I’ve been one of the greatest proponents of turning web properties like Facebook and Google into platforms that can anchor a rich ecosystem of applications developed. That was the strategy that helped make Microsoft a fortune from Windows and the one that enabled Apple to keep its PC business alive long enough to launch the iPhone which could be the basis for an important platform-based ecosystem itself in the years to come. Alex Iskold pours a welcome dose of reality on the platform hype for Facebook and Google and saves most of his scorn for Facebook. The basic problem that Facebook has had is spending money on platform development yet they haven’t figured out a way to make money from it and it isn’t clear how this is different from the rest of Facebook—this is a company that’s struggling to get 50 cent CPMs and has led to the term “dead zone” in referring to where Ads are placed. According to Iksold, the old platform model led to too many apps crowding the page while the new model makes it too tough for app developers. As with advertising, Facebook is clearly finding its way as a platform.

I agree with Iskold that Facebook and the other web-based wannabee platforms have to figure out how to sustain a growing ecosystem of developers and to monetize it. Here are a few observations - The typical platform model is to not make any money on applications but hope they drive users from whom you make money; that’s true except for videogames where the console providers have done what Apple is doing with the iPhone: take a cut of the app developers revenue. The problem with Facebook is, it isn’t clear where anyone gets revenue. The app developers have the same problem getting advertising revenue as Facebook itself has. Could Facebook change its model and be like Windows: people pay to subscribe and benefit from the applications which Facebook might or might not take money from? It’s a possible direction although the record of sites that have gone from free to pay doesn’t inspire confidence. Or maybe Facebook should let the application developers figure out how to sell advertising and just take a piece of that. It is going to be hard for Facebook to come up with a coherent platform model until it figures out the best way to monetize its traffic—and it seems like they are a ways away from that.