While Facebook has revolutionized the way we communicate with each other by making information more open and sharable, users still find themselves beholden to the regulations of the environment in which they live when utilizing the technology — whether it’s their country, state, or school.

Taylor Moseley, a freshman at North Carolina State, found that out the hard way late last week. Moseley had started a Facebook Group whose purpose was to attract John Wall, the top-ranked high school basketball player from Raleigh, to attend N.C. State next year. After 700 people joined the group, Moseley received a cease and desist letter from N.C. State’s compliance director, Michelle Lee, warning of “further action” if he failed to take down the site since the Facebook group’s purpose violated NCAA’s recruiting policies, the Associated Press reported.

NC State didn’t enjoy playing bad cop, though. As the AP reported, the school merely enforced the NCAA’s recruiting rules, which haven’t been updated to address the emergence of social technologies like Facebook. As the incident unfolded, however, the NCAA claimed it had been progressive in rethinking its policies to accommodate technological advances, noting, for example, that it had put regulations in place for coaches who wanted to send text messages to prospective recruits.

We find that a weak argument, however. Regulating text messaging is straightforward because it’s a one-to-one communications medium. The social nature of a Facebook Group page, on the other hand, presents different challenges because it can be populated by regular students not involved in the official day-to-day operations of the team (like a coach).

The incident raises a slew of tricky issues for normal Facebook users. Like many Web-based technologies, Facebook has lowered the barriers to entry for someone who wants to be a publisher, organizer, businessperson, or, in this case, a booster for their college’s athletic program. While it’s tempting to think of Facebook as an isolated environment with its own laws and regulations, it ultimately operates under the existing rules we live under everyday.

That said, the handling of this incident seems (at best) over-the-top and (at worst) a stifling of the students’ right to free speech. If we all agree that the actions we take on Facebook should be subject to the rules of our governing bodies, then is the NCAA going to send cease and desist letters to every stranger who runs into John Wall (and playfully tries to sway his college of choice) while passing him on the street, in a restaurant, or at the movies?

Such a response would be viewed by our local communities as outlandish and a serious violation of our First Amendment rights. As extensions of our communities build their presences on Facebook, we shouldn’t be punished any more severely than we would in our day-to-day interactions.

LivingSocial, the popular application for sharing lists of your favorite sports teams, beers, or almost anything else, has just surpassed Causes to become the #1 application on the Facebook Platform by total reach, with just over 20 million monthly active users.

According to AppData, LivingSocial was reaching just 2 million monthly active users as of March 25. It’s added about 18 million active users over the course of the last three weeks. LivingSocial has experienced such rapid growth by making good use of Facebook’s “feed form” functionality, which syndicates all application feed stories published by users to their friends’ home page streams, with its “Top 5″ feature.

LivingSocial’s Top 5 has inspired dozens of other applications to follow suit, including top music and film sharing applications iLike and Flixster. International application developers have also adapted the “Top 5″ – for example, friends5 from French developer Sociabliz applies the same user interface to pick users’ top friends.

Will LivingSocial be able to sustain the growth it has achieved and stay at the top of the application leaderboard? Keep following the application charts at AppData to find out.

SocialCash first made a name for itself on the Facebook Platform as one of the more aggressive third party ad networks helping developers monetize their applications. Now, however, the company is refocusing its efforts on developing new social advertising products and developer tools.

Recently, the company launched new versions of its latest products: “BFF,” a tool to determine a user’s best friends, and “Headliners,” a social ad banner that uses the BFF algorithm to target the most compelling creatives. Developers can use BFF to optimize their invitation-based viral loops, while the Headliners product allows developers to set up deeper integration to provide more relevant social banners.

For example, this ad from We’re Related shows how Netflix could take advantage of its recent Facebook Connect integration by integrating movie ratings with the Headliners advertising product. You can also see a live demo of an ad using Facebook Connect here.

“We empower the developers to serve ads by providing a file that contains our creative templates and targeting rulesets,” SocialCash CEO Rob Jewell says.  “This means that the ads can leverage the social graph while keeping the developer and us in full compliance with both the Terms and dynamic user privacy.”

Jewell also said the company closed a “Series A” round of financing in December, but the company has not disclosed the investor or amount.

Facebook Platform ad networks like SocialMedia, RockYou, AdParlor, Sometrics, SocialReach, Adknowledge, VideoEgg, and SocialCash, as well as managed offer networks like Offerpal Media, Super Rewards, and Peanut Labs Media, have been fighting hard to improve eCPMs through better targeting technology and improved advertising units that take advantage of the rich data available inside Facebook’s social graph. Facebook itself has launched an alpha test of its own in-house advertising network with a small number of app developers.

However, it will take continuous innovations in the advertising products being developed for application developers to experience higher CPMs in this tough advertising market, and Headliners and BFF are another step in that direction.

As more marketers evaluate the Facebook marketing landscape, new data from a recent Adobe educational software awareness campaign sheds light on Facebook Page campaign performance.

Adobe created a game called “Real or Fake” on their Facebook Page that challenged users to determine whether a photo was real or edited with Adobe’s flagship Photoshop product. At the end of the game, users were presented with information about student editions of Adobe Software and 3 calls to action: 1) “Buy Now”, 2) “Play Again” and 3) “Share” the game with others. The game was up for one month, and supported by a Facebook Social Ads buy.

The results?

• 10% of Page visitors played the game. This was before the page redesign, so marketers could expect this to be higher if they default the campaign landing tab to a specific game or experience.
• Of those who played, 6% clicked the “Share” button at the end of the game, and 6% clicked the “Buy Now” button at the end of the game. (No data was shared on actual purchase conversion rate.)
• The Adobe Students page got 6,000 new fans during the campaign.

The Adobe case is a good example of how marketers can create appropriate content and engaging experiences, without (hopefully) breaking the bank.

Check out the top headlines and insights this week from Inside Social Games:

Monday, April 6

• Scrabble on the iPhone Connects to Facebook Version
• UpperDeckU (beta) – New Sports Card Collecting Virtual World

Tuesday, April 7

• Facebook Unlikely to Launch Universal Virtual Currency Anytime Soon
• New iPhone Refund Policies Raise Questions for Developers
• Mafia Wars Comes to the iPhone

Wednesday, April 8

• Raptr Launches Partners Program to Distribute Co-branded Clients
• MoiPal Expands with Branded Goods & Mobile Payments

Thursday, April 9

• Roundup: hi5 Restructures Around Games Portal Model, Strikes Payment Partnership with Paymo
• Checking in on PlayStation Home

Friday, April 10

• Spot the Difference – Well, It’s Different

Facebook for iPhone continues to grow in popularity, adding about 1 million active users per month. Now, with nearly 7 million monthly active users users, the iPhone alone now represents nearly 25% of Facebook’s 30 million active mobile users worldwide.

In addition, the Facebook for iPhone app was also recently recognized by Apple as the #1 All Time Free App in the iPhone app store. It’s the first time since last December that Apple updated its all-time iPhone app leaderboards – then, Facebook for iPhone was named the 2nd most downloaded free app in the app store.

Meanwhile, Facebook’s Joe Hewitt, lead developer of Facebook for iPhone, has begun releasing various elements of the Facebook for iPhone application to the open source community through the Three20 project. While Hewitt says the code is “alpha” quality, iPhone app developers can find elements like Facebook’s photo viewer, message composer, and more on Github.

As a side note, Facebook also recently released version 2.3 of Facebook for iPhone. It’s a minor maintenance release, with several bug fixes and new German localization support.

Facebook’s Blackberry application sports about 5 million monthly active users. The company operates mobile sites at m.facebook.com (the standard mobile interface) x.facebook.com (the advanced mobile interface) as well.

It was one year ago that Facebook started suggesting “People You May Know.” Now, Facebook has started suggesting businesses and brands you may like as well.

Public profiles (formerly known as Pages) are now appearing in the “Suggestions” module on the top right side of the home page. In addition, business and brands are now mixed in with suggested friends on the “People You May Know” page.

For example, today I’m getting suggestions for popchips, The Tonight Show with Conan O’Brien, Warren Miller, Sarah Palin, George Lopez, and Depeche Mode. Most all of the suggested pages are official brand pages, as indicated by the vanity URL, but not all.

Getting included in Facebook’s suggested public profiles list could give a big boost to your public profile’s traffic. But, unlike Twitter’s process of manually choosing a few users to follow, Facebook’s list of suggested public profiles appears to be algorithmically generated depending on pages your friends of fans of. Pages experiencing increasing overall popularity also seem to be included.

As always, you can track the popularity of growth of hundreds of thousands of public profiles on Facebook at PageData. Some of the fastest growing pages in the last 24 hours include Barney Stinson, the Make-a-Wish Foundation, and Sarah Lacy.

Facebook responded to the recent addition of a share tab on The Pirate Bay by blocking all links to the free torrent site, driving a little space between themselves and The Pirate Bay. The “Share on Facebook” links that popped up in recent weeks on The Pirate Bay download pages now lead to a message from Facebook citing user complaints about “abusive” material from the site.

Linking on Facebook is still possible for several free torrent sites, but Pirate Bay is one of the largest to incur a block. It’s unclear whether or not these other sites are any more or less “abusive” than Pirate Bay under Facebook’s standards. What is clear is that they aren’t under the same type of scrutiny as TPB, which is currently the subject of a lawsuit in its homeland of Sweden. This was at the heart of the explanation for the ban posted on TorrentFreak.

According to Facebook spokesman Barry Schnitt, “Given the controversy surrounding The Pirate Bay and the pending lawsuit against them, we’ve reached out to The Pirate Bay and asked them to remove the ‘Share on Facebook’ links from their site. The Pirate Bay has not responded and so we have blocked their torrents from being shared on Facebook.”

This isn’t necessarily a death toll for sharing your favorite torrent sites on Facebook, but it does indicate Facebook’s stance on protecting itself legally. Although there were only a few files cited in the suit against Pirate Bay, Facebook could come under the gun if illegal content is posted on the site and not taken down in a timely manner. This is more of a preemptive strike on Facebook’s part, doing what’s necessary to deflect any heat from a torrent site that’s already a hot topic.

Yesterday in her keynote at the AdAge Digital Conference in New York, Facebook COO Sheryl Sandberg discussed what she called Facebook users’ “active networks,” framing some recently published data on Facebook users’ social behavior for the agencies, brands, and marketers in attendance.

Sandberg defined users’ active networks by the type of communication that happens in the stream, highlighting that the stream leads to greater connectedness with your network than direct or reciprocal communication. Sandberg wrote afterward,

“This stream communication, rather than reciprocal and direct communication, forms your active network. Whenever you interact with a story in the stream–whether you “Like” a piece of content, comment on it or simply click on it–the person sharing it becomes part of your active network… With greater connectedness has come the ability for people to influence one another with more speed and efficiency.“

As the data shows above, Facebook has found that people use the stream to communicate with twice as many people as they send messages or wall posts to, and four times as many people as they have reciprocal conversations with. In the very least, it’s an interesting sociological phenomenon that appears to have held so far across a large set of people.

Whether or not marketers currently buy the opportunities generated by this kind of social behavior on Facebook fully or not, it’s clear that Facebook is a communications platform that cannot simply be ignored.

For brands and agencies interested in digging deeper, Inside Facebook has developed independent industry leading resources designed to help strategists frame the opportunities and challenges Facebook offers and start executing in the right direction. For more information, please see:

• The Facebook Marketing Bible, Agency & Brand Edition
• PageData – Independent, Accurate Facebook Page Metrics and Trends

Facebook has released a new feature in the feed that should allow more conversations to happen in the stream and on profile page walls: now, users can comment on wall posts both from themselves and others.

As you can see below, wall post commenting behaves identically to status commenting. When a comment is posted, users receive both an email notification and a Facebook notification by default.

This is a helpful feature, because there are many instances in which commenting on a wall post makes sense. First, it eliminates the need to start a separate dialogue, and second, Facebook has decreased some of the social pressure associated with starting a dialogue with another user whom you may not know well. Facebook is still building features to create a more social and engaging site. Status commenting has become a uqibuitous part of the News Feed, and its highly probable that Wall Post commenting will become equally important.

This feature is in the process of being rolled out to all networks, so look for it soon if you can’t see it already. Also, we’ll likely see this implemented on the Facebook Mobile site in the near future.