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Although the numbers are exciting, there have been the usual debates about whether interesting ideas for the Web can become profitable. Seth Goldstein, cofounder of the hosting provider and ad network Social Media, says his company hopes to make money from applications in three ways: by advertising on applications’ home pages; by designing applications that users will pay to install; and by using applications to do marketing research, providing perks to users who answer polls. Bay Partners’ Deshpande says that Facebook applications will stand or fall with all the other Web 2.0 sites.

While the question of making a profit is still unanswered, some developers have faced more immediate problems. Craig Ulliott, who designed Where I’ve Been, an application that tracks a user’s travel history and plans, found himself struggling to host the hundreds of thousands of users who added his application in the first few weeks. Without income from the application, Ulliott resorted to asking for donations to cover his rising hosting costs before getting help from investors.

And Facebook, for its part, became concerned about the flood of invitations that users were receiving to add new applications. To prevent these invitations from seeming like spam, the company limited users to sending out 10 invitations per application per day.

Although applications range from simple greetings to systems that allow users to host websites within their profiles, Farmer says the fastest-growing applications come in two forms: those that are purely viral, in which the point of the game is to convince a large number of friends to play along, and those that add to functions already present on Facebook, such as the Free Gifts application, which supplements Facebook’s existing Gifts feature. Many applications seem like toys. Of the 2,300 applications now on Facebook, more than 900 are categorized “Just for Fun.”

Farmer’s own experience as a developer suggests that it may be difficult for more-complex applications to gain ground. His application, Bookshelf, which lists, shares, and searches books, movies, music, and games, topped out at around 5,000 users in spite of having received positive reviews early on. Farmer says he thinks applications that are more complicated than core features of Facebook won’t take off.

Dave Morin, Facebook Platform’s marketing manager, says that as the development of applications for Facebook matures, he hopes to see applications that are more deeply integrated with Facebook and provide mechanisms for deep and surprising forms of social interaction. Many applications, he says, forget to take full advantage of Facebook’s News Feed–a system that notifies people about what their friends are doing. A concert application, for example, could post an item in News Feed telling a user, “Ten of your friends are going to the Smashing Pumpkins concert. Do you want to go too?”

“Applications that enable you to have deep interaction with your friends are the ones that are becoming most popular,” Morin says.

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Credit: Facebook

Tagged: Business, Facebook, software, social networks, advertising, applications

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