Considering thousands and thousands are made per day and most are not necessarily, probably a very low percentage.
A more interesting question, IMO, is the "market size" of Facebook apps, irrespective of your chance of success. I've built a few apps that generate $800k-$1MM in revenue per year.
It's just much easier to get massive scale on Facebook than outside on the web, and the monetization methods are constantly improving.
Of course, it's hard to say if you can just build a viable ten year business out of it, or if the Platform will be dead in two years. But you take what you can get now, factor in the risk of long-term failure, and branch out it ways that protect you against that.
There's certainly enough money to sustain a decent business in a short-to-medium-term.
Ok, I believe that without a seconds hesitation. But here is my problem with this: A REAL business, such as twitter or facebook creates an ecosystem around it. You are just part of their ecosystem, conclusion, you are not a business.
A business stands on its own strengths, and minimizes its dependence on outside factors that threaten its existence.
If your business is solely dependent on Twitter or Facebook you should be trying to diversify like mad.
A REAL business, such as twitter or facebook creates an ecosystem around it
:s/REAL/big
It's called an ecosystem because of the web of interdependencies. If it makes money, it's a business.
Biologists define an organism as a "thing that eats, poops and reproduces." Let's just define a business as "a thing that eats resources and poops profits".
By that definition large numbers of web 'businesses' are not businesses (yet) because they do not make profits. Their owners might disagree though.
And there are plenty of 'real' businesses out there that make a loss.
It's really not that simple to put out a definition of what really is a business, but I think that something that lives by the grace of an API as a total dependent on some other company does not count as a business in its own right.
Every now and then you come across a rant somewhere from someone that got 'cut off by google' because they depend for 100% of their sales on search engine traffic, and google happened to provide the bigger portion of that.
Suddenly they find out that even though they were profitable last month they did not have an actual business, they forgot to realize they were actually a small extension of the google ecosystem and were only able to make a profit because of that. Anybody that has been in business for a while would realize that is an accident waiting to happen.
Making your company 100% dependent on FB or Twitter is no different.
It's easy money if and when it works, but easy come, easy go.
Following your logic, if you're in the business of selling pencil sharpeners, relying on the existence of one or more third parties selling pencils, who in turn rely on a market of people who want to use pencils, is also not a 'real' business, because who knows, the third parties may decide to start selling a self-sharpening pencil and stop offering the regular ones, effectively cutting you off.
Now, the above mentions one or more third parties. Having redundant providers significantly reduces the risk of being cut off like that, but while having a known single point of failure may seem stupid, it's not as if only businesses that don't have any are real.
Whether or not something constitutes a 'real' business does not hinge on that business' dependencies or any other risk factors. Whether you'd want to be a stakeholder in it is an entirely different matter.
How many of us in the software world would actually have a real business within this definition of dependencies if you consider how quickly we'd all go in the red if google somehow ends up blacklisting us? With a somewhat grown-up business, you don't need 100% of your sales to evaporate to be in serious trouble..
> Now, the above mentions one or more third parties.
Exactly.
> Whether or not something constitutes a 'real' business does not hinge on that business' dependencies or any other risk factors.
If a business is created with the explicit goal of being in the position of building right on top of another business for which there is no alternative, then I doubt the right of that business to call itself an independent business.
Sure, no business is without risk, there are always factors that increase or decrease the risk. You should always be trying to minimize those risks, and if there is one thing that is a huge red flag for investors or buyers then it would be a dependency like that.
The 'What if you get cut off' question is absolutely unanswerable. If you manage to get it to the point of a contract with termination clauses and such then that's a different story, but until then, to just build your enterprise on top of an API and hope for the best is not a good long term strategy.
Your point about google is well taken, I'm happy to report that my business depends for less than 2% of it's traffic and income on google, I wouldn't have it any other way.
Of course there are numerous examples of companies that did great building for instance software on top of the microsoft platform, but worst case there would have been other operating systems that they could have ported their software to in case microsoft would go under.
If a company like twitter or facebook would go under or decide they no longer want you or that you become too much of a threat you're done.
Instantly.
And you don't even have any recourse, simply because you never had a contractual right to be there in the first place, after all you use an API at the providers discretion, and nowhere in their terms of service does it say that you have a right to access, no matter how popular or profitable you are.
That's not the same as being in a business relationship, even about something as mundane as buying and selling pencils.
The self sharpening pencil, by the way, has been done:
But they didn't put any pencil sharpener producers out of business, though I suspect the typewriter and the word processor may have caused a few of them to find different sources of income.
Pretty massive I would expect. They're either setting themselves up to be the ideal bride for Google or Microsoft or they'll be a very long term presence in their own right, until the 'next big thing' comes along in social networks.
Google tried it with 'orkut', that didn't work out very well except for Brazil, chances are they'll go and do with Facebook what they did with Youtube, buy it to avoid someone else buying it.
Microsoft seems to have missed out on the user generated content almost completely, Facebook might be very attractive to them.
The payoff for FB investors/owners will likely be unlike anything else seen in the history of the net.
"Unlike anything else"? That's a grand claim. The net's seen some real craziness in the past.
I remember when AOL was valued at $166 billion. MSFT was around half a trillion dollars at one point. It's unlikely that Facebook will come even close.
I'm not sure what you mean. Like, a mom-and-pop store has vendors who supply the flour they sell, so that's an ecosystem and therefore a REAL business?
I certainly have vendors (server providers, contractors, etc.), so if that's not what you mean...what do you mean?
