Inside Facebook

While Facebook is a multi-faceted service that could grow in any number of directions, Facebook’s recent cues indicate that first and foremost on its mind right now is establishing itself as a communication platform. Facebook doesn’t want to become a content distribution system or an entertainment console as much as it wants to wants to become the dominant way you communicate with your friends.

This is not a short term goal that will instantly reap financial benefits. As some have recently pointed out, communication tools like email and IM have historically been difficult to monetize. Rather, it’s a long term plan that has the potential to significantly change how the world shares information.

I think Facebook and other social networks can create the most enterprise value by continuing to create new communication channels that provide better user experiences than what’s existed before - channels that are only possible because they own a large chunk of the social graph. On Facebook, this has been happening in a number of ways:

1. News Feed

In my opinion, the News Feed is Facebook’s greatest innovation to date. It has organized and filtered a large class of one-to-many messages like never before. Many types of messages that today are broadcast via Mini Feed and consumed via News Feed have historically (less efficiently) been broadcast and consumed via email: status updates, content sharing (links, photos), service referrals (applications, Pages, Beacon). However, Facebook’s ability to organize and filter these messages according to your personal preferences has made consuming them in great volume much more palpable and valuable than any email client or feed reader ever did. I really continue to believe that the News Feed has the potential to deliver greater value to the consumer than any broadcast channel ever built.

2. Messaging

Many people in tech circles can’t talk about Facebook’s messaging system without complaining about it, but even though it “sucks,” Facebook Messaging is replacing (or has already replaced) email with friends for many users (especially those under 21). Even though it lacks a feature set comparable to most email clients, the context for large classes of one-to-one messages is simply more important. As Facebook enhances the context around messaging, and builds more utility into the service, I think a greater portion of conversations currently conducted over email will move to Facebook.

3. Wall

Much of the same could be said for Wall. Its semi-public context has made it a more valuable channel than email for both the senders and receivers of messages that appear one-to-one but are often really one-to-many. (Facebook has tried to make the Wall into a media sharing platform as well, but apparently without much success.)

4. Chat

With the exception of Google Talk, it’s been years since most people have experienced an improvement in synchronous communication. While Facebook hasn’t announced any chat products yet, I wouldn’t be surprised if it did soon. Chat is just a better experience around your social network - most of the time, people want to talk with their friends. Just as Google Talk has probably significantly increased the number of people using IM, so could Facebook…downloading a client and exchanging odd handles is an experience that’s just too complicated for some people.

In the end, if Facebook wants to own the most valuable channels for communication with your friends, this could have significant implications for the Platform. It’s clear in announcements Facebook has made regarding upcoming changes to the profile page that Facebook is expanding the role and concept of the Mini Feed and Wall, while simultaneously dealing a blow to applications that may depend on significant profile page real estate to provide valuable communication experiences to users. If Facebook does indeed build a chat application, that could obviously hurt applications building chat around the Facebook experience. At the same time, however, Facebook has been promising to reward applications that enable valuable and meaningful interactions with greater visibility within the new Wall and News Feed.

While I hope Facebook can co-exist with and reward developers of communication-oriented Platform applications, I think Facebook is smart to want to own the most important channels used to communicate with your friends. While it may take a while to figure out how to monetize these new communication channels most effectively, people will always stay most engaged with services that provide the most value, and core communication tools are some of the services that can be most enhanced by ownership of the social graph.