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July 7th, 2008

Scrabble vs Scrabulous

It took a long time, but Hasbro, the owner of the rights to Scrabble in the US, has teamed up with Electronic Arts to finally launch an online version of the popular crossword game. The game is available at Pogo.com today, and is scheduled to make its debut on Facebook later this month. So what does this mean for Scrabulous, Scrabble’s ersatz competitior, which took Facebook world by storm when it launched last year?

The prognosis isn’t good.  Scrabulous has been under a cloud since January when Hasbro and Mattel, which owns the international rights to the game, sent letters to Facebook asking it to remove the game, citing copyright infringement.

Meanwhile, an online version of Scrabble created by Mattel and Real Networks has been struggling to gain traction since it launched in April for audiences outside the US and Canada. To date, the game has managed to attract fewer than 6,000 daily users on Facebook - less than two per cent of Scrabulous’s daily audience of 450,000.

Hasbro and EA may do better with the launch of Scrabble in the US and Canada. But even if the North American version attracts five times the interest of its international counterpart, it will barely make a dent in Scrabulous’s audience numbers.

In January, Scrabulous’s creators claimed to be making more than $25,000 a week in advertising revenues. With the launch of a US version of online Scrabble imminent, the door is now open for Scrabble’s owners to go after their fair share of that revenue by pursuing legal action.

Forcing Scrabulous to shut down would no doubt alienate tens of thousands of loyal Scrabulous fans. But with thousands of new users joining Facebook daily, it might make sense for Scrabble’s owners to risk some user backlash now in hopes of a bigger payoff later. Besides, if the game is addictive enough, even the most disgruntled former Scrabulous users may not be able to stay away for too long.

June 20th, 2008

Another high-level Facebook departure

The exodus of early Facebook executives continues. Six weeks after Facebook announced the departure of co-founder and technology guru Adam D’Angelo, the social network said on Thursday that Matt Cohler, one of Mark Zuckerberg’s first hires, is on his way out.

Well, not exactly. Cohler is leaving his position as VP of product development to become a general partner at Benchmark Capital, a Silicon Valley venture capital firm. But he will stay on at Facebook in an “advisory” capacity, whatever that means. 

Cohler’s not-quite departure is the latest evidence of the changes underway at a company that is trying to mature beyond its scrappy startup beginnings. Of the original, core team of executives that led Facebook up from obscurity to take on MySpace for the title of world’s biggest social network, only Mr Zuckerberg and his former Harvard roomate, Dustin Moskovitz, remain.

It’s not hard to understand why. It has been ten months since Facebook garnered its eye-popping $15bn valuation in an investment round with Microsoft, and the pressure to drum up the sales and profits necessary to justify such a high price tag remains intense.

Yet for all the work Facebook has been doing to develop its business model, it has little to show for it publicly. Over the past few months, the company’s PR operation has fallen largely silent, while the focus of internet buzz has shifted to other services like Twitter and Friendfeed (a Benchmark company).

There is little doubt that Zuckerberg and his new number two, Sheryl Sandberg, are hard at work on the business model needed to carry Facebook through the next stage of its development, perhaps paving the way for an eventual IPO. But there is also little doubt that Facebook isn’t quite the free-wheeling startup it used to be.

March 19th, 2008

Facebook Chat

Facebook’s users are bound to be excited by news that the social network is planning to roll out its own chat service in the coming weeks; Facebook developers, perhaps not so much.

There are dozens of developers offering chat applications designed to run on the Facebook platform. Facebook’s decision to get into the chat business for itself means those developers will now have to grapple with an 800 lb gorilla in the room, sucking up all the air

As revealed to reporters on Tuesday, Facebook’s new chat service looks to be a no-frills affair. The service doesn’t allow group chats, and users will only be allowed to chat with other Facebook friends. Still, Facebook’s decision to make its chat service a full-fledged feature of the site means that it will be in pole position to capture users from rival applications that sit on the Facebook platform.

The situation is reminiscent of that faced by developers writing applications to run on Windows in the 1990s. Back then, if a particular application market got big enough, the chances were that Microsoft would move in to try to capture it for itself. That is why Microsoft muscled its way into the highly profitable market for word processing and other office productivity software, where it was able to gain a huge advantage by tying shipments of Office to Windows.

None of the third-party chat applications on Facebook have met with huge success yet. But there are signs that chat could become an important feature on social networks as it has on the rest of the internet, where usage is widespread. AOL, for example, has said that close integration with its AIM messaging service is one of the chief rationales behind its $800m acquisition last week of Bebo, a Facebook rival.

In addition to its new chat feature, Facebook already has applications that let its users share photos, video, and other information with their online friends. The question vexing Facebook developers is, what other popular applications does Facebook plan claim for itself?

March 5th, 2008

Facebook’s new fixer

sheryl sandbergMark Zuckerberg scored a coup on Tuesday by recruiting one of Google’s top stars to take the number two spot at Facebook, the fast-growing social network.

Among other things, Sheryl Sandberg’s appointment as Facebook COO will bring some adult supervision to a company that, for all the buzz and excitement,  manages every so often to remind the world that it is being run mainly by twenty-something computer geeks.

Sandberg, 38, graduated near the top of her class from Harvard College and Harvard Business School before serving as chief of staff to US treasury secretary Lawrence Summers during the Clinton administration. She joined Google in 2001, where she was responsible for developing the search giant’s wildly successful ad sales programmes. She also played an important role in launching Google.org, the internet group’s philanthropic arm.

Having captured the attention of millions of internet users, Facebook’s biggest challenge over the next year will be to deliver its own equivalent of AdWords - a technology capable of turning all those eyeballs into a reliable revenue stream.

Facebook tried to do just that last year with the launch of several new ’social’ ad technologies, including Beacon, a messaging service that broadcasts purchases made by users on outside web sites to their Facebook friends.  Mr Zuckerberg hailed the new technologies as a once-in-a-hundred-years innovation in advertising, only to see them overshadowed by a user revolt over privacy.

With Ms Sandberg on board, Facebook has an opportunity to move beyond this somewhat ham-fisted attempt and find a sustainable revenue model that takes advantage of the social connections between the site’s millions of users. There is no doubt that the raw materials are there. It may just take an experienced hand like Ms Sandberg to make things fall in line.


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