Google and analysts explain how revenue generation is par for the course for OpenSocial and its ilk.Google's OpenSocial bonanza has consumed the high-tech media and blogosphere for the last few days. Since it was formally unveiled Nov. 1, the focus has been on what kinds of applications programmers will build from the 15 or so social networks that have signed up.
How do OpenSocial, Facebook and other sites that throw open the pearly gates to its developer platform make money?
Simple. These vendors let programmers piggyback on their platforms in the hopes that some of the applications strike gold and become wildly popular, sending connected users scurrying online to join the fun.
More users flocking online means larger audiences for online advertising—the dripping noise is Google, Facebook, MySpace and the others salivating.
"This will drive usership and traffic growth and therefore growth of advertising inventory and, potentially, revenue," IDC analyst Rachel Happe wrote in a research note Oct. 31.
Google answers Facebook with OpenSocial. Click here to read more.
The best part is that it's not a one-way street, because the application developers can make money by putting ads in their widgets, said Ovum Research analyst David Bradshaw. "Some of the ads are cost-per-click and some are cost-per-impression, which means [Google and developers] get paid for people just viewing them," Bradshaw told eWEEK.
He wondered if OpenSocial applications would include Google's AdSense code, which enables the Mountain View, Calif., search vendor to get paid for clicks. Incorporating AdSense to a Web site merely requires some HTML coding, he said.
Joe Kraus, Google's product manager for OpenSocial, told eWEEK that while applications created from OpenSocial point to a real opportunity for advertising, there is nothing in the APIs that says programmers have to use AdSense.
However, "we certainly hope that by having more developers writing more applications that are social, some of them choose AdSense and certainly the company would benefit," Kraus said.
He said that by making it easier for developers to reach their market, Google ultimately will benefit because consumers benefit. "Consumers spend more time online, and generally, when consumers spend more time online, they're doing more searches," Kraus said.
Implicit in this statement is that users who do more searches will stumble across more ads, resulting in more clicks, and hence, more ad revenue for Google.
So how is this working out for Palo Alto, Calif.'s Facebook, which has seen the mad creation of some 7,000 food-fighting, sheep-throwing, slide-show presenting widgets pop up on the Web since it opened its platform May 24?
Read more here about Facebook opening for developers.
Facebook, which a spokesperson said has "not been briefed on OpenSocial," and therefore is not sure if joining will benefit its 50 million users, declined to discuss dollar amounts with eWEEK.
But as Ovum's Bradshaw noted, Facebook pioneered the use of third-party widgets on its site, which has proven to be a success in terms of user enthusiasm and adoption. However, despite its lead in this area, Facebook requires programmers to use its proprietary APIs, while OpenSocial is built using standards such as HTML and JavaScript.
This means widgets on Facebook will be a lot harder to deploy on other sites, and vice-versa, while OpenSocial widgets should be relatively easy to deploy to between sites, he said.
That is one big reason—along with the involvement of MySpace and the 200 million-plus users members of the OpenSocial network may target—that OpenSocial has a shot to succeed.
Bradshaw put the social development charge and the resulting money-making in perspective.
"It's rather like in the business world, the way a software vendor likes to encourage people to build products on top of its products, but doesn't necessarily take any revenue from the partners that do that because it enlarges its market," he said.
So, for all those laughing at the amount of sheep flying or food being thrown between friends, remember that somewhere Google, Facebook and their armies of software developers are happily padding their coffers with your clicks.
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