Facebook is a tool with a lot of potential for making content 'go viral'. I think it's an immature tool that will come under competition and it, or one of it's competitors, will eventually open (just as AOL did in the 90s) but in the mean time if you have a website, it's important to use and use soon. That's my opinion.

Why do people use Facebook?

I, and people that I know, use Facebook to 'update their status' 'post on walls' and 'share photos', mixed in with some 'send message' and random 3rd party app stuff, which has been pretty poor in terms of what I've tried, but some decent ones were recommended here recently.

Why Facebook, opposed to Flickr for photos, one's own blog for wall posts (with comments), one's own email for messages, one's own RSS reader for one's own feeds, one's own etc?

I think, because of the ability to choose your friends. I would not consider posting some photos on the web, but given that only my friends can see them, it's cool. I may not say some of the things I say, or give certain replies to a poll if a potential employer could see them. But on Facebook that's OK. And another cool feature is I get an instant photo album with photos others have taken of me, saving them the trouble of sending an email link, vis a vis videos, quotations, etc. Facebook is not a killer app per se, but allowing one to share stuff only with friends is. And the presentation and easy of forwarding a link so friends can see it is the killer feature your website can utilise.

Personally, I hate Facebook.

• I hate it (them?) for asking for my email password when I joined, when doing so as a somewhat trusted company only encourages other less trustworthy companies to do so. It helps draw more people to the Facebook network, but do they give me a dime for helping them grow their company using my contacts for free?
• I hate them because when I upload a photo someone can only see it by joining Facebook. It's a closed system and draws people in, rather than giving stuff out.
• Etc

It is a closed system, even for 'public' contents.

Why do people use Facebook? Because of permissions and returns to scale. Because I have a list of people I can share stuff with, share with all, or not share at all. And because it's so damn easy to update my status, upload photos, view others' book lists, all in the same comfortable space.

What is Facebook doing, and why does it matter?

For this I'd refer you to, and completely agree with a comment here, scroll down to 'josh' (he has a follow-up post on his blog here:

“I don’t feel like most people understand what facebook is trying to do– they’re trying to become the provider/manager/source of identity on the Internet, not unlike what Microsoft tried to do once upon a time with Passport and Hailstorm and all that. They’ve just gone about it in a much more clever way, and that’s what Microsoft is interested in.
The social networking stuff, along with the long-time reliance on belonging to particular networks based on an email address, is the key to giving people the incentive to honestly represent themselves. And whereas MS tried to cajole/bribe/strong-arm companies into signing up for passport, facebook has companies and developers falling all over themselves to create apps whose primary identity requirement is a facebook login id. I think Dave Winer pointed this out on his blog the other day– this is the real opportunity for facebook, and the value is enormous."
Spot on, Josh.

Facebook as a Closed System.

Facebook recently opened their API. That's different from opening their system. They opened parts of their API, on a strictly in-not-out basis. Their API is more like a 'layer' (using their FBML and FQL query languages for 3rd party app developers) on top of their internal API. I can write an application for Facebook using their opened API, I can add and sync my data into Facebook, but I cannot extract data from Facebook. The Facebook 'openness' is entirely to their own advantage and they're collecting an ever large amount of data.

An interesting blog post here (follow-up here) suggests that Facebook – what it does and how 3rd party developers can interact with it – is little different from AOL in the mid 90s. A system of users, custom portal-style home page, with the rest hidden from others unless they used AOL themselves.

AOL failed because enough people did not use AOL. Open standards and open access to information were, in the end, enough incentive to draw people away from AOL's closed system and custom interfaces From kottke (linked above):
Everything you can do on Facebook with ease is possible using a loose coalition of blogging software, IM clients, email, Twitter, Flickr, Google Reader, etc. Sure, it's not as automatic or easy, but anyone can participate and the number of things to see and do on the web outnumbers the number of things you can see and do on Facebook by several orders of magnitude (and always will).

Facebook does not yet have a massive user base. It's pretty massive, but it's not massive. There remain a large amount of users not using Facebook, and that will probably not join for a long long time – both the obstinate, companies with communication policies (I'm not likely to get a email from my manager in an unauditable Facebook personal message), and developers who have the tools to build truly new an interesting applications using truly public APIs. Much is being made of Facebook application development, but it's mainly integrating existing tools with Facebook's 'friend'/'go viral' system – in and not out. Outside Facebook there is, and I believe will remain, a far more diverse range of web tools and applications.

I do expect lots of Facebook integration to take place. Web mail in Facebook being one of them. But Facebook's system relies on external APIs/data sources existing (unless they upgrade their API hugely).

Facebook have just acquired Parkey OS. Mark Zuckerbergpreviously stated "We want to make Facebook into something of an operating system so you can run full applications" and “a place to involve your friends with everything you do”. As a closed system, this clearly cannot happen, unless everything on the web is a Facebook application. This could be interesting.

The point:

• there are some user bases and content types where authoring will stay mutually exclusive from Facebook,
• there is a certain stickiness in consumer behaviour where they stick to the tried-and-tested
  developing something truly new and innovative is always easier using the best tools than having to conform to a strict and limited programming interface.
• Facebook, or any kind of Facebook style system, is a layer above the original content. The thinner that layer is, maintaining the same functionality, the more successful that layer can be. That's why it should open.

The Future of Facebook

I look forward to the coming 12 months. Facebook will come under competition from others, some loyal to Facebook in the beginning are complaining. But with some kind of application development, and several enthusiastic developers, they can appeal to the many. As Josh stated above, being the provider/manager/sourcer of identity on the web is a massive prize. Expect competition.

Facebook as a closed system could be one of it's big disadvantages. If, for example, one could develop a Facebook-esque plugin for Flickr, where I could easily tag my friends in photos and they'd get an automatic reply and go to a custom Flickr page (with varying levels of tags depending on permissions), and I could use the same friend list to view book reviews on Amazon, to view downloaded MP3s on iTunes or wherever, that is where competition will come from. Keep the friend network and permissions but make the rest truly open. Facebook would remain the social network, but other sites would be able to work with it.

Parkey was (is?) an open-source project. As well as being open source with code, it was open source with it's information. The aim was for an individual to be able to see where their comments appeared, no matter where they were typed. One's identity and contributions were manageable. Live Journal, for example, is open source, but each user's contributions are locked to the site with the Live Journal code. Parkey would store all information on my desktop, which web service providers would then syndicate, not own. Maybe this is a suggestion Facebook will open up their content, or maybe it's a suggestion they'll remove one of the next best hopes for an open identity on the Internet.

Monetarise: In the end, if Facebook does not make money it will cease to exist. Facebook is reported to have a pretty poor click-through rate on adverts. [Facebook's text advert provision is outsourced to Microsoft for guaranteed revenue until 2009 – so for now it's advertisers and Microsoft losing money).

Facebook, or any kind of Facebook style system, is a layer above the original content. The thinner that layer is, maintaining the same functionality, the more successful that layer can be.

Future of Other Sites, in the Face of Facebook:

At this point, I'd appreciate Chris's opinion, as he's pretty sharp on this sort of 'new media' stuff, but at the moment he's in Madagascar, far far away from a computer.

I always believe 'content is king'. If you have good content, it's worth reading and worth providing to others. Making that content accessible was a task of getting a good Pagerank, good referrals, and/or having it 'go viral'. Now, with Facebook and it's potential, a lot of 'going viral' opportunities arise – get the right network and it's there. On the way though, your content which may have appeared on your site will now be buried in opaque messages, group/forum posts and links, with your advertising revenue sucking. Is revenue going to be reciprocated on what gets passed around Facebook? A thinner layer is better for content providers, the less middle men the better, I'll put Facebook links on my sites as some views are better than no views.

Super-Local Sites:

Chris, Rick and myself are involved with launching a 'super local' site for our region of China. Ideas are springing up more and more, but our basic plan is to make information about Dalian as easy to find as possible. We use RSS feeds from other sites (with permission) feeding us information, we reciprocate revenue. We're in the middle, but we recognise trying to 'dominate' or 'own' information about Dalian is wrong, both business-wise and morally.

As such, we're going up against old-school 'super local' sites. Maybe it's a local newspaper that could not avoid going online but doesn't like it much. Maybe it's a guy who installed some forum software and expected everyone else to 'contribute' (for free). Perhaps these comments apply to any site that depends on user contribution for content:

• Your user base now uses Facebook, or will probably have an account there soon. They don't need to use your site to send personal messages to each other.
• They probably don't need to use forums so much either, as they can organise things themselves using Facebook's wall and events functionality
• If some kind of well-adopted listings/reviews functionality comes to Facebook, they may probably use that instead of your own listings info, especially for organising events.
• With users and event locations more able to manage themselves, expect to take less of a back-hand cut for event planning events.
• If you maintain an email list which you hope to/do sell occasionally, it's value has depreciated.

How to make up for this - quality:

• Get a Facebook identity and 'friend' as many people as you can. See what they write and discuss.
• If your listings are better quality than others', you will reap rewards. Make things super-easy to add to and browse. But expect to add to them yourself too, a lot. This will draw users and you can use Facebook's nature of things getting forwarded to allow them to 'go viral' more easily.
• Editorial. People always read well written stuff that applies to them. Add value, don't expect a few haphazard forum posts to satisfy. Again, Facebook can help rather than hinder you.
• You want page views, make sure they are page views that contain information applicable to your audience and make sure, if you're after revenue, that revenue-generating functions are encased within your page views.
• The biggest advantage your content is on Facebook, and that it is not enclosed within a social network – it is available to all, but linking in to social networks is a big advantage.

I think Facebook and enclosed networks/content is a step back for the web, but longer term, having a useful web-identity manager is big step forward.