Second Age of Aquarius: Facebook Connect + Facebook Payments (= Social Sign-on + Viral E-Commerce)

so i went to a Rock Concert Facebook F8 yesterday, and i had a good time. 

yeah sure, the hype machine was in overdrive & some folks were a little underwhelmed (tho others more excited than usual).  Jerry didn't show up, but Zuck was a lot more relaxed than last year, and even cracked a few funny jokes.  he ain't no Steve Jobs yet, but overall it was a good set.  and a few of us not only rocked but grokked the Happy Happy Joy Joy Meaning of It All.

all Love aside tho, we're just beginning the Second Age of Aquarius.

here are 3 Important Signs to recognize on your way to Enlightenment:

Sign #1:

Facebook Connect isn't Single Sign-on, it's Social Sign-on.

Facebook Connect is barely arrived, but it's going to change how people think about the usefulness of social networks, and will have a substantial increase on their value in the marketplace.  the FB Connect integrations demo'd yesterday by Digg, SixApart, & CitySearch (wtf? how much did they pay to bump Yelp off stage?) were impressive and very smooth.  I believe most people who saw those demos now recognize the potential for using Facebook as a single sign-on option on many consumer websites. (note: i'm not downplaying the significance of competing alternatives MySpace Data Availability, Google Friend Connect, or even OpenID [tho Dick isn't sure]; they're also relevant.  currently Facebook Connect appears to be the lead horse in the race... but watch closely).

while the topic has been much discussed over the past few months (years even), it seems only a few people really understand the implications of using a social network as single sign-on service.  historically, Microsoft tried to create Passport (aka Hailstorm) as a broad use single sign-on for other non-Microsoft services, but failed rather miserably... in my opinion, as much due to poor UI design as lack of 3rd-party incentive.  the strategy had merit, but the tactics & implementation sucked.  after a blue-streak chair-throwing incident, Marc Lucovsky is now at Google trying one more time.

these days there *are* functional multi-service sign-ons available from Google, Microsoft, Yahoo, & others, but they haven't been widely adopted by many third parties (yet).  OpenID has potential as well, but i don't see it getting traction without major vendor support... and i don't mean just lip service, but also coordinated developer evangelism communication as well.

now the Grand Game is Again Afoot, only this time not just at Microsoft, Google, & Yahoo, but also Facebook, MySpace, LinkedIn & other social networks.  Why?  Because while major platform services have ~200M-500M account logins, the primary social networks are also approaching critical mass in #s of users (critical = >100M, roughly speaking).  More importantly social networks don't just have lots of user profile data, they also have functional Friend Lists (with pictures); their users are now socialized and familiar with invitation behavior, and this enables easy viral distribution of content & applications. thus, it's not Single Sign-on, it's Social Sign-on.

Sign #2:

Facebook Payments is Coming... Ready for Social Commerce?

The shoe that *didn't* drop yesterday at F8 was of course Facebook Payments.  It's a poorly-kept secret  Facebook is working hard on their own payment system, and many of us were hoping they would launch it at F8, but alas that rumor was squashed earlier in the week.  Rightly so, payment infrastructure (and fraud prevention that goes along with it) is not something you shove out the door without a lot of testing,  if it's not quite ready for primetime, i'd just as soon they wait a bit longer.  i'd still expect they will ship before end of the year, but i won't hold my breath.

In any case, once they DO ship it's likely there will be considerable interest by the developer community to integrate payments into a number of apps, in the hopes someone will figure out how to make money.  if that scales up, then there is tremendous value in combining an integrated payment service with several hundred million user logins -- each with a hundred or so friends they can share / refer / inform about their favorite new clothes, music, or other commercial goods & services.  want to get a discount on that new iPhone?  invite a friend to buy one too, and hey maybe you both get 20% off.  in other words, this isn't just another e-commerce payment system, it's about Making E-Commerce Viral. 

Yeah, i know group buying has been tried before, but this time you've got an audience of millions already used to social networks, news feeds, online shopping, & lifestyle transparency... now they're so used to online voyeurism, it's just a matter of time before someone cracks the nut on this one.

Sign #3:

Search Monetization (Future Intent) gives way to Social Commerce (Past Discovery)

Ok i admit, this one is purely speculative.  But it's fun to put on the aluminum foil hat every now & then, and think about how Facebook could beat Google.  It certainly won't happen overnight, and Google is already trying to co-opt Facebook's social mojo, but maybe it's not as crazy as you think.  Up at Foo Camp a few weeks ago, Danny Sullivan moderated a debate between Tim O'Reilly and Mike Arrington about how & why Microsoft/Yahoo should keep trying to fight Google (or not).  While there was a lot of argument on approach, almost no one thought Google could be beaten head-to-head in Search.  In fact the big question was whether there was ANY way to make a dent in Google's dominance in Search at all. 

well i'm here to tell you: there is a way. 

close your eyes for a second, and i will explain.  (Let Go Luke... Use the Force!)

Let's think about how most people buy stuff in the real world.  Do they do a lot of research?  well, sometimes.  Do they search around & look for the best price, the best deal?  yeah, sometimes they do that too.  Do they typically make the decision all by themselves?  hmmm no, most people don't just depend on their own efforts... they talk to friends & family, and they rely heavily on word of mouth & opinion.  most purchases are social activity: markets are conversations; commerce is communication.

And about all that research... do you really think people LIKE to do that stuff?  Aren't a lot of people really just very lazy?  wouldn't they cop out on all that search & research if they could just see what other people were doing, and copy their behavior?  yeah, that's more like it.  i tell ya... most times i ain't the hard-working little pig that builds his house out of bricks.  i'm the lazy-ass little pig that just wants to find out what the next guy is doing, do the same damn thing, & get back to watching YouTube and knock back a cold one.

Now let's translate the behavioral observations above into the online world.

What if instead of having to do all the hard work online by myself, i could just see what my friends (or famous celebrities) are doing?  What if i could just use my social network & related information services to help me DISCOVER what other people have already bought?  Then i could just forget about all that research, and cut to the chase.  Imagine if the dominant way to make money on the web changed from using search engines to monetize future intent, and instead transitioned to using news feeds and social networks to monetize discovery & distribution of past transactional behavior? 

hmmm...  that might create a whole new way for someone to make a Mint out of social networks.

[cue Pink Floyd's "Money" & cash register sounds... then fade to black]

Comments

[Kevin]

Great post, good to see someone looking at the big picture of what FB is trying to accomplish over the next ten years instead of calling it a "big snooze" just because they haven't switched focus to some shiny thing that tech bloggers can chew on for a few days.

[Brian Robinson]

Regarding #3, wasn't that attempted once with Beacon? People were very put off by privacy concerns as I recall. That was seemingly poor implementation though; it was deployed as an opt-out service instead of opt-in.

I think the question/response model has merit, as pointed out by Edwin in a prior comment. However, in my opinion, social payment will thrive on what people can buy for others through social networks and what people can buy together for events (such as tickets) through those networks.

I think Facebook and Myspace will be big players in this area do to their large user bases, but ultimately the whole web will become social, and a more open standard of identity will prevail (i.e. OpenID over Facebook Connect) because people won't want to be locked in.

One thing is for certain though: it will be very interesting to watch it all unfold.

[dave mcclure]

Edwin: my wife is a member of PAMP, so i'm very familiar with the example you mention. in fact, i think PAMP could be an excellent example of a place where social discovery of past transactional behavior could be quite helpful.

while i'm not saying "ask" is a bad model either, it requires synchronous behavior between multiple parties.

"discover" is an asynchronous model that doesn't require multi-party back & forth. and with aggregation, it would be very easy to discover that many new parents are buyers of certain Fisher-Price toys and/or Leapfrog Learning systems (yes, we've bought lots of both).

anyway, thanks for the comment & ideas :)

[Edwin Khodabakchian]

Great post! The next couple of years are definitely going to be interesting.

Regarding #3, you might want to take a look at the Palo Alto and Menlo Park Mother's club. It is a Yahoo Group with 2000 moms. The amount of recommendations flowing through that group is pretty amazing. For example, if you are looking at buying a car or hire a gardener, post a question and you will get in less than 24 hours 10+ qualified recommendations. Based on that, many be the pattern will not be "discover" but simply ask and get a response. Facebook (and/or twitter) could create an application which would streamline the process of asking, collecting and pruning recommendations and I think create a really interesting advertisement space. Yahoo groups is going that direction through the addition of product reviews. The benefit of the ask-response model is that it is engaging, the results are always fresh and people do not get the impression that someone is spying on them.

Do you have any insight as to why the discovery model would be better than the ask model?

Thanks,
Edwin