VentureBeat

Updated with a response from Facebook

Slide is one of the largest third-party application developers on leading social network Facebook, and both share an investor in venture firm the Founders Fund. But all that apparently wasn’t enough to stop Facebook from at least temporarily removing one of Slide’s most popular Facebook applications, Top Friends.

Top Friends let you pick and choose who among your many Facebook friends are your favorites, including a box on your profile page that would show a list of everyone who you’d listed as a Top Friend. It also included a number of game-like features like being able to give awards to your most favorite friends. It also included a security hole: A way for someone with a little technical knowledge to view information about other Facebook users through the Top Friends application, whether or not they were Facebook friends with them in the first place. For example, there’s a screenshot of Facebook chief operating officer Sheryl Sandburg, above — taken by CNET after the news organization was notified of the security hole by a third-party developer.

Facebook shut down Top Friends last night, shortly after being contacted by CNET about the issue, saying that Slide was breaking the site’s terms of service by allowing anyone who had the Top Friends application installed to access such user data, which included users’ birthdays, gender, and relationship status. Now, presumably, Slide is working hard to restrict what information about other users Top Friends shows you.

As of this morning, Top Friends is still offline. Which means the window for Top Friends’ much smaller rivals, including Auto Top Friends (912 daily active users) and Super Top Friends (1,922 daily active users), is still open.

However, that window is likely about to shut — I expect Facebook to turn Slide’s Top Friends back on shortly.

Update from Facebook:

Providing a trusted environment for our users is a paramount concern for all of us at Facebook; we are continuously focused on safeguarding user information. We have built options and controls into Facebook that are designed to offer our users choice and control, and to provide clear guidelines for developers.

We have suspended the Top Friends application while we investigate violations of our Terms of Service. We recognize this is a popular application and don’t take this action lightly.

Slide, the widget-maker that among other things let you create slideshows and share them with your friends on social networks, is now un-banned from Turkey. It was banned in March for “harboring pictures and articles that are considered to be insulting to Ataturk [pictured], the founder of modern Turkey,” as we wrote then.

Its hardly uncommon for social networks to be banned by governments that censor things their citizens happen to share. Many companies are currently banned from being accessed within China, for example. In Slide’s case it “crack legal team” and its decision to delete “the offensive content” got them recently reinstated by the Turkish authorities. Hardly a blow to censorship everywhere, but the company tells us that it “may even have helped to set a new reviews policy inside Turkey.”

A little more on the company blog, here.

[Photo via About.com]

I spent four days this week at the Web 2.0 Expo at the Moscone West convention center in San Francisco. Here is a summary of the scene, including photos and my impressions of the show.

I attended the RockYou/Clearspring/Mixercast reception on Tuesday night at Bong Su, a trendy new Vietnamese restaurant. Three companies sponsored the party and so it made the Web 2.0 froth seem a little less excessive, since they can split the bill. There I met RockYou founder Lance Tokuda and enjoyed some fancy fried rice.

On Wednesday, Tim O’Reilly, the head of show organizer O’Reilly, kicked off the conference with a plea for innovation even in the midst of tough economic times.

“If you follow the headlines, you might as well stay home,” O’Reilly (left) said as he opened the speeches on Wednesday. He praised the Internet as the ultimate platform and its ability to create a revolution in human augmentation. That means that, with the web at our fingertips, we won’t have to remember much. He also told the Web 2.0 denizens to harness the collective intelligence of the web. He suggested we rise above the level of the single device and think about making software work across everything.

Go after the hard problems, he implored. “Do you think we’re really done yet?” We’re at the beginning, he said. And he cited a poem by Rainer Maria Rilke, “The Man Watching,” which O’Reilly said he read to his father on his death bed. It’s about how you can grow by being defeated by those who are greater than you are.

That led to the conversation with wunderkind Max Levchin, the CEO of Slide, an event which we used to introduce our live blogging. Eric Eldon caught up with Levchin afterward for a Q&A. The talk inevitably led to “how do you make money?” question that every Web 2.0 company has to grapple with. Levchin made a rare admission for a CEO. He said he was “extremely uncomfortable” being in front of the crowd and was happy that all he could see out there in the audience was a bunch of bright lights. You see, CEOs are just like the rest of us. Except they have a lot more zeroes in their checkbooks.

I was back bright and early the next morning to listen to John Battelle try to get Marc Andreessen to talk trash about Microsoft. But Andreessen (at left in image) was fairly diplomatic, saying only that he was happy there were “counter weights” to Microsoft such as Google. He was happy, he said, that the original ideas of the Netscape Navigator have survived (like the “back” button on browsers) and that something of Netscape lives on in Mozilla’s Firefox browser. He, like Levchin, has a company, the social networking platform Ning, in the $500 million valuation club. If Ning keeps going, it could become Andreessen’s third big start-up home run.

Read the rest of this entry »

(Note: So begins our live blogging efforts at the Web 2.0 Expo. Please check back for early looks at significant news from the Moscone West convention center in San Francisco as we cover the various talks. I’ll be updating this post as the keynote unfolds).

Max Levchin, the founder of widget maker Slide, has kicked off the conference. He is being interviewed by Forrester Research’s Charlene Li on stage now. Slide is a social entertainment company whose widgets add context to social interactions.

“The primary value the consumer derives from it is fun,” he said.

Is it a fad, Li asked? Nope, he said. “It’s the only thing that prevents social networks from becoming fads.”

She noted the value of the company is $500 million. “How do you make money?” she asked.
He replied that advertising is what delivers the money. Slide has a brand. It can approach top advertisers, sell sponsorships, impressions and what not.

“The future of social apps are split between brand advertising and direct-to-consumer sales,” he said. The latter is what the next few years will be all about. He said he got back from Asia, watching people make billions of dollars selling virtual goods, like eyes or hair for characters in online games or social networks.

“What are brands doing in the widgets?” Li asked. This gets back to the widgets themselves and the idea they’re not fads. The value the advertiser receives is they can inject themselves into the context a Slide application creates. It’s fully interactive, but as engaging as TV.

“That’s what the advertisers crave: engagement,” he said. “That’s what we deliver.” With Super Poke, for instance, you throw a sheep at your friends on Facebook. Every Super Poke campaign has been a huge hit with advertisers, Levchin said. Read the rest of this entry »

The government of Turkey has banned widget maker Slide. The reason: harboring pictures and articles that are considered to be insulting to Ataturk, the founder of modern Turkey.

In response, a Slide spokeswoman issued this statement: “We’ve contacted the government of Turkey in an effort to resolve the situation but have not received a response so far. What’s worse is that some bloggers and reporters writing reactions criticizing such government blockings are being jailed.

We pledge to do everything we can to enable Turkish citizens to access their Slide applications. In the meantime, we are supporting Reporters Without Borders and have reached out to other companies that have been affected by this ban. We will keep you posted on any changes. You can check out the Slide blog post for more details.”

Starting this Tuesday, MySpace is giving all developers the chance to start building their own applications for the site using its developer platform. Then, in a month, the company will let users start adding any of these creations.

MySpace is the largest social network in the world, with more than 110 million unique visitors a month, so the platform could quickly rival Facebook’s, which itself has spawned thousands of applications that are used by millions.

Because of MySpace’s heft, a few companies will likely see the vast majority of their users embrace these MySpace applications — especially since Myspace applications will soon begin working on other Open Social member social networks, like Google’s Orkut.

Companies like Slide, RockYou and others that have grown large widget empires both on MySpace and most other social networks, and have also gained millions of users on Facebook. Their MySpace widgets, if nothing else, are massive advertising vehicles for their new apps. Their Facebook applications are where they learned how to use developer platforms to virally gain users.

In fact, these companies — Slide, RockYou — need to win. They need to reach as many users as possible, because they’ve taken millions in venture funding, they’re still trying to figure out ways to monetize, and they’re relying on reaching as many social network users as possible to scale whatever business model ends up being a hit. MySpace, despite Open Social’s inclusion of other social networks, is the last big social network target.

The Facebook advantage:

The official line is that tomorrow any developer will be able to access MySpace’s specialized platform code documentation, sample application code, a developer sandbox for creating and testing applications, forums, and blogs from the platform development team, as Adam Ostrow notes in his early look at the platform.

MySpace appears to leverage the many third-parties that already own widgets on millions of its users’ profile pages. It has added a feature, code called “action scripts,” in its platform that will let existing widgets use the platform to let the widget’s users easily invite friends, or add user data such as photos.

Widgets are snippets of code that are embedded in a web page and, besides action scripts, don’t normally have any way of connecting to data contained in the page they’re located on. Applications are more complex because they use social data, such as lists of users friends, to spread virally.

Take the most simple instance of an application platform at work. You can invite 20 Facebook friends to an application, using Facebook’s application programming interface provided in its platform to access your list of Facebook friends. A widget on MySpace has until now had no way to know who your friends are, nor a way to invite them to add the widget using Myspace’s interface.

The reality is that the biggest winners among Facebook application developers, such as Slide, RockYou and others, know how to use these viral channels better than a MySpace widget-maker that has never built an application. These two companies, and others that already have millions using their Myspace widgets, will be able to experiment with application-izing their MySpace widgets even as they build MySpace versions of their successful Facebook applications, using their knowledge of what works for growing applications.

Slide has just raised $50 million on a $550 million valuation, with the intent to reach the most users in the world (it already reaches more than 150 million, according to Comscore). It is developing ways for advertisers to reach users. Example: Branded items, like an image of a movie star, that shows up within a user’s widget or application.

RockYou has also raised millions in venture funding. It sees a big opportunity in selling advertising on its applications that lead users to add other applications.

Slide, Rockyou and other widget-makers have recently gained the attention of advertising agencies on Madison Avenue, that are experimenting with ways they can use these social networks to reach massive numbers of users. If these widget (and application) makers can figure out how to pair users and advertisers in a way that users can deal with, and that pays, their scale means they will make lots of money.

1. Tesla to begin production of the Roadster on March 17
2. Blog ad network FM turns down $100M offer?
3. CDN Akamai sees record traffic from social networks
4. Newspaper traffic up; old media on the rise?
5. Creating popular social networks, apps
6. Gazprom-Media reportedly acquiring RuTube
7. WSJ will stay subscription based, says Murdoch
8. Recording industry to start going after ISPs
9. World Wide Packets sells for $280 million

Tesla to begin production of the Roadster on March 17 — All safety and emissions testing has been completed by Tesla Motors, and it’s on schedule to start shipping its first cars. Comforting news, after a recent round of layoffs at the company, as well as some production problems centering around the transmission. Michael Powell, the company’s VP of Vehicle Integration, blogs about the nitty-gritty details of crash-testing a new vehicle here. The company took home a Crunchie last Friday, for top cleantech startup.

Blog ad network Federated Media turns down $100M offer? — John Battelle, who runs blog ad network Federated Media (it places ads on sites like VentureBeat), said he has retained an investment bank, Savvian, to manage investor interest in the company. Rumors are that he has received a $100 million offer. He sent a note to his authors trying to head off the rumors, saying FM had received lots of interest from investors, but adding no details: “I don’t know if anything will come of this process, but I do know that as a fast growing business, it’s always smart to assess investor interest, and to be ready to quickly arm the company with additional capital to do new things and continue to accelerate our growth, should that option prove attractive.” After what happened at Battelle’s former company, Industry Standard, where there was a bit of a kerfuffle among insiders about when it was the right time to sell — and the indecision gave way to outright implosion — Battelle will be taking this very seriously indeed.

Content delivery network Akamai Technologies sees record traffic from social networks, widget companies — Mashable has an interesting post looking at the huge growth the CDN is seeing from these sites.

Newspaper traffic up; old media on the rise? — A new study by the Newspaper Association of America shows that traffic to the newspaper websites rose seven percent in 2007 to 2.87 billion pageviews. Either there are just more readers coming online, or “old” media is beginning to figure out how to reinvent itself for a wired audience. That’s mostly good news for startups — more intelligent, web-oriented content from traditional media sources both benefits and takes advantage of Web 2.0 darlings like crowd-sourcing and aggregation, and plays into the business plans of all sorts of companies, from Digg to ShareThis.

How to create a popular social network platform, how to create a viral social network application — Widget-maker Slide chief executive blogs about the former, RSS service Newsgator looks at the latter. How to create a popular social network platform, how to create a viral social network application — Widget-maker Slide chief executive blogs about the former, RSS service Newsgator looks at the latter.

Gazprom-Media reportedly acquiring RuTube, Russia’s Answer to YouTube – Russian newspaper Vedomosti reports a deal has been reached by Gazprom to acquire RuTube, citing an investing banker and source close to Gazprom-Media. Both companies confirmed they are negotiating a deal. Reports emerged of such a deal as early as July. More from Yakov here.

WSJ will stay subscription based, said its new owner Rupert Murdoch — “The really special things will still be a subscription service, and, sorry to tell you, probably more expensive,” he said. But then again, he also said the WSJ would expand and improve the free content, and that ultimately could mean the majority of the articles, which will be short-form in nature.

Recording industry to start going after internet service providers — A French policy of forcing ISPs to monitor customers for illegal file sharing, and disconnecting those customers after three infringements is paving the way for the recording industry to try to introduce similar policies around the world, including in the US. PaidContent has more.

YouTube offers mobile version, so you can watch its videos on your phone — More here.

World Wide Packets, Ethernet access switch company, sells for $280 million — Ciena has picked up the eight-year-old World Wide Packets, after that company raised $147M from a group of investors including Argo Global Capital, Azure Capital Partners, Eagle River Investments, Entrepia Ventures, Madrona Venture Group, Northwest Venture Associates and Rally Capital. In addition to $280 in cash and stock, the purchase includes $15 million in assumed debt. The Spokane Valley, Wash. company has $30M in revenue.

Update

Companies that make widgets grew quickly last year. The largest four — Slide, Myspace, Clearspring and Rockyou — each reached more than 100 million people around the world last November, according to web analytics company Comscore. [Update: Some widgets companies are taking issue with Comscore's numbers. See below for more.]

Given the recent surge of interest in widgets from advertisers, these numbers help explain why Slide was recently able to raise $50 million at a valuation of $550 million (our coverage). If it can monetize its pageviews, it could be sitting on a gold mine.

Slide grew from 117 million monthly views last April to nearly 144 million last November while Rockyou grew from 82 million to 104 million, both largely through Facebook applications. See the two tables below for a more detailed comparison of the top widget makers between April and November. The most popular Facebook app is RockYou’s Super Wall, with more than 23 million monthly Facebook users, according to Comscore.

Widgets are snippets of code that you can embed on other sites, that allow you to do things like display YouTube videos or links to the latest posts from your blog. They also, in Comscore’s reckoning, include Facebook applications, which allow third-party developers to connect the widget with its user data, such as lists of friends.

Facebook only opened up its platform for third parties to build applications in late May, so Comscore’s November numbers include this data but its April numbers (here) don’t — which helps show you the difference Facebook applications have made.

If you’re wondering why Myspace, Clearspring and Google suddenly appear in the tables below, its because Comscore also started counting the companies’ widgets more accurately. Myspace offers widgets like Myspace Video, Clearspring offers white-label widgets for other companies (in contrast to the others) and Google offers YouTube video widgets. Comscore has been tweaking how it tracks widgets, and it still isn’t perfect. See here for more.

Note, also, that many of the smaller of the top ten companies on both lists, like BunnyHeroLabs, have popular widgets on Myspace, but haven’t focused on Facebook.

[Update: Widgetbox's vice president of product and marketing, Pam Webber, has just sent us the following email, excerpt below taking issue with Comscore's methodology:

There are some issues with the Comscore data that are interesting to note.

Comscore does not currently track JavaScript widgets. That is affecting Widgetbox, in particular, as a large percentage of our widgets are JavaScript. Our internal numbers have us at 25 million unique viewers monthly.

Comscore is double counting unique viewers. In particular, Clearspring does widget tracking for Rockyou. So, one viewer is being counted by both Clearspring and by Rockyou for the same widget.

In our call with Comscore yesterday, they confirmed the double counting and are working on adding JavaScript widgets to the report. They are working with us to make sure our numbers are included accurately and expect it to be corrected in future reports.]

The context here is that more web users are joining social networks and are becoming familiar with smaller sites on the web, that serve their niche interests. They are going to these sites instead of large portals like Yahoo or MSN. In turn, widgets are a new way for content creators and advertisers to reach these users across the web. Here’s an excellent AdWeek article that goes into detail on how widgets are now of great interest to advertising companies on Madison Avenue.

Here are the top Facebook applications, worldwide, followed by the April-November worldwide comparison of widgets. (You can find US data here.)

Updated

Widget-maker Slide has raised nearly $50 million at a $550 million valuation from two private equity funds, Fidelity and T-Rowe Price, according to the New York Times, with the two firms buying a total of around a nine percent stake in the company.

San Francisco-based Slide has more than 144 million users of its widgets on Myspace and other social networks, and another more than 50 million total (not necessarily active) users of its Facebook applications, according to Kara Swisher at AllThingsD, who first reported that a large round was in the works earlier today.

However, Slide hasn’t, as far as I know, publicly stated significant revenue streams — as is the case with many other Myspace widget and Facebook application companies. A large funding round could mean that the company has proven to investors that it can monetize.

On the other hand, investors may just be impressed with the number of eyeballs Slide has attracted. The company’s Top Friends Facebook application, which lets you designate and display your favorite Facebook friends on your profile page, has 2,483,760 daily active users. Its FunWall application, which replaces Facebook’s “Wall” of messages from your friends on your profile with its own features, such as video-sharing, has 2,762,039 daily active users.

Note: Facebook applications give third-party developers direct access to user data, such as your list of Facebook friends, which companies like Slide can use to make more compelling applications, like Top Friends.

Slide sees itself as a “distributed media company,” relying on its widgets and applications to create new forms of entertainment for social network users. For more, see my interview with chief executive Max Levchin from last June. Its latest efforts include involvement in Open Social (our coverage), a Google-led effort that’s in development, that intends to create a standard means of implementing social networking applications on Facebook rival sites, including Myspace.

Main competitors to Slide include RockYou, which also has popular Facebook applications as well as widgets on other social networks. RockYou claims to have passed Slide as the most popular Facebook app company, as I wrote last month, although it’s not clear if that’s still the case. In late August, Slide claimed the number one spot.

Slide would use the money to expand as well as buy other companies, Swisher says, and has hired investment bank Allen & Co. to help raise the round (the bank, among other things, is also helping Digg shop itself around).

Slide’s previous valuation is based on the approximately $20 million that it raised in 2006 from Khosla Ventures, Mayfield Fund, BlueRun Ventures and Founders Fund (our coverage).

In the latest evolution of this fast-paced but not yet lucrative world of widgets, Clearspring, a leading widget company, has launched an ad network for widgets (sample widget left).

It comes at a time when advertising agencies on Madison Avenue are finally getting comfortable with the idea of buying ads in widgets to get their client companies in front of social network users. A market for widget ads is forming, although its still unclear which forms of widget ads will deliver the best results.

The McLean, Virginia will use Adify’s ad technology, including ad serving, ad operations and ad reporting. PointRoll will be the exclusive provider of its ad units and technology that allows interaction within ads.

This news follows other widget-related announcements last week. Leading advertising network Advertising.com launched its so-called “WIDGNET” network, another ad network. Webs.com (formerly Freewebs.com), launched what it calls a “Social Gaming Network” — interactive gaming applications that run in social networks and rely on social network data. As in-gaming advertisers like MochiMedia are showing, this niche can be quite valuable.

Also, PointRoll — the Clearspring partner — will give advertisers the option to “widgetize” their rich media banners, so the next time an ad for a theatrical release expands over the page you are reading, you can “snaggle” a widget from the ad and put it on your MySpace or Facebook page.

Widgets are taking over advertising, content syndication, social gaming, and more.

For the uninitiated, a widget works when a website owner places an embeddable snippet of code on a web page. Widgets are also called gadgets, Widgets with a capital W (at Yahoo), minis, flakes, snippets and badges. Facebook applications, and now Google-led OpenSocial applications, are more advanced: These widgets offer third parties access to their data, so applications can design interactions around your relationships.

Otherwise, what distinguishes a widget company is largely semantic. YouTube is a massive widget distributor while MySpace (and now Facebook) are huge widget receptacles. MySpace, as the first mass-scale social network to allow users drop widgets into their page, is largely responsible for the growth and reach of widget companies like Photobucket and Slide. Now Facebook and other company’s platforms are similarly responsible for the birth of a new category of start-ups, technologies and revenue streams.

The advent of Facebook’s platform in May changed the game for widget companies because — beyond the new access to valuable user data - it let third parties make money without fear of being banned. Myspace, for example, sometimes blocked Photobucket, although it eventually bought it.

Now these widget companies are gunning for Madison Avenue, with overlapping but increasingly differentiated strategies to build, distribute, and track widgets across social networks.

Or is Madison Ave gunning for them? Ro Choy, VP of Business Development for RockYou says the adoption of Facebook applications by large advertisers has been “radical.”

Here’s who’s in the game and what they’re doing:

Clearspring

Clearspring earned its reputation as the market leader developing widgets for Big Media, and counts among its clients NBC (exclusively), Disney (recently launched over a dozen widgets for ESPN) and Turner.

Clearspring’s network allows advertisers to distribute their widgets across properties like Break.com, The Huffington Post, NHL.com, 20^th Century Fox, and paparazzi haven X17online. Virgin Mobile is sponsoring a Futurama widget running on Fox’s site (see screenshot). Clearspring gets a cut of the revenue as well as possible development fees. If Fox wants to offer one of its own advertisers a widget integration, Clearspring now gets a cut of that deal too.

Peggy Fry, a former vice president of sales at Netflix and AOL Time Warner, is well-positioned to head up the advertising effort for Clearspring, and several people I interviewed attested to Clearspring’s mindshare in the market.

In an interesting twist, Clearspring and Webs.com are bedfellows. The two companies share a common venture backer, Novak Biddle, and Clearspring offers widgets for Webs.com’s millions of websites, Clearspring CEO Hooman Radfar saidin an interview.

However, one executive familiar with the situation notes that the relationship is growing uncomfortable as the companies deal with overlap in services.

There are other, smaller players that are trying to do what Clearspring does, including Musestorm for example (see our coverage).

Webs.com (formerly Freewebs)

Webs.com’s sales efforts are being led by Chris Cunningham, a regular on the Madison social circuit, who’s become a go-to widget evangelist and educator for ad agencies. The company is trying to monetize the millions of pages people have created with Freewebs service, which lets people create their own web pages. The company wans to make sure ads are relevant for its users, and so wants to match them according to each site’s subject matter.

Webs.com builds and distributes widgets, but relies on companies like Clearspring and YourMinis to provide the tracking analytics for how widgets perform. It wants to distribute widgets through its new game network.

According to a source, the company has a quarter-million dollar deal on the table to develop a Facebook app for a client. Webs.com already includes P&G, Ford, Universal Pictures, Sony and AT&T in their roster of ad clients.

YourMinis

YourMinis, a service launched by Mark Cuban-funded Goowy, lacks the sales presence of Clearspring or Webs.com but is another notable widget contender. Clients from CBS (multiple deals in place) to MTV, AOL, Redbull and Real Networks use YourMinis to build, syndicate and track brand-content widgets. Similar to Clearspring, YourMinis syndicates its widgets to the top social networks, blog platforms and Facebook apps, but also offers desktop extensions to Adobe AIR and Mac Leopard.

Developers whose widgets get under 50,000 views a month use YourMini’s services for free, while clients above that threshold pay a widget development fee and a monthly fee for syndication, hosting and analytics.

The company is experimenting with widget monetization, including looking at skinning widgets and inserting unobtrusive text links, CEO Alex Bard said.

Slide.com

Slide has enjoyed its position as the largest widget distribution service online, with three of the top ten Facebook applications (apparently ceding the #1 Facebook app spot to RockYou’s SuperWall last week). Since the company’s user base is built upon consumer-powered widgets like photo slideshows, its approach to monetization has been markedly different. In August, Slide started allowing users to incorporate branded images into their widgets, with Paramount Pictures, AT&T Wireless, Activision and the Discovery Channel as early ad partners (VB coverage here).

Slide is emphatically not in the business of making and distributing branded widgets. It is more focused on carefully monetizing their existing ones. Within Facebook, Slide is now experimenting with skinning canvas pages (pages where users interact with Apps) and it recently ran a campaign with Comedy Central, allowing users to skin their slideshows with a promotion for the Sarah Silverman show. Nam notes that an impressive 5 percent of users clicked further to watch a video promo of the show from within their slideshow. Unlike RockYou’s ad network, Slide appears to have no plans to leverage its Facebook presence for pay-for-play for other widgets.

RockYou

Before Facebook Apps, RockYou was focused on doing things like adding features like glitter text to its Myspace slideshow widget. As of last week, they now hold claim to the most popular app on Facebook (their SuperWall has surpassed Slide.com’s FunWall) and they’re reaching some 40 million Facebook users a month, by Quantcast’s measure.

They launched an ad network shortly after the Facebook Apps launch (VB coverage here) designed to leverage their presence on Facebook to promote other apps. They started by offering cross-installs and now offer banner-style advertising on their canvas pages.

RockYou’s opportunity for real advertising dollars has been a bit unclear. Goowy CEO Alex Bard notes: “If you think about the majority of what RockYou is doing, let’s call it widget advertising revenue, it has come from promoting other applications. It hasn’t been in true ads, right? I’ve got an application, I want to distribute it as quickly as possible. More like a widget distribution network.”

Indeed, RockYou VP of Business Development Ro Choy notes that half of the top 50 apps on Facebook are paying clients in RockYou’s ad network. He also points to deals with Expedia, Paramount, Sony Pictures and CBS News to explain their foray into traditional ad dollars. Paramount didn’t want to take the leap into developing a full Facebook App, so instead they developed a quiz for the upcoming Sweeny Todd theatrical release. It’s integrated into the existing Likeness Quiz App, is seeing some 15-30K completed quizzes a day, and is getting virally extended through Facebook Feed updates. This mass reach on Facebook and readiness to leverage it has garnered interest from major agencies like Ogilvy, Digitas and 360i. Average RockYou deal size? $30-70,000, par for the widget course, the company says.

RockYou works with partners to build applications too, including with ContextOptional, Trignos and RealBranding. RockYou handles distribution. Clearspring provides their tracking analytics.

Slide, the most popular widget maker in the world, says users are adding one million new Flash widgets daily across all non-Facebook social networks, such as Myspace and hi5.

The San Francisco company says it now has more than 134 million unique viewers of its widgets per month (up from 117 million in March), giving it a lead over its rival widget-makers that Comscore’s data has backed up. Growth has slowed from spring, but continues.

Slide provides create-your own online photo slideshows that you can embed in your Myspace page, and related widgets for personalizing social network pages.

Slide separately has some of the largest applications on Facebook, as measured by total number of users. Within Facebook, it has also been aggressively promoting other widgets available on Slide’s home site, Slide.com. This cross-promotion activity appears to have helped Slide see traffic growth on its home site, as we reported last month. Rockyou has done something similar.

Chief executive Max Levchin told us more about his plans for monetizing Slide in this June interview. Since then, the company has launched an ad network on Facebook.

Facebook, the booming social network company, is quietly creating a technology that would let advertisers target Facebook users based on the “massive amounts of information people reveal” about themselves, according to a story in today’s WSJ.

The new ad plan, reportedly being led by Matt Cohler (pictured top), vice president of strategy and business operations, and Chamath Palihapitiya (pictured below), vice president of product marketing and operations, may produce some serious concerns among some of Facebook’s partners.

Advertisers placing ads on your profile page will have access not only to your age, gender and location, as they do now, but also on details such as favorite activities and preferred music, according to the piece. They wouldn’t have access to your name however — and thereby have no way to target you as as an individual. Rather, Facebook would let advertisers target groups with similar characteristics.

But the biggest bombshell of the piece is this line: “In addition, the ads would show up on Facebook pages that feature services provided by other companies, one person says.” If true, this suggests Facebook wants to advertise on pages controlled by third-party developers on Facebook’s “platform.” This could be a slap in the face to those parties because Facebook had previously said it would let them make money by running their own advertisements. However, the sourcing and wording of the article on this matter is vague. It’s quite possible that Facebook may let third-parties access the technology, and agree to some sort of revenue share, letting all parties win. It’s all speculation at this point.

A Facebook spokesperson declined to comment for the article. Worth noting is that numerous companies have launched their own ad networks to run on Facebook’s third-party applications (these companies include Lookery, RockYou and VideoEgg). Microsoft, which has a large deal with Facebook to run its own ads, may have its own concerns about the program. The advertising rates advertisers are getting on Facebook is being highly debated. Some reports suggest rates are as high as $10 CPM in some cases. However, a source told us recently that Microsoft is losing money on every ad it serves on Facebook. We ran this by Facebook two weeks ago, but a spokesperson declined to comment on rates, saying only that the relationship with Microsoft was strong. Microsoft recently extended its partnership with Facebook, suggesting things can’t be too bad, or even that Microsoft itself may be in on the ad targeting plan being developed. Again, we don’t know.

Updated

Online media widget-maker Slide is announcing a new way for advertisers to reach the 129 million viewers it has across social networks each month (see Comscore table from May, below).

The San Francisco, Calif.-based company’s widgets let users create and display photo slideshows and a wide range of other information from within their profiles on MySpace, Facebook and other sites. But like its widget rival RockYou, it is searching to exploit huge user base to make money. RockYou recently released its own ad network on Facebook.

Today, Slide will begin allowing users to incorporate photos and video clips from films into these widgets. As users create slideshows, they will have the option to add sponsored advertising images to them. Featured advertisers include Paramount Pictures, AT&T Wireless, Activision and the Discovery Channel, the company tells us.

When one thinks of all the college students with posters of Al Pacino on their dorm-room walls, this idea starts sounding plausible. AT&T will sponsor a slideshow that plays a ringtone when a user opens a page with a slideshow on it.

In the past, Levchin has worried aloud that ads could drive users to other widget-makers without ads. Allowing Slide users to choose ads for themselves is a compromise between monetizing and staying sensitive to users’ wishes.

The risk is that users won’t actually want to add this advertising, Levchin said; still, Levchin hinted of an initial public offering as early as next year if these efforts to monetize pay off.

However, MySpace still won’t Slide’s ads be displayed on its site, per its ban on all third-party developers including their own advertising.

Arch-rival RockYou announced its ad network last week — but just for the applications it has on Facebook; its idea is to help other Facebook applications launch by advertising to Facebook users who decide to first add Rockyou’s own applications.

Slide, Rockyou and HotorNot, three companies with the largest number of users on Facebook, are showing continued traffic growth on their own sites.

The finding, reported by Quantcast, a service that tracks traffic trends for Web sites, suggests that sites failing to embrace Facebook may be missing out on potential growth.

For some, this is also encouraging evidence that Facebook’s platform, launched in May, isn’t necessarily weening users entirely off their own Web sites. While Facebook allows third-party sites to advertise on their applications on Facebook, many sites prefer to maintain control over their users’ experience, and are hesitant to trust Facebook’s promise that it will remain hands-off. Despite the pledge by Facebook’s executives that sites are free to make money on their apps within Facebook, its terms of service says Facebook can change its policy at any time.

Slide, Rockyou and HotorNot have their own Web sites, and have also launched multiple Facebook applications. Some boast millions of users, foremost among them Slide’s Top Friends, which is the most popular Facebook application, nearing ten million users on Facebook. Top Friends lets you display your favorite Facebook friends in a box on your Facebook profile.

These graphs show the rate of growth that each company experienced to its .com site since . We’ve been hearing the same thing from developers of other successful Facebook applications who also have freestanding sites. Example: a Facebook application for anonymous gossip, Socialmoth has been driving traffic to its previously launched Socialmoth.com.

However, Slide also tells us that they’ve been seeing double-digit growth to Slide.com for months — that site whent from 117 million unique viewers in April to 129 million in May; Facebook’s platform didn’t launch until late May. Also, HotorNot.com has been undergoing some major changes over the past couple of months.

Each of these companies make money by running ads on their freestanding sites. They are also already experimenting with new ways to monetize both in and out of Facebook.

RockYou, for example, has been running ads in Facebook, within its casual gaming application “Games.” Slide, meanwhile is working on big plans to use the data it collects about what its users like in order to develop better tools for predicting other things they will like.

Then again, some sites don’t seem to care. iLike is another company with both leading Facebook apps and a quality, free-standing site. Its chief executive, Ali Partovi, says he doesn’t seek to drive traffic to iLike.com from Facebook. That’s because ads in Facebook may in fact be more targeted and thus more lucrative. Facebook pages include basic personal information on people, such as age, location, gender. To this end, iLike has made changes to its free-standing site that it knows will slow growth in order to boost growth on Facebook.

This data also justifies these companies’ land-grab approach to Facebook. Each has been launching as many apps as possible, cross-selling their users internally between their own applications to drive up overall growth, and buying other applications or hiring those applications’ developers into their companies.

It also may add more fuel to the fire driving many developers to build applications within Facebook. (For a more heart-on-sleeve explanation of how it makes developers feel, see this post.)

So what’s happening on other sites that these companies are pulling in users from, such as Myspace? RockYou’s traffic throughout all other social networks has been holding steady “in comparison to Facebook where it has been exploding,” company chief executive Lance Tokuda told us.

Where does this leave Facebook? Are these companies driving additional traffic to Facebook through their sites and their apps? Facebook tells us this is may be one of many factors. It is now at 32 million active users, and still doubling every six months — it attributes its recent growth not only to the platform launch, but becoming more of a hit with international audiences (London recently overtook Toronto as the city with the most Facebook users). It has also been introducing ways to more easily import contacts from other sites. For example, its AOL contact list importer, which was introduced only earlier this month.

Slide, the San Francisco company that lets you create photo slideshows that you can embed in blogs and other sites, has acquired a specialty company called Favorite Peeps. While the purported purchase price was piddling, it suggests a land grab may be under way by companies developing applications for Facebook.

Favorite Peeps is a “widget” — a box in a Facebook user’ that lets you choose your favorite friends and give them a nickname. See image at left. It was built especially for users of Facebook, who can then put the widgets prominently in their profiles. It had become immensely popular, ranked #14 among Facebook applications — not bad, considering it was built by a single developer, Dennis Rakhamimov, a software engineer at Palantir Technologies. That company is backed by Facebook investor, Peter Thiel, incidentally.

Facebook-focused blog, Inside Facebook, reports the purchased price was $60,000. Slide confirmed the acquisition for VentureBeat, although they did not confirm the price. Like Slide’s own Top Friends application, Favorite Peeps allows Facebook users to feature their favorite friends (or top “peeps”) on their profiles.

Favorite Peeps currently has around 1.3 million users. As Inside Facebook points out, this purchase price values each of its users at around $0.046 — or not very much at all, considering companies like Xfire have been purchased at a price of $25 for each of its users.

Top Friends, which is very similar, has nearly seven million users — the most of any Facebook application. Fortune Cookie, which provides users with fortunes about themselves, has nearly four million users.

We interviewed Slide chief executive Max Levchin Friday, and he wouldn’t comment on whether they were considering purchasing other Facebook applications. The company did tell us, however, that there has generally been a lot of “discussion” between various Platform developers.

Inside Facebook also reported last week that travel-focused startup SideStep purchased the Extended Info application, for an undisclosed amount. Sidestep also has its own application, Trips — each of these applications has around 130,000 Facebook users.

Separately, we’ve heard from other cash-strapped developers with successful Facebook apps that they are also interested in getting bought.

We have also been hearing that some companies looking to grow their presence on Facebook through their applications are seeking to hire successful Facebook platform developers directly, in an effort to incorporate the developer applications into their own offerings.

As Robert Scoble points out, Inside Facebook is an example of “the rise of Facebook blogs.” In fact, he’s an advisor to the Facebook group of another blog, called FaceReviews, that, yes, reviews new Facebook applications.

Internet traffic measurement company ComScore will release data showing that slideshow company Slide is the world’s top widget provider.

We don’t want to fall into the habit of issuing these numbers constantly, but the sheer size of Slide’s usage, if true, is mind-boggling — especially given that San Francisco’s Slide is hardly two years old.

It has a reach of 117 million unique viewers, around 13.8 percent of the total worldwide Internet audience. By contrast, competitor RockYou has around 82 million viewers and photo company Photobucket has 28 million viewers, Slide said in a statement, ahead of Comscore’s data. If Photobucket was bought for hundreds of millions, Slide may also command a nice sum. The question is still, how do you monetize slideshows?

Slide is led by workaholic Max Levchin (pictured above), formerly co-founder of PayPal. Levchin has said Slide will collect substantial data about users, which potentially could be useful for advertisers.

The numbers are impressive, any way you look at them. Slide is getting more than 200,000 new slideshows added each day.