Mobile social network Brightkite is now one of the 126 websites to have implemented Facebook Connect.  Although Facebook Connect for Brightkite has been available in beta for a few weeks, last night marked the official release.

Connecting your Brightkite account to your Facebook account only takes three simple steps:

1. On Brightkite, visit the Sharing tab in your Account Settings.
2. Authorize Facebook by clicking the link.
3. Choose your Facebook sharing options and click save.

Integrating with Facebook is a great strategy for Brightkite. What it means at a fundamental level is that Brightkite users will be able to share their location with their friends and publish the information as a status message or news feed on Facebook.

It’s also a good step toward attracting new users — not only those that have yet to commit to any mobile social network but also those that are already signed up with competitors. Sites that have recently added Facebook Connect, like Govit, have already discovered that it’s a great way to increase traffic. Brightkite competes with services like Loopt, Whrrl, and MocoSpace – all sites with much higher traffic, according to Quantcast.

Thing are looking good so far — already, one poster on Brightkite’s website has said he might make the switch:

“Now I can stop using Loopt. I had stopped using Brightkite because Loopt already had this…so now maybe I’ll come back.”

With so many social utilities out there, integration is definitely a step in the right direction.

A new report from Hitwise UK today shows that Christmas Day was Facebook’s busiest day ever in Great Britian.

According to Hitwise, Facebook accounted for 4.65% of all Internet traffic in the UK on Christmas day – a 69% increase over its share of Internet traffic on Christmas day 2007 – making it the second most visited site in the UK on Christmas behind Google. Social networks as a whole accounted for 10% of all UK visits during Christmas week.

Christmas was also good to many application developers on Facebook. Check out our previous coverage on the growth that many apps saw during the holiday season:

• AppData: Christmas App Developers Seeing Viral Growth
• Top 10 Christmas Applications on Facebook

At a growth rate of 645% in 2008, Indonesia has been the fastest growing country on Facebook in Southeast Asia, outpacing growth in China, India, Malaysia, Thailand, and Singapore.

Surprisingly, the 831,000 Indonesians on Facebook are a small minority in their own country. With 0.4% penetration, they represent just a small portion of the of 237 million people in Indonesia.

There is stiff competition amongst social networks in southeast Asia. Friendster is the largest social network in Asia with about 65 million users. Following Friendster is Facebook (14 million), MySpace (15 million), CyWorld (Korea, 14 million), Hi5 (10 million), Orkut (10 million), Xiaonei (China, 5 million), 51.com (China, 5 million), and Bebo (4 million).

In Indonesia, Friendster was the first social network to translate into Bahasa Indonesian in March of this year.  At the time, the social network already had ten times the number of users that Facebook has now and enthusiastic Bahasa speakers were signing up in droves. Friendster now claims almost 45% of the Indonesian market and has consistently been ranked by Alexa as the third most visited site and the largest social network both in Indonesia and in Asia.

Nevertheless, loyal Facebook users from Indonesia were requesting their own Bahasa Indonesian translations for months earlier this year. Today, both Bahasa Indonesia and Bahasa Melayu translations are available via Facebook’s crowd-sourced Translations tool.

Facebook’s strong growth that Indonesia shows that despite the large number of social networking services in Asia, Facebook can still grow significantly. We looking forward to seeing how Facebook finds new ways to grow in the region in the coming year.

When the Facebook Platform launched in May 2007, many speculated on Facebook’s various opportunities for revenue generation on Platform. However, while there has been much talk of Facebook’s revenues throughout 2008, Facebook has focused the majority of its monetization efforts on direct advertising and virtual gifts sales. Why hasn’t Facebook focused more on Platform monetization?

Based on everything we’ve seen this year, Facebook has been primarily focused on growth. On Platform, that has meant 1) trying to find a sustainable balance between application developer and user interests, and 2) expanding the Platform’s reach through Facebook Connect. In the end, 2008 will be remembered as the year Facebook opted to build for the long term growth of the Platform instead of focusing on immediate Platform revenue opportunities.

Yesterday, there was a lot of discussion after we noted that Facebook has not launched the Platform payments system that was announced over one year ago. (The post was updated to clarify that Facebook has not made any new announcements regarding the future of the program; the payments system has just been apparently deprioritized while Facebook focuses on other initiatives.) In the comments of yesterday’s post, Dave McClure laid out an argument as to why Facebook’s delay in launching a payments system is “the biggest error in Facebook strategy & execution over the past 2 years.”

But is it? Here’s another take:

Let’s take a look at the current state of the transaction economy on the Facebook Platform. I’m not going to speculate on numbers here, but for the sake of argument, let’s consider the three widely varying cases that 2008 Platform transactions totaled a) $50 million, b) $150 million, and c) $250 million. Without going into too much detail, let’s quickly approximate that Facebook could net 5% of sales through an integrated payments solution.

At the end of the day, those fees might have added around a) $2.5 million, b) $7.5 million, or c) $12.5 million to Facebook’s top line, not accounting for the lift in transactions that would likely have arisen from a more frictionless payment option. Based on popular estimates of between $250-$300 million in Facebook’s 2008 revenues, a platform payment system could have reasonably boosted total revenues by 3-5+% this year.

Other Platform monetization possibilities (i.e. a Facebook-operated ad network) and operational costs aside, let’s compare the ballpark characteristics of that option to what Facebook decided to focus on in 2008 instead.

1) The first half of 2008 was focused on redesigning various elements of the Facebook Platform and profile, because Facebook was concerned that the user experience problems being created by some applications would negatively impact the health and viability of the Platform as a whole. While developer reactions to the changes were very mixed, Facebook’s overall virality and engagement metrics have continued to increase. And as for apps, many “widget-only” applications have experienced a big traffic decline since the profile redesign, but many social applications have continued to thrive. 50+ developers currently engage over 1 million people per month, while 400 applications currently reach over 100,000 people monthly.

2) The latter part of 2008 was focused on the launch of Facebook Connect, Facebook’s broader strategy to extend the Platform off Facebook.com (see our previous thoughts on Facebook Connect monetization). Unlike previous off-Facebook product launches, with Connect, Facebook took a much more deliberate approach toward explaining the value proposition of Facebook Connect to the market and working with early adopters to both ensure a good user experience and maximize ROI for Connect partners. As a result, dozens of sites have launched Facebook Connect implementations so far, and there have been no major privacy issues. Overall, Connect is off to a solid start.

Given that Facebook is likely fairly well positioned with cash on hand and (from what we hear) healthy sales going into the new year, there’s a pretty good argument that Facebook was right to prioritize focusing on longer term Platform growth over nearer term Platform monetization opportunities in 2008. Besides, it’s not as though current third party solutions like Paypal, Zong, and Spare Change aren’t working well. (And many developers are doing very well with offer networks like Offerpal and Super Rewards that offer a variety of third party payment options.)

In the end, Facebook is very likely to develop its own in house systems for monetizing the Platform at some point. However, Facebook has the luxury of taking a somewhat longer view toward the future of its business and does not need to prioritize efforts like platform payments in the immediate term. For now, Facebook seems to be focused on bigger strategic issues that will more significantly affect its revenue growth in the coming years.

Facebook has made a great effort this year to increase its level of international outreach, and Turkey has taken note.  Especially lately.

During the first of of the year, national penetration was lingering at about 4.5% with about 3 million of Turkey’s 71 million people signed up for and actively using Facbeook.  During Q3 and Q4 of this year, however, Facebook exploded, adding 4.5 million more people to its Turkish audience.  As of today, the total number of Turkish users on Facebook is about 10.6% of the entire population, or approximately 7.5 million people.

With these numbers, Turkey has launched into the top five most represented countries on Facebook.  It is surpassed by the U.S. (41 millions users), United Kingdom (14.8 million users), and Canada (10.7 million users). Behind Turkey is France with close to 6.3 million users.

Facebook competes in Turkey with four other social networks: OrtaKantin.com, StudentSN.com, Unihayat.com, and YouniTR, making its popularity even more notable.

With the growth in audience size in Turkey, the Facebook Platform’s spread has also followed.  There are now 760 Turkish apps available in the applications directory.  The top ten most popular apps list includes a video sharing app (think Turkish YouTube meets Facebook), a Sim City-esque game called “My City” and an app called Online People that facilitates new connections between Turkish-speaking strangers on Facebook.

If you’re a developer or marketer interested in building, buying, or selling a Turkish Facebook app, you’ll find that the application marketplace for such apps is very active on the developer’s forum, with one user, “tolgafiratoglu” leading most of the Turkish app threads on the discussion boards.

The social networking scene in Turkey seems to be in flux with an increased level of engagement on both Facebook and the Facebook Platform.  We’re not only looking forward to seeing Facebook’s growth in Turkey in 2009, but also where all of these trends will lead.

Check out the latest news & insights this week from Inside Social Games:

• Playfish Lauches Premium In-Game Campaign with Procter & Gamble and Herbal Essences – Who says P&G isn’t advertising inside Facebook? The CPG conglomerate has partnered with Playfish to provide a special version of Geo Challenge on the Facebook Platform.
• TouchLeague Offers a New Turn Based Game API – The new TouchLeagueSharp API provides a set of services that are capable of supporting turn-based, asynchronous game play. This means it can support games such as chess, checkers, and other board games, but can also support core elements from other game genres
• Review: Cellufun’s Call of the Pharaoh – Call of the Pharaoh won the “Best Mobile Game” award at the 2008 Global Mobile Awards. See how Cellufun is bringing it to Facebook.
• Minigolf Party Tips, Tricks, & Cheats – Discover all the latest tips, tricks, and cheats for Playfish’s Minigolf Party in this detailed guide.

It was one year ago last week that Facebook announced the beta test of its Facebook Platform payment system that would allow applications to start accepting payments from users directly inside their Facebook apps. However, one year later, Facebook has not developed the system, and some signs from the company point to the project being on hold altogether while it focuses on other priorities.

Originally billed as a way for developers to conduct e-commerce transactions without the need for third party payment platforms like Paypal, a Facebook payment solution would make purchasing both virtual and physical goods and services inside Facebook apps much more integrated with the Facebook experience.

Facebook Payments also has the potential to become a significant revenue generator for Facebook through commissions, as well as a way for Facebook to get a lot more credit cards on file for future direct transactions like the purchase of Facebook’s own virtual gifts.

However, Facebook has apparently decided not to get in the middle of third party transactions so far, leaving merchant solutions to other payment processors. Developers can continue to choose between established providers like Paypal and new entrants like Spare Change and Zong.

When asked directly about the future of a Facebook Platform payments system this afternoon, a Facebook spokesperson said, “We’ve been excited by advertising and payments solutions provided by the market, and we currently do not have anything to share around a Facebook Payments system at this time.”

Update: For further analysis see our 12/30 post Why Facebook Opted for Platform Growth Over Platform Monetization in 2008.

In a special series, InsideFacebook has recently been talking with the winners of fbFund’s $250k second round.  GroupCard, one of the five apps that made it to the top, is essentially an innovative e-card that leverages the power of the social graph on Facebook to send cards signed by multiple friends and family members.

It’s especially useful on Facebook because it identifies all your friends with upcoming birthdays and allows you to start a community card that will be delivered on a specified date – with notifications, of course, to spread the word. GroupCard also has a wide selection of non-birthday cards.  If you’re feeling particularly charitable, you can check out public cards and add your message and signature.

We spoke with John Anderson, CEO of GroupCard, about his app and how it became a hit.  Future fbFund winners, listen up!

Q:  What problem does GroupCard solve and what inspired you to start this business?

A:  The concept of a “collaborative greeting” is an extremely common tradition in offices and families around the world.  In Japan the concept of “passing a card” actually has a name (it’s called Yosegaki).   Despite such popularity, it’s an incredibly broken offline experience – paper cards are expensive, they harm the environment, contributors lose them, recipients can’t keep them, and (most importantly) everyone needs to be together to sign it.  With GroupCard, all those problems are solved, and furthermore people can be so much more creative, sign with pictures, and pass the card to hundreds of friends around the world.

One day I noticed that my brother struggling to circulate a group card for an officemate’s retirement.  Because his team was spread out across multiple offices in different continents, PowerPoint seemed to be the only way he could get everyone to collaborate on the message.  He asked all of the team members to send an individual PowerPoint slide to him via email, and he then collated them into one presentation. That’s when I saw the very clear need for an easier way to sign group cards in today’s environment.   As I finished up classes at Stanford, I  began to work on prototypes that tested whether people really would embrace the idea of an online group e-card.

Q:  What is the most interesting GroupCard story you’ve heard?

A:  A while back, a network of moms decided to create a GroupCard for a cancer survivor named Kelly Kruger.  The card was circulated around the country, and over 100 women signed it with heartfelt words of encouragement.  When we saw this card, we said “Wow, this GroupCard really creates meaning in people’s lives.” Here’s the card. Today, cards like that happen all the time, and enabling those moments is the most rewarding part of our job.

Q:  There are so many aspiring entrepreneurs out there, not all of them in Silicon Valley.  Can you share your experience of starting a company in Milwaukee?  Do you think being in the Midwest made it any harder to get people to notice you?

A:  We actually work from Milwaukee and Silicon Valley.  I work mostly in Silicon Valley on business stuff and the rest of the guys are in Milwaukee working on the product.  It’s the best of both worlds:  Milwaukee offers economic advantages that allow us to stay lean, while my presence in the Bay Area enables the relationships and industry context that help us stay competitive.

Q:  What do you think you were selected as an fbFund winner?

A:  There were really great ideas and teams in the competition, and my hat goes off to all the developers involved.  I think we were competitive because we had proven ourselves in terms of user traction, business model, and team.  Ultimately the proof came when our community showed up to vote – over 2,000 of our users were voting nearly every single day of the competition.

Q:  What methods did you employ to gain traction among Facebook users and to market your app? Is that what you would recommend to the next generation of fbFund applicants?

A:  GroupCard.com was a growing standalone website before we started working on the Facebook app.  We then built the Facebook application as a seamless extension of our website – for example, a card started on GroupCard.com can be circulated and signed on Facebook (and vice versa).  Therefore, we were able to ramp up the Facebook user base by simply pointing our users to the Facebook application as a means to circulate the cards they started on GroupCard.com.   The Facebook app offers great advantages such as integration with Facebook photos, invitation of mutual friends, and more, so many users stuck.

For real sustainable growth, I think any great application goes through three stages:  First, the team starts with a solid hunch or observation on a product-market need.  Second, once built, the app needs to get traffic flowing through it… either through extreme “friends and family” adoption or (more likely) buying traffic.  I call this phase “spinning up the flywheel” because you essentially are creating momentum from a standstill application.  Finally growth comes from observing your usage and tuning the product to optimize growth and retention.  Tuning needs to happen quickly – you need to reach sustainable growth before you run out of either friends or cash.  I believe the instincts that make a team succeed in stage three can be very different in stage one, so this is the hardest leap for anyone to make.

Q:  InsideFacebook has written recently about the growing number of international Facebook users.  Are you guys seeing growth internationally?  How are you planning anything to capture that market before anyone else does?

A:  Every day we hear from people who were moved to tears of joy when they see cards signed by friends from many countries from around the world.  When we started enabling international payments we saw a 30% jump in revenue.  GroupCard is becoming a very global brand.

Q:  Do you have any specific plans for the $250k from fbFund yet?

A:  Other than heading to Vegas and putting half of it on black? We have aggressive growth targets and a very full product roadmap ahead of us.  The money will enable us to execute on our strategy without having to raise venture money too soon.

Q:  Where do you guys see the company going in the future, especially with respect to Facebook?  What is the next step?

A:  Expect to see GroupCard show up more often across your Facebook experience – both for different types of personal events and in more places across the platform.

Lastly, we (at InsideFacebook) just want to say that, after having used GroupCard a little while ago, we are big fans!  We’re looking forward to seeing GroupCard’s success in 2009.

Facebook’s international numbers are growing larger every day, and Argentina is one of the countries leading the charge.  At the beginning of 2008, less than 100,000 people in Argentina (with a population of 40 million) had accounts on Facebook.  Now – just one year later – about 2 million Argentines, or 5.3% of Argentina’s population, are on Faceboook. That’s an annual growth rate of over 2000% for the year.

This growth hasn’t been limited to Argentina – other South American countries like Chile, Venezuela, and Peru have also had remarkable growth at rates of 3768%, 1277%, and 328%, respectively.

The growth spur in Argentina and its neighboring countries has likely been caused by the inherent value that Facebook offers as a new communication tool.  In addition, a Spanish language version of the site was launched in February. But luckily for Facebook and its users, there is another dynamic that’s lending a helping hand to Facebook’s popularity and adding to its utility — mobile phone usage.

This past October, Telefonica, a leading mobile service provider in Spanish and Portuguese speaking countries, signed an agreement with Facebook to add direct access from its mobile portals. Deals like this, combined with the high mobile phone penetration rates in the Southern cone of South America (nearly 60%), are a major reason Facebook has exploded in the region during the second half of 2008.

Facebook usage in South America is only going to incerase in 2009.  The real question is whether we’ll see increased adoption of Facebook for mobile in the region over the coming year.

Facebook Connect has enabled powerful new functionality for any site on the web, but still-being-developed Facebook policies may limit what new classes of Connect-enabled applications can be built in the near future.

When Facebook opened Connect integration to developers around the world three weeks ago, dozens of entrepreneurs started building new kinds of services that leverage Facebook Connect to create new products and services for websites through the “widget” model. (This means visitors to a website would login to Facebook Connect through a widget module – not through a direct Facebook Connect implementation by the website itself.)

The reason? Facebook Connect theoretically enables a new class of widget products around the web that combine familiar ideas with new identity and communication infrastructure. (For example, consider a Facebook Connect-enabled version of MyBlogLog, or any other service where identity matters. Commenting apps like those from Disqus and JS-Kit are additional examples that have already started work in this direction.) Building on top of the Facebook Connect infrastructure changes the game for products architected in this way.

Facebook Policies Limit Connect-Enabled Widget Products

However, when Facebook released its 4th party Connect policies on December 16, that threw a major wrench in the plans of many of those developers. What is the pertinent policy exactly? Basically, Facebook says that you’re not allowed to authenticate using Facebook Connect through widgets. From the policy page:

The widget developer can have a relationship with the site owner, but not directly with the user… The user has established a relationship with two parties: Facebook and the website. A widget developer should not create a third connection.

When we broke the news about this new policy, several developers suddenly found themselves going down a dead-end path.

One entrepreneur who had assembled a team of five to build new Facebook Connect-enabled widget products told Inside Facebook, “I was changing my business plan literally by the hour, as Facebook updated its 4th party Connect policy page.”

Facebook’s Motivations

So – why would Facebook enforce such a policy now, and curtail certain kinds of innovation around Facebook Connect? I think there are two main reasons:

1. The security model. As phishers around the world know, there are a lot of security challenges associated with implementing a third party identity system. Unlike the Facebook Platform last year, when Facebook flung the gates open and let anyone build an application with very few restrictions right off the bat, Facebook is rolling out Facebook Connect more carefully this year. Facebook wants to be conservative until it establishes that the fundamental third-party model works broadly and securely, before introducing the additional complexity of fourth party widget providers.
2. The user experience. Educating 140 million users about a completely new way of thinking about their identity and privacy across the web is no small task. Users have placed a tremendous amount of trust in Facebook to manage their personal information in ways they’re comfortable with, and introducing a fourth-party model into Facebook Connect increases the potential for scenarios to arise in which users feel that their trust is violated. Facebook wants to be careful how it rolls Connect out – especially given the ghosts of Beacons past.

Next Steps for Widget Developers

When can entrepreneurs expect more clarity on this issue?

I believe it will likely be at least on the order of a few months before Facebook significantly changes its stance on 4th party Connect policies. Too much is simply at stake for Facebook as the company attempts to extend the reach of its platform throughout the entire web.

For its part, Facebook won’t say if or when these policies may change. However, a Facebook spokesperson did tell Inside Facebook, “We’re still reviewing some of the implementations in the market to be sure they meet the policies and expectations with Facebook Connect.”

In other words, it’s still early.  Developers betting on 4th party Connect-enabled widget models may want to rethink their efforts given the current lay of the land. We’ll of course stay on top of all developments for the entrepreneur and developer communities.