Analysis: Problems and possibilities in MySpace’s new developer platform

Last night, MySpace was the epicenter of optimism about the value of social networks, as it threw a party at its new San Francisco offices to launch its new developer platform. The company hopes to see an explosion of applications that will become popular with users, that will in turn drive traffic and pageviews on its site, just like what has happened to some degree on Facebook, through that company’s platform.

But last night I heard lots of questions from developers who attended — even though thousands have signed up to start developing MySpace applications.

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Will Myspace users even care about applications, since they’ve already had widgets for years? Can Myspace’s platform provide the viral growth as Facebook’s platform has? Also, will Myspace treat developers more fairly than Facebook has (in the eyes of many developers)? And, is there even “a pot of gold at the end of the widget rainbow” as one bystander quipped — how will any of these applications become big businesses?

I only got these questions partially answered last night, but one thing is clear to me. If you’re an advertiser or marketer that wants to a cheap, measurable way to reach users while they’re talking to each other, you need to be paying attention to this platform.

Will Myspace applications be popular like Facebook applications?

These applications may possibly spread even faster and stay more engaging than the millions of widgets already on MySpace, because MySpace’s platform is giving unprecedented access to viral distribution channels, as I’ll explain below, and user data.

Simple actions such as “tickling” a friend on Facebook have proven popular because friends have new ways of communicating without having to send complete messages, and MySpace hasn’t offered this sort of passive communication before. Applications are the modern form of sending holiday greeting cards, or nodding to an acquaintance that you pass in the hallway, as Jeremy Liew eloquently notes here.

Myspace users will be able to see applications on each others’ profile pages, like existing widgets on MySpace. But the company said last night that its platform will also feature notifications about applications within its user’s homepage, the page you see that you log in to Myspace, that shows you the latest messages from friends, updates to their profiles, and other new information.

This is the rough equivalent of Facebook’s “news feed” that shows you a running stream of the most interesting activity from your friends. In fact, Myspace also recently implemented its own news feed of friends’ activity, but has met with more limited success.

In any case, get ready to see Myspace applications like RockYou’s X Me Facebook application for sending “pokes” and other touchy-feely messages to your friends — on Myspace, imagine logging and seeing that a friend has “tickled” or “scratched” you on your Myspace homepage, then getting the option to poke them back.

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Myspace users shouldn’t just expect an invasion of Facebook-style applications, as well as an application-ization of existing widgets. Myspace is also offering a way for existing Myspace widgets to become applications — imagine Slide’s picture slideshow application incorporating information from your friends profiles, for example. Slide’s slideshow widget on Myspace is already used by millions of users, and has long had crucial details optimized for MySpace. Examples: When a user adds the widget, it will automatically fit within the MySpace page, and draw attention through loading pictures faster than myspace pages.

But many developers I spoke with expressed uncertainty about how MySpace users will actually like to engage with their applications. Everyone is waiting to see.

There are more general issues with trying to launch applications on Myspace, as well. Applications that have launched on smaller social networks Bebo and Hi5, using those networks’ new developer platforms, are showing far less activity, relative to Facebook applications, I heard last night. Unlike Facebook, which had no widgets before its platform launched, these other social networks had widgets — like MySpace.

Furthermore, these social networks tend to be more entertainment-oriented: Like MySpace, musicians and other celebrities use these social networks to connect with many thousands of fans, whereas Facebook doesn’t let anyone add more than 5,000 friends, and only lets you see the profiles of people in a pre-defined network. Perhaps the need for applications on Myspace has already been met through its widgets.

Is MySpace’s platform better than Facebook’s platform?

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The promise of new access to users is what drew so many developers to Facebook’s platform when it launched similar features to great fanfare last May — but Myspace will have to deal with the same issues that Facebook has had. Facebook’s platform resulted in many applications that people don’t use, or that annoy users through tricking them into doing things like sending spammy emails to their friends.

In response, Facebook has been constantly modifying what third parties can and can’t do on its site. For example, it recently decreasing the presence of applications within a users’ news feed, which has hurt the usage of many applications and alienated some developers. In fact, developers I spoke with universally pointed to Facebook’s many changes in recent months as being the explanation behind the decline in daily usage of many applications (as I mentioned here).

As a result, many Facebook applications developers tell me they’re getting disillusioned with Facebook’s platform. Which is why so many showed up to the MySpace event with high hopes that Myspace is the next big platform opportunity.

Myspace hopes to learn from Facebook’s mistakes, as it made clear last night, by emphasizing that it will communicate clearly with developers about any changes before those changes happen. The company says it will be careful to give developers notice before disabling their applications due to new rules that the applications may happen to break — in contrast to Facebook’s sometimes surprising decisions to immediately disable suspect applications.

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However, Myspace is being more cautious than Facebook about what it lets developers do. While Facebook’s philosophy, generally, is to experiment first and get conservative later, Myspace is promising greater levels of security. MySpace says it will vet every application for privacy and decency standards before launching them on the site, which others have noted could be a huge bottleneck for letting thousands of applications become quickly available to users.

Also, MySpace is trying to avoid a cabal of leading developers taking over its platform — as has happened on Facebook. Because MySpace has for years let users edit the look and feel of their own profile pages using HTML and CSS markup languages, it wants these users (many of whom are teenagers), to build their own applications. The company tells me it will offer step-by-step tutorials that make it extremely easy for anybody with minimal programming skills to build on the platform.

It remains to be seen if MySpace’s efforts will truly level the playing field against market leaders like Slide and RockYou, that have 1) large MySpace widgets that they can convert to more interesting applications, 2) fine-tuned skills at tapping viral channels on Facebook applications, that they’ll apply to figuring out virality on MySapce, and 3) millions of dollars in venture funding. More on these companies’ advantages here.

So where’s the pot of gold?

VCs, however, aren’t throwing money at most Facebook applications or MySpace widgets. Many developers looking at MySpace’s platform instead are planning to bootstrap their way up, confident that if they’re able to gain lots of users they’ll be able to monetize through advertising or other forms of making money, as many have on Facebook.

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Application developers will be able to run ads on the canvas pages of their MySpace applications and “make money however they want,” MySpace says, although MySpace doesn’t currently let widgets run ads on users’ profile pages.

Myspace says it is still working out how it will help developers to monetize their applications. It has only said that it will use its own advertising platform, that incorporates user data to deliver more targeted ads, to serve ads on applications, and share revenue with developers. These so-called hyper-targeted ads have been gotten a 300 percent improvement in response rate for some marketers already, the company says.

Meanwhile, brand advertisers are hungrily experimenting with ways of reaching social network users — successful MySpace applications will be a new way to do that. See this recent post by Forrester Research for more on why applications have a bright future despite being in an experimental stage, and in spite of a pending recession.