MySpace and Facebook

Josh Kopelman writes:

By providing a clear roadmap and business opportunity for the widget makers, Facebook has just increased its virtual R&D budget by over $250 million dollars. By welcoming third-party innovation, Facebook will reap the benefit of hundreds of millions of dollars of venture investment and the Facebook user will have a much richer experience. I’d wager that every widget maker who has previously relied on Myspace for traffic is hard at work this holiday weekend on migrating their application to support the Facebook API.

Facebook has recognized (and embraced) something that Myspace has not that there is more value in owning a web platform then a web property. This brings back memories from the early days of the Internet, when companies like Prodigy and AOL were the only online services in town. Despite the launch of the web browser (which unleashed the creation of millions of web sites), AOL and Prodigy initially focused on maintaining their proprietary online environment and controlling everything on their site. It took a few years, but ultimately they saw that it is impossible for one company — no matter how popular and well-funded — to compete with an unlimited army of motivated (and funded) developers. Even Microsoft recognizes that the true strength of it’s Windows platform comes from the volume of third-party developers building (and profiting from selling) Windows applications.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.