Facebook won't take cut of mobile apps

John Shinal · July 25, 2008 · Short URL: https://vator.tv/n/35a

Mobile initiatives to focus on growth, not revenue

Facebook seems content to keep spending money to grow its user base and traffic rather than focusing on investing in projects that produce immediate revenue.

That was a repeated theme of comments made by CEO Mark Zuckerberg at the f8 conference earlier this week.

And it will also apply to Facebook's early efforts in the mobile ad market, says Jed Stremel,the company's director of mobile.

When Facebook rolls out its Facebook Connect for mobile this fall, the social network will let developers keep 100% of any revenue they generate.

It's also committed to keeping its own applications free.

"We are using mobile for traffic growth," Stremel told me when we spoke at the MobileBeat conference this week.

That growth has been significant, according to Stremel, with traffic nearly doubling in the last six months and still accelerating.

Facebook is now up to 10 million active mobile users.

Stremel said developers will be able to get good mobile distribution for their apps and allow them to easily add a social network element to them.

That should be especially useful for game apps and for anyone developing on the iPhone platform, since Facebook plans to release the source code for its own iPhone application.

Facebook's focus on non-revenue generating efforts provides fodder for skeptics who are still wondering how much value the company will be able to wring out of its users.

It's true that some small ad networks working with Facebook report CPM of less than a dollar. But some are doing better than that. One person familiar with the company's finances says that the bigger Facebook app developers, like Slide and Zynga, are getting CPMs between $1 and $2 for the ads that they place on the site.

That means it's likely Facebook getting some similar rates for its own applications. Multiplied by hundreds of millions of page views, its reasonable to assume Facebook is producing revenue of several hundred million a year.

For the near future, at least, none of that will be coming from mobile developers who use its platform.

With its move to an open Web, where distributed apps run on top of the Facebook platform, the company's strategy seems more focused than ever on becoming the largest operating system for the Internet.

To get a visual of how much Facebook has grown, check out the very short video embedded in this piece.

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