Now that everyone from family to colleagues are connecting on Facebook, how do you continue sharing freely while maintaining your privacy and reputation in the years to come?

Facebook allows users to customize their privacy settings at a granular level, but a surprisingly low percentage of users actively manage their privacy settings. Many users who complain about the lack of privacy on Facebook aren’t even aware of the privacy configurations available to them. Below, Inside Facebook guides you through all the steps you need to know to protect your privacy on Facebook.

1. Segmenting Your Friends

Clicking on “Friends” in the top menu of any page brings you to the new Friends page where you can create Friend Lists. Lists can be organized by geographic area, relationship type, etc. – however you like. They will come in handy when managing your privacy settings.

As you’ll see, the most effective lists are created for two main groups of friends: those you plan on being completely transparent with and those you want to share information with at a minimum level.

2. Your Privacy Settings Dashboard

To access your Facebook privacy settings, click on “Settings” on the top menu bar and then choose “Privacy Settings” in the resulting drop-down. You’ll be taken to a page where you see the following menu of privacy options:

3. Choosing Privacy Settings for Your Wall

Your Facebook Wall contains lots of personal information about you, so it’s important to think through who you want to give access to.

A friend of mine completely disabled her Wall after her friend wrote a Wall post alluding to a job transition that she had not yet announced. While shutting down your Wall (select “Only Me”) is an option, you can also avoid this risky situation in a less dramatic way, simply exclude particular Friend Lists from viewing your Wall. Below, I’ve allowed all my friends to see my Wall, except those on my Work list:

4. Choosing Privacy Settings for Photos

Similarly, say you’re sensitive about pictures that you’re tagged in, but feel comfortable allowing a subset of your friends to view them, you can also make that happen. Here, only friends in my Besties list have access to my tagged pictures.

The above setting only applies to pictures you’re tagged in, not to photo albums you may have created. To edit these, visit the Photos tab of your Profile and click on the link “Album Privacy” toward the bottom.

When in doubt, you can always view your own Profile from any friend’s perspective. You can also block a friend: this is equivalent to temporarily removing them.

5. Choosing What Kinds of News Feed Stories People Can See About You

You can determine which of your actions get published to the News Feed and your own Wall by tailoring your Recent Activity settings. With Facebook’s new open stream API, it makes more sense to let your Wall posts to friends appear in mutual friends’ News Feeds, while broadcasting a change in relationship status may be less preferable.

6. Choosing Whether You Want To Appear in Facebook’s Social Ads

In addition, you can choose whether or not you want to appear in Social Ads, Facebook’s ads that show your friends which ads you’ve interacted with. Do you want your friends to know that you’re a fan of Cuddling? You may want to think about it.

7. Choosing Who Can See Which Fields on Your Profile’s Info Tab

Within the Profile Privacy settings, the following fields in the Info tab of your Profile are within your control:

You can choose who can see each of these fields on your Profile based on Friend Lists, just like you can the Wall. Don’t want people you met at conferences or parties to know your phone number? Only allow it to be visible to best friends.

8. Choosing How You Want to Appear in Facebook Searches

The Search privacy settings section is where you can make sure that you’re comfortable with how people search for you, both inside and outside of Facebook. Within Facebook, either everyone, mutual friends, or only friends can search for you, depending on how you configure your search settings. You can then decide what pieces of information you want to be included in your search results (picture, friends, links to add you as a friend/send a message, and Pages that you’re a fan of).

9. Choosing How You Want to Appear in Google Searches

Outside of Facebook, you can give Facebook permission to create a public search listing of your Profile, or you can opt out of this by simply un-checking the “Create a public search listing for me” box.

Many users don’t know that this box is automatically checked, meaning that a limited version of your available is indexed in Google’s search engine – the implication being that anyone can crawl your name, profile photo, and other basic information about you like Pages you’re a fan of on Facebook.

10. Choosing Application Privacy Settings

Facebook does a good job of making it clear whenever you’re authorizing applications to access your personal information. You’ll always be given a prompt to choose whether or not you want to allow an application to have access to your Profile.

To change your application settings, find the Applications start menu at the lower left corner and click “Edit.” For each application, you can permit (or prohibit) the application to access data/send emails/publish one-line stories to your Wall, as well as who can see the application on your Profile if you choose to display it as a box or tab.

Conclusion

As Facebook becomes a site where friends, family, and colleagues all come together, users’ willingness to share and be open with each other will depend on how knowledgeable users are about their privacy rights on Facebook, and how diligent they are about actively managing their privacy settings. People often complain that there’s no privacy on Facebook, but this is only true for users who aren’t aware of the privacy configurations available to them.

Although Facebook has become a staple consumer application, businesses have grappled with how best to contend with it internally. Dogged by concerns of employee productivity, security and compliance, many companies have banned employees from using Facebook during the day, both on their work computers and corporate mobile devices.

Business technology vendors, including IBM and Microsoft, have tried to tailor their products to help companies bring their employees social networks in a secure manner. They provide internal social networks with Facebook-like functionality for employees to share expertise and collaborate on key projects. But industry analysts say those efforts have been hampered by poor adoption rates within enterprises. Because they are closed networks, they limit the ability for employees to communicate and share with customers and partners, making the value proposition much lower.

Another company, WorkLight, has taken a third approach that could serve as a compromise between closed social networks and a total Facebook ban. Worklight is essentially a server that companies buy. The server acts as “a bridge” between traditional corporate IT systems and consumer portals like Facebook. Since the information passes through the server, it protects company’s internal systems from attack and data leakage.

Inside Facebook caught up with David Lavenda, WorkLight’s vice president of marketing and product strategy, to find out how companies are enabling their employees to use Facebook to get work done.

IF: Why are companies that you speak with hesitant to let their employees use Facebook? Is it for security concerns?

Lavenda: While Facebook is an attractive venue for enterprise social networking, organizations need to be comfortable with, or find a way to deal with [some critical issues]. One is Safeguarding information on a consumer social network. A social network that is designed for the consumer market may not have the requisite qualifications that companies require of enterprise systems. To thwart possible Web 2.0 security risks, companies need to safeguard systems and users, and ensure employees can safely collaborate.

IF: Why would enterprise social networking work better on Facebook, opposed to buying an internal social network from one of the traditional business software vendors?

Lavenda: Unlike proprietary collaboration solutions, an enterprise social network nested on Facebook would benefit from the service’s popularity to spread among employees. This would obviate the need to aggressively promote new tools across the enterprise, as employees are already on the popular network. However, to ensure even those employees that are not signed on to the popular Facebook can collaborate within the same space, companies can use solutions such as WorkLight to allow them to securely collaborate on Facebook.

IF: We wonder if employees would find it it difficult to mix their personal and professional life on Facebook?

Lavenda: Privacy in a corporate setting — some people are uncomfortable about mixing their personal lives and their professional lives. Unless a clear delineation between the two can be created, people will be apprehensive about “buying in” to the enterprise usage. Again, this is something that WorkLight helps to solve.

IF: Can you explain how Worklight can be used to enable employees to communicate with customers and partners on the social network securely?

Lavenda: The WorkLight Application Platform connects with enterprise systems and applications on the one hand, and extends these applications via a host of consumer Web 2.0 services, such as Facebook on the other. Companies that use WorkLight can offer employees a secure overlay made available much like any other Facebook application.

WorkLight is, in essence, a secure app running within the Facebook window. It leverages the Facebook social graph (and combines it with the corporate directory ala LDAP or some other directory). Employees can use WorkLight to form groups with colleagues, share business insight, news and links, upload documents and diagrams, perform simple business tasks such as time reporting and purchase requisition approval.

Moreover, by leveraging WorkLight, companies can use Facebook to engage customers and partners. Customers can add a range of widgets on Facebook, such as account management, search and order widgets. Similarly, partners can track upcoming shipments, manage inventory levels and more.

IF:  Can you offer an example of how a company has utilized Worklight to get employees onto Facebook safely?

Lavenda: One of our customers is an international bank with employees spread across many geographical locations (the bank has branches in over 50 countries). It used WorkLight to connect its different teams and encourage collaboration between members. By leveraging Facebook’s social graph, the bank employees were able to connect with colleagues using a simple, intuitive tool which is linked back to its enterprise systems, corporate directories, and more.

Over the last couple of days, rumors have been swirling about a possible Facebook Platform payments system launching over the course of the next few weeks. Tonight, we have confirmation from Facebook that while it isn’t planning on launching a new payment service for applications in the short term, it is planning on starting an alpha test to let users spend Facebook credits in Facebook applications in the next few weeks.

Currently, users buy Facebook credits (Facebook’s virtual currency) in the Facebook Gift Shop in order to buy virtual gifts to send to their friends. In the alpha tests that Facebook will start running soon, users will then also be able to use Facebook credits to make purchases inside Facebook applications and games. Developers who accept Facebook credits will subsequently be reimbursed by Facebook for the currency spent in their applications we assume, though Facebook hasn’t shared any more details on reimbursement rates or how exactly the program will work yet.

While there has been much speculation about Facebook’s virtual currency roadmap, this is the first time Facebook has confirmed plans to test the beginnings of what some have called a “universal” virtual currency system. Such a system could be a powerful revenue driver for the company, which to date has largely abstained from directly monetizing the sea of applications running on the Facebook Platform. Estimates from executives at top Facebook application and monetization companies we’ve spoken with estimate that between $300 – $500 milion in transactions will happen inside applications on the Facebook Platform in 2009, numbers corroborated by other reports. Global social network Hi5 launched a similar universal virtual currency program in March for developers on the hi5 Platform.

However, at this time it appears Facebook is not preparing to launch new payment services for application developers. When the new tests launch, Facebook credit payments are still likely to continue to happen inside the Facebook Gift Shop or another proprietary Facebook account management page. Currently, Facebook only accepts credit card payments (Visa, MasterCard, and American Express), but there’s nothing to say that Facebook itself won’t begin accepting payments through additional payment providers in the near future in order to be able to accept money from its increasingly global audience.

How does the Facebook credits test affect other virtual currencies operating inside the Facebook Platform? Clearly, a platform-managed virtual currency presents a long term challenge for companies like Spare Change (recently acquired by PlaySpan) who have created alternative virtual currencies for applications. Facebook credits are usable elsewhere throughout the site (including recent tests around currency gifting and branded virtual gifts) and bear the Facebook name, and Facebook will want to have increasing numbers of direct billing relationships with its users over time.

In the future, Facebook could theoretically expand the use of Facebook credits to any Facebook Connect application as well – not just those apps running inside Facebook. Such a system could be a way for Facebook to help publishers around the web monetize through the Facebook credits system – a big idea but clearly further down the road.

For now, Facebook is just starting an alpha test with a few developers. We’ll let you know how it goes.

Update: Facebook has confirmed that it will be starting an alpha test to let users spend Facebook credits in Facebook applications in the next few weeks. More details here.

As the Facebook payments and virtual currency monetization space continues to grow, entrepreneurs are becoming increasingly interested in what role Facebook will play in transactions on the Facebook Platform. Will Facebook launch a payments system for developers? If so, how will it work, and what kind of payment options will it offer? Will Facebook allow developers to plug into its virtual currency system to enable microtransactions through a universal Facebook credits currency?

Such questions have big implications for developers of apps and games that are monetizing through user micropayments inside Facebook. While Facebook announced an initial beta test of a Platform payments system in December of 2007, no public programs have ever been launched. However, yesterday Eric Eldon at VentureBeat reported that sources say Facebook may launch some kind of small alpha test, the details of which still haven’t been decided, in the next few weeks.

Facebook chose to optimize for Platform growth over Platform revenues in 2008, but 2009 appears to be the year of alpha testing Platform revenue streams. Earlier this year, Facebook announced a small alpha test of its own in-house ad network.

Many in the industry have criticized Facebook for not being more aggressive in building payment products for Platform applications. Sources we’ve spoken with estimate that the overall size of the Facebook Platform economy in 2009 is likely to be between $300-$500 million overall. However, the task of operating a robust payments platform is no small operational task or expense for a variety of reasons, and Facebook also wants to be careful not to discourage third parties from continuing to invest in building third party Platform payment solutions.

Nevertheless, Facebook has been actively experimenting with various ways of integrating its own virtual currency into the site. For example, it’s done several tests around birthday gifts and holiday gifts on user profiles, and recently also started experimenting publicly with a new credit gifting system that allows users to give virtual credits to each other as a reward for sharing good content, as well as packaging the credits with branded Facebook gifts.

Of course, we’ll be keeping tabs on the Facebook payments space as it evolves.

Inside Facebook is excited to announce the first Facebook Marketing Breakfast, a half-day invite-only event in San Francisco on Thursday, June 18^th, 2009, focused on the landscape and realities of marketing in Facebook for large brands and advertisers.

The Facebook Marketing Breakfast will bring together Facebook’s brand solutions team, leading experts from the space, and successful clients to share information on what’s worked and best practices. The breakfast is being held at the San Francisco offices of Razorfish, host sponsor for the event.

At the Facebook Marketing Breakfast, attendees will gain a deeper understanding of products and opportunities in the Facebook ecosystem, including brand, performance, and application solutions, engage with companies that have successfully seen growth in customer awareness and bottom-line sales, and learn what tactics to avoid along the way.

So far, confirmed speakers for the event include:

• Kevin Barenblat, CEO, Context Optional
• Katherine Bateman, VP Marketing, Buddy Media
• Michael Brito, Social Media Strategist, Intel
• Trista Handisides, Manager of Brand Market Solutions, Facebook
• Alyson Hyder, VP Digital Media, Razorfish
• Jeremiah Owyang, Senior Analyst: Social Computing, Forrester
• Keith Rabois, VP Strategy & Business Development, Slide
• Justin Smith, Editor, Inside Facebook

Space is very limited, so register today to ensure your spot at the event. Look forward to seeing you there!

Schedule

8:00 a.m. – 9:00 a.m.

• Breakfast and Registration

9:00 a.m. – 9:15 a.m.

• Welcome & Opening by Justin Smith, Editor, Inside Facebook, and Garrick Schmitt, Group Vice President, Razorfish

9:15 a.m. – 9:45 a.m.

• Introduction, “How Brands Can Maximize ROI through Facebook” by Mike Hoefflinger, Director of Brand Product Marketing, Facebook

9:45 a.m. – 10:00 a.m.

• “How to Start a Game-Changing Dialogue with Consumers on Facebook” by Michael Brito, Social Media Strategist, Intel

10:00 a.m. – 10:15 a.m.

• “How to Use Applications Effectively on Facebook” by Kevin Barenblat, CEO, Context Optional

10:15 a.m. – 10:30 a.m.

• “A Look at Engagement: Best Practices” by Jeremiah Owyang, Senior Analyst: Social Computing, Forrester

10:30 a.m. – 11:30 a.m. – Panel: What’s Worked?

• Katherine Bateman, VP Marketing, Buddy Media
• Alyson Hyder, VP Digital Media, Razorfish
• Jeremiah Owyang, Senior Analyst: Social Computing, Forrester
• Keith Rabois, VP Strategy & Business Development, Slide

11:30 a.m. – 12:00 p.m.

• Snacks & Mingle

Location (Google Map)

Razorfish
303 Second Street, 6th Floor South Tower
San Francisco, CA  94107

This week, a new beta feature – Quick Transitions – will be available to all applications on Facebook, according to the Platform team.

The feature is designed to enhance both FBML and iframe application performance by making canvas page load times faster. To test the feature out, click on “Edit Settings” and find the Canvas tab. You’ll see the option of turning Quick Transitions on at the very bottom of the page.

You can find more details on implementing the feature at the Facebook Developers Wiki, including a couple tips for IFrame apps. If all goes well, the feature will enable applications to provide users with a friendlier user experience – faster apps!

In an effort to make interaction on Facebook more real-time no matter where users are on the site, Facebook today turned on a new feature called “immediate notifications.” Now, when users receive a notification from Facebook or any Facebook application, a small popup window will appear in the bottom right hand corner of the screen.

The feature means applications should get higher click-through rates across the board. However, the new popups should be the biggest boon for developers of multiplayer Facebook games, especially turn-based games. Now, players will get notified much more prominently that action is required of them to continue the game.

However, no action is necessarily required by the recipient with the new popup notifications. If the recipient does nothing, the popup window will go away in a few seconds. Users will also be able to hide notifications of this type/application as usual.

In general, it’s another step from Facebook and the Facebook Platform team to make Facebook a more synchronous experience. A couple of months ago, Facebook released a new Chat invitation API giving applications a new Chat-based viral channel. Those implementations are performing well so far.

Facebook’s audience in Germany has just crossed over 2 million monthly active users – a number that outpaces Inside Facebook’s growth projection of 1.8 million users by May 1, 2009, according to our Facebook Global Monitor.

In the last 12 months, Facebook’s audience in Germany has grown by 260%. Germany now has the 18th most Facebook users of any country, leading Norway and Hong Kong, but trailing behind Denmark and Belgium.

However, relative market penetration in Germany is still low. Facebook’s main competitor in Germany is Berlin-based social networking service StudiVZ. Started in 2005 as a social network for college students, StudiVZ now boasts over 13 million users.

In 2007, it was sold to a German publishing group for possibly up to 100 million Euros. A year later, Facebook filed suit against StudiVZ for intellectual property infringement, a move that lead industry speculators to wonder which Facebook clone was next. Xiaonei?

Facebook hasn’t faced difficulty gaining market share in Germany alone. Our recent look at the Chinese market, for example, shows the challenges Facebook is having there. In general, by the time Facebook fully localizes in key emerging markets, local clones will likely have already won over the hearts of local Internet users. And while the cost of transition isn’t high for these users to switch to Facebook one day, it isn’t low either: Facebook would have to convert a critical mass of users for the switch to be worthwhile for the others.

But Facebook has demonstrated creative efforts to acquire users in the German market, including the Facebook German Application Contest, Facebook for Good – Germany, and even recruiting Facebook ambassadors in Berlin and Munich.

In related news, Germany’s largest newspaper, Bild, recently implemented Facebook Connect – a sign that other local media companies are hopeful of a stronger Facebook presence in Germany.

For nearly a week now, Facebook has found itself in an uncomfortable position: It has had to defend the rights of Holocaust deniers who have set up incendiary group pages on the site. Today, Facebook announced that it had removed two of the pages, but the issue is likely to be revisited frequently in the future, exposing one of the grayest areas in Facebook’s Terms of Service.

Yesterday, Attorney Brian Cuban — the brother of Dallas Mavericks owner Mark Cuban — wrote an open letter to Facebook’s CEO Mark Zuckerberg, asking him to remove all the Holocaust denial sites. While these groups might stop short of explicitly encouraging violence against Jewish people, Cuban wrote, they nevertheless promote hateful speech and egregiously inaccurate information about one of the darkest incidents in modern history.

A key passage in Cuban’s letter:

The Holocaust Denial movement is nothing more than a pretext to allow the preaching of hatred against Jews and to recruit other like minded individuals to do the same.  Allowing these groups to flourish on Facebook under the guise of “open discussion”  does nothing more than help spread their message of hate.  Is this the kind of open discussion that Facebook wants to encourage?  Is this really where you want to draw your line?

The issue has dogged Facebook for a week now. It started with an earlier post by Cuban, in which he tried to make a legal case as to why the Holocaust denier groups violated laws in some European countries. Seeing as Facebook operates internationally (not just in the U.S.), Cuban argued the groups should be removed. In addition, because Facebook is a closed network that requires members to join, U.S. First Amendment rights don’t apply as vigorously as they do on the public Web.

Facebook hasn’t relished the task of defending the groups, which it called “offensive” in several interviews with the media. In a CNN article, Barry Schnitt, a Facebook spokesman, noted the company debates the issue of controversial groups frequently. While Facebook disagrees with the views expressed on the Holocaust denier pages, he said Facebook will not remove a page unless it promotes violence or threatens an individual, which is outlawed in Facebook’s terms of service. The idea, he says, is to facilitate an open dialogue across the social network.

“It’s a difficult decision to make. We have a lot of internal debate and we bring in experts to talk about it,” Schnitt said. “Just being offensive or objectionable doesn’t get it taken off Facebook. We want it [the site] to be a place where people can discuss all kinds of ideas, including controversial ones.”

CNET published a full-length Q&A with Schnitt that details the internal discussions Facebook has on these matters, and how the company approaches dealing with them.

Conclusion

The Holocaust represents one of the darkest moments in human history. We of course find a group that seeks to deny the existence of those awful events offensive, and we believe it offends Facebook as well.

But we also believe that, in the Facebook ecosystem, Facebook itself must act as a judicious governor that enforces a steady policy. As a company, Facebook is mostly comprised of technologists, engineers and marketers. As a result, we think its inclination to defer to U.S. laws of free speech make sense in the long run.

By having a consistent stance, Facebook won’t have to judge groups continually on an agonizing, case-by-case basis. As this incident revealed, holding firm to its terms of service won’t always be popular, but if you believe in the First Amendment, it’s ultimately the right thing to do.

When Facebook announced the new “Open Stream API” a couple of weeks ago, it made it easy for developers to build applications around the friends timeline in much the same way that Twitter application developers have been doing for a long time. Now that Facebook has made it easy to read and write from the Facebook friends stream, what does that mean for Twitter app developers?

1) All the work you’ve already done around the Twitter friends timeline can now be extended to support the Facebook friends timeline, almost for free.

As we saw when TweetDeck and Seesmic (two popular desktop clients for filtering and publishing to the Twitter sream) launched the first applications built on the Facebook stream APIs, most of the work that developers have put into tools designed to manage the Twitter stream can be easily reused to manage the Facebook stream. In the simplest case, this means just “adding another column” to the experience.

Facebook developed its own stream APIs in light of the Twitter friends timeline API in order to minimize the extension cost to developers. This was a very intentional move by Facebook to compete with Twitter where it’s had the most success – on the API level. Facebook is hoping to capitalize on all the work already done by Twitter app developers by letting them integrate Facebook functionality for free.

2) The Facebook stream has access to much more rich data.

While the Twitter stream only contains text, Facebook’s stream contains several other kinds of interesting object types like profiles, photos, videos, events, etc. that allow for much richer interfaces to be built with the stream.

Twitter app developers can extend the Twitter timeline user experience to let users interact with the richer data that Facebook’s stream contains. As Microsoft’s Silverlight demo showed last week, it only takes a few hours to create a new way to navigate the photo stream. Think about the different things this could mean for visualizing and managing relationships, media, and news…

3) The Facebook stream does NOT allow public timeline search.

Unlike Twitter, where almost all data is public, Facebook is fundamentally built on privacy, and the cardinal rule of Facebook app development is to obey Facebook’s privacy rules and philosophy. This means Facebook does not (and may not ever) allow users or developers to search the full Facebook timeline.

For Twitter applications built on Twitter Search, the concept of a public timeline just doesn’t exist for Facebook users (though it somewhat does for Facebook Pages). Thus, some of the more interesting CRM applications that have been built for Twitter just aren’t possible inside Facebook. The Facebook Open Stream API is just not built for the same types of use cases for marketers.