the blog posts I’ve read is that new upstarts on the Facebook platform haven’t been able to break through to dislodge RockYou or Slide. Naturally, finding a new pasture in which to compete where you can be one of the first-mover launch applications is appealing. But at the end of the day, this open coalition has to deliver on its promises to developers (openness = more opportunity to acquire users or make money) and end-users (openness = better user experiences and more compelling applications) or it won’t work.

I think it will be really interesting to see how this all pans out. We’re clearly in the early days of this.

If you’re an existing widget provider and developing an ad network or ad capability is part of your overall business plan, experimenting with Facebook makes sense to me. Facebook is a pretty fertile ground for innovation and Facebook is a good way to figure out whether ad serving in widgets is a viable way to proceed. If your name is RockYou or Slide, this makes a lot of sense to me as a hedge at a minimum and as a real business opportunity at best. Those two companies already have enough non-Facebook widget traffic; figuring out how to better monetize that traffic using Facebook as a testbed makes a lot of sense to me. Any key learnings could likely be filtered back into the non-Facebook product as well.Ultimately I think the widget business is going to be about delivering ad impressions anyway.

Until it’s clear that Facebook is not interested in playing in this game, I’m not sure that I would pour a lot of resources into building a monetization engine only for Facebook. Perhaps I am being naive, but I only see two real revenue opportunities for Facebook — ads and virtual items. For the near term, I expect ads to dwarf the virtual items piece. I’m not sure whether devoting resources to build an ad product for Facebook is a wise investment.

I don’t want to abandon this point prematurely. Building a good advertising product requires three key components: advertisers, publishers, and reasonable expectations about conversion. From everything I’ve seen, the conversion rates on most Facebook-related advertising is fairly low. To actually make money, app publishers will need to build applications that generate a lot of traffic, especially if we’re talking about display advertising with fairly low CPMs. I won’t even touch on the question of advertiser acquisition – getting quality advertisers on board is very expensive. If building a really good ad network were cheap and easy, everyone and anyone could do it.

Like any emerging market, there are more questions than answers. But until I see more data, I’m just not convinced that Facebook-specific ad networks make a lot of sense at this point in time. Feel free to agree or disagree in the comments.