Facebook’s King-Making Superpower Has Its Limits

Sometimes you pick the wrong prince.

kingmaker Facebooks King Making Superpower Has Its Limits

I annoint you "the Instagram of video-sharing"

Does Facebook have a secret superpower? That’s the theory floated by Nick Bilton in the New York Times today. Because Facebook connects users “to more than nine million apps and services through Facebook Connect, the Open Graph developer platform, and the hundreds of millions of like buttons that perforate Web pages across the Internet, the company can see what people are using,” and thereby predict–and influence–what becomes popular, argues Mr. Bilton, who compares the skill to a sort of startup “spidey sense.”

In monitoring photo-sharing, Facebook used that data to figure out that it needed to acquire Instagram. But in the case of Viddy and Socialcam, two new video-sharing services, Facebook flexed its might to “experiment with who wins and who loses online,” Mr. Bilton said. In other words, Zuck can knight your startup the next Instagram depending on Facebook’s willingness to promote your app.

“This was evident on April 24 when Facebook started highlighting a number of apps, including Socialcam and Viddy, both new video-sharing services that had been growing modestly. Each had a few million users. Just one week after Facebook began highlighting these apps, Viddy and Socialcam had close to 20 million active users.”

After the crown, comes the funding. SocialCam nabbed an angel round from bold-faced names like Ashton Kutcher, Ari Emmanuel (brother of Rahm), Yuri Milner, and more. And Viddy closed a $30 million round on Friday from powerhouse VCs like Khosla Ventures and Battery Ventures, mere weeks after lining up a celebrity-studded list of angels like Shakira, Jay-Z’s Roc Nation, and Will Smith’s Overbrook Entertainment.

But over at GigaOm, Om Malik does an excellent dissection of where this king-making superpower falls short.

1. Facebook Can Promote the Wrong Prince

Says Mr. Malik:

“Facebook is good at hoarding data, but is terrible at interpreting the data: putting a proper context around it and then putting it to use. If you want to know the reason for my skepticism, just look at the lameness/pointlessness of the advertisements that show up next to your stream.”

In other words, thanks but no thanks for a deal on bushels full of acai berries. Mr. Malik further points out that Facebook’s interpretation issues are apparent in the way it confuses Viddy, whose growth has shrunk back to a normal curve, and Socialcam, which is soaring high thanks to spammy tactic of pulling content from YouTube, as the same thing.

bits disruptfb tmagarticle Facebooks King Making Superpower Has Its Limits

via Bits/New York Times

Socialcam, which is also buying traffic and downloads from Tapjoy and FreeAppaDay to boost total numbers, isn’t the only one. “If you look at the top ten video apps on Facebook, they are essentially repackaging videos from somewhere else,” Mr. Malik notes. Thus what looks like the next Instagram using Facebook’s data, might be anything but.

2. Beware the Evaporating Crown

All that kingmaking also triggered Mr. Malik’s own spidey-sense:

“I wondered: had Facebook  given a deliberate boost to all video apps just to reinforce its value of its platform in the mind of skittish investors? The idea that they could drive app-downloads across platforms – Facebook, Android, iOS and HTML5 – was definitely a way to blunt any questions around company’s questionable (and lagging) mobile strategy.”

But just because Facebook could boost your app to the top of the heap, doesn’t mean it can keep you there. For evidence, one need only at the downward spiral of social reading on Facebook. Mr. Malik allows Fred Wilson the last word on that.

“SEO and Facebook timeline integration is “best practice” on the Internet. You should do both. They can be great free acquisition channels. But they are not great retention channels. Because easy come easy go.

Be your own bitch.”

Just as long as we still get to be a bitch.