There’s no shortage of big initiatives going on at Facebook these days. We sat down with Facebook CEO Mark Zuckerberg this week to talk about the state and future of Facebook and its surrounding ecosystem.

Zuckerberg shared his thoughts on recent changes to the Facebook Platform, competitive dynamics he desires amongst developers, the surprising growth of the social games business on Facebook overall, his vision for Facebook Credits, market perceptions of Facebook’s revenue streams and overall revenue numbers, what the company learned from its period of serious interest in Twitter, and Facebook’s company culture around money.

Today, Facebook’s 1,400 employees are working on products to better serve and monetize its nearly 500 million monthly active users around the world – up from 150 million at the start of 2009. We estimate the company did between $600 to $700 million in revenues last year, and will see between $1 and $1.1 billion in overall revenues this year.

As Facebook’s business has grown, so has the Facebook Platform economy. Developers of social games on the Facebook Platform will earn hundreds of million of dollars in revenues in 2010, according to our Inside Virtual Goods: The Future of Social Gaming 2010 report, and tens of thousands of businesses are shifting more of their marketing efforts and dollars to build their Facebook presence.

Justin Smith: What’s the state of the platform right now, in terms of the alignment of incentives between developers and Facebook and users, compared to where it was just after the Platform launched a couple of years ago, and where you want it to be?

Mark Zuckerberg: There’s two parts of the Platform – there’s canvas and then everything outside of Facebook. The focus now is actually the latter – Connect and everything we’re doing with social plugins. We have an all hands meeting later today and I was just told that Connect is now on 1 million sites. That’s definitely an increasing focus, and the last two f8′s have been around that. But I think what you’re asking is about the canvas part.

There are two ways that apps get usage that really define the character of the application. One way is viral distribution – spreading to new people. The other is reengagement. Early on, the viral strength was so much, but there were really no channels for reengagement. So people were using viral channels to reengage people, and you basically had apps that were growing very quickly, and their best way to get a good user count was to get new users and churn through them. That really optimizes for apps that are very viral instead of apps that are high quality and that people want to reengage. So we intentionally weakened the viral channels recently, and intentionally strengthened reengagement with emails, so that there will be better apps. It’s going to be a long process, but I think it’s going reasonably well.

One of the things we did recently was rebalance around games. A lot of users like playing games, but a lot of users just hate games, and that made it a big challenge, because people who like playing games wanted to post updates about their farm or frontier or whatever to their stream. They want all their friends to see their updates, and they want to get all their friends’ updates, but people who don’t care about games want no updates. So we did some rebalancing so that if you aren’t a game player you’re getting less updates.

One of our goals that we have is to make it so that you have just as good of a chance to build a good game if you’re a standalone game shop as if you’re a part of a bigger conglomerate, like Zynga or EA. That is a long term thing, to make sure the market stays competitive around this. CrowdStar has grown pretty quickly in the last 6 months, from very small to now pretty big. That to me shows that it’s definitely not a one company market, and that’s what we’re looking for. A lot of what we’re working on is can a small company succeed in the space.

What do you think about how big the games business has become on the platform? You told me a couple of years ago soon after the Platform launched that you weren’t really thinking about games when you built the Platform.

I was surprised, I was surprised about games. I had a conversation with some folks at Apple at one point, and they were surprised that games was the big thing on the iPhone too. I also heard anecdotally that the people making the first PC operating systems were surprised that games were that big too. So I think people build platforms for utilitarian purposes and then get surprised that games are a killer app, so I don’t think it’s uncommon. But clearly a lot of people like them.

Someone once wrote that I don’t like games, and I think that’s pretty silly. I don’t spend a lot of time playing games myself, but it’s really cool as a first proof example of an industry that’s getting completely disrupted by the whole social movement. All the dynamics of how you play the game, getting neighbors, trade with people, do tasks with people to more efficiently use your resources. It’s the first place where someone completely wove in social dynamics into the dynamics of the industry, and it works really well. The early games like Jetman and Boggle and things like that weren’t that social, but now when you hear gaming companies talk about the next generation of games that they’re creating, everything is about integrating the social stuff more and more deeply into the game.

Now, there are companies like Zynga, EA/Playfish, CrowdStar, but then there’s a Facebook version of Civilization as well, so it’s going in both directions. The Civ game is your traditional high quality game, but the big question there is whether they leverage social dynamics enough. The risk for them is that it might just end up being a good traditional game with very little social integration.

One of the questions that people I talk to have these days is what role Credits will have in the future of the company. How important is Credits in terms of your overall product priorities, do you think it will succeed, and how important will it be in terms of revenue?

It makes sense that there should be one currency. If I go play a CrowdStar game right now and get Credits there, I can’t go use those Credits in a Zynga game, so that kind of sucks. One of the biggest inefficiencies in buying virtual goods is all the friction of having to take your credit card out, so having one store of [virtual currency] that you can use everywhere is both good for users and good for all the apps.

The other thing about Credits from our business perspective is that payments and Credits is a significantly lower margin business than ads. Ads are 20%, 30%, 40%. A lot of people are skeptical of when we say we are doing this primarily for the developer ecosystem, but that’s really how we think about it. A lot of the apps so far are games, a lot of games monetize a lot better through virtual goods than through ads, and a big goal for us is to build this level ecosystem. So if Zynga or any one player can allow cross payments within their games, but that doesn’t extend to other games, then that ends up being a big barrier to entry for other startups. Making it so that there is one currency that people can take everywhere levels the playing field a bit, which is good.

We want to make it as easy as possible for users to build up a liquidity of Credits themselves, so we’re planning on pouring all the money that we make on Credits back into things like different offers or cards that people can buy in stores, to lubricate the economy so people will buy more stuff in apps. Overall we think it’s better for everyone for us to be in that place. Now if we fail, we fail, and someone else will succeed. But I think that over the long term this will end up being a pretty valuable thing.

When we spoke in the spring of 2009, you said you felt like there were misperceptions in the market around Facebook’s revenues, and soon thereafter you guys released some financial data points to adjust people’s expectations. Do you think that expectations today are more accurate? We estimate your 2010 revenues at $1 to $1.1 billion.

I think it’s really hard to predict this stuff. The biggest driver for revenues and costs for us is the number of users. Last year, we went from 150 to 350 million users – how could you predict that? Over a longer time horizon, it doesn’t matter that much. For how early social media is, you want to be looking at longer trends. You can have blips over a six month or one year period, but it doesn’t necesarily say that much.

The reason we corrected it last year is because it was hurting us. People thought it was too low. Now what I would say is that the estimates are not so far off in either direction that it’s causing us any pain, so we feel no need to correct it. Also, if it was too high, we would want to correct it too, because we don’t want expectations to be too high and we don’t want people to be disappointed if they joined. I think people are getting a better feel for it, but in general I think people underestimate the value of the whole thing.

There was a time over the last year and a half when you and the company became more engaged with Twitter, and then there was a time when you weren’t. What did you learn from that?

At first I think we learned that they do a lot of things really well. It’s a very nice, simple service. They do one thing really well – that’s powerful.

I think the main thing was we looked at their growth rate and – well, we saw our exponential growth rate continue for a very long period of time, and it still does at a super-linear rate, though not quite 3% a week any more. I looked at their rate and thought if this continues for 12 months or 18 months, then in a year they’re going to be bigger than us. I guess I extrapolated too much from our own experience of what was possible, but it just turned out that that their growth rate was kind of unnatural. They got a lot of media attention, and it grew very quickly for a little period of time.

Most of the lessons I take away from the whole thing now are that, as good as I think they are, I think I personally just paid too much attention to it. I don’t think we over-rotated as a company on it, but it was interesting because we’re a pretty young company, and we haven’t had that many other companies in our space. Learning how you work with other companies is an interesting thing that I’ll hopefully figure out over the next decade, and it was just interesting learning from watching them.

What particular product insights did you gain from that experience?

The way that people use the products are pretty different. It’s just interesting that they do some things that we explicitly don’t want to do, but do them well. For example, they don’t do real names, and they have themes. It’s a lot more around self expression than real identity, but I think it works for them. But that doesn’t mean we want to be that. Watching them is going to be really interesting over the next few years, and the same with FourSquare, and a lot of other social companies.

Can you talk any more about your plans for your location products?

Well, we’re developing something, but nothing besides that. We want to make sure that we do it well, and we’re taking the time to do that.

From what I’ve observed, it appears as though you’ve established a culture here that does not respect people who cash out early. Could you talk about the role that money plays in building the organization?

I guess we have a pretty utilitarian view towards money. Sometimes what I say gets misinterpreted as I don’t care about money, but that’s really not true. I think building a company is the best way to change the world, because it’s the best way to align the interests of a lot of smart people and a lot of partners to build something that’s great and that serves people. You can’t do that if you’re an individual, because it’s just you and there’s no one to align, and you can’t do it if you’re a non-profit, because you have no resources and you’re constantly out trying to raise money instead of generating it and being self-sufficient. That’s I guess the view.

At this point in the company’s evolution, I don’t see a huge need for the company to be throwing off a huge amount of profit. What’s the point? If we believe that we can build a lot more value for users, developers, and advertisers by taking any excess money we can make and investing it back in, then we’re just going to grow those communities and markets faster, and we’re going to end up with greater potential in the long run. If you prematurely optimize, you might get a bigger piece of a smaller thing. I feel like we’re really early on in the start of this movement toward everything being social.

But even people who are very smart, a lot of times throughout the history of the company, have underestimated how far it would go. That’s been difficult, because when you have key people who have that attitude, it’s hard to get stuff done. Especially around selling the company early on and choosing not to do that – that was a big learning moment for the company in terms of what kind of people we wanted to have here. I just want the people we have here to be focused on building stuff, and that’s how we run it.

Today in a special session of the Facebook Developer Garage London event series, Facebook CEO Mark Zuckerberg and a few executives provided more details about the company’s product plans, and some updated statistics.

A location service is indeed on the way — “we are finishing designing our application soon and hope to offer it soon,” Zuckerberg said. While he referred to an application, a variety of hints point to a broader federated system where third parties would share location data back and forth with Facebook, rather than compete with it.

Here’s a quick recap of recent Facebook location news. McDonald’s is reportedly building location data into a custom app for a Page-based marketing campaign. Facebook’s new Open Graph Protocol allows third parties to share specifics like address, and latitude and longitude. Facebook has also had discussions with location-based services like Foursquare and Loopt — possibly about acquisitions and possibly about partnerships — and it even recently hired a Loopt engineer to work on its mobile team. It has meanwhile reportedly been looking into ways of getting more location data straight into it system.

Facebook has experimented with many location ideas since at least last year, but concerns about privacy, the newness of location services in the consumer market, and other product priorities have contributed to the delays.

An in-house Facebook location app, in any case, could be more of a conduit for location data, sort of like its Events app is for third-party events services. You can export Facebook events data to third-party apps like Apple’s iCal or Google Calendar, for example, so you can imagine being able to import and export data like a list of local destinations where you regularly check in.

Aside from location, the company provided some other meaningful details, mostly stats related to Europe. The company said that it has 26 million monthly active users in the United Kingdom, 16 million in Italy, 15 million in France and 10 million in Germany and Spain, respectively — this pretty much matches up with the country numbers we recently reported in our May Global Market Monitor report.

Among the more than 300,000 web sites that have integrated Facebook’s new social plugins, “a disproportionate amount” of the development with them is “coming from startup” in the region, according to Zuckerberg. European users are responding, apparently, as he said they’re generating nearly half of all Likes via the Like Button. This is even though European users comprises a smaller minority of Facebook’s 500 million or so users.

As Facebook continues to experiment with its universal virtual currency, Credits, some developers continue to tell us that the product is going to lose them money — even as others say the opposite.

One issue is the flat 30% fee that Facebook takes from all Credits transactions on third party applications. But there other potential costs, that some in the industry say increases the total percentage to around 50% of their revenue, versus what they are bringing in now.

Facebook, however, believes that Credits will be a net win for developers, and not just a big new revenue stream for itself. Before we get into the details of what the real costs (and benefits) of Credits might be, here’s some more background.

The Place for Credits

The virtual goods market has boomed around the world in the past decade, mainly in Asia — but Facebook quickly becoming a leading platform for growth of companies based on the virtual goods model after it launched its developer platform in late May of 2007. Many people who use third party social games and applications, it turns out, are willing to pay for digital products in order to do things like win a competitive game or more beautifully decorate a virtual space.

This year, we expect the virtual goods revenue model in social games to bring in around $835 million within the US alone, with most of the money coming from Facebook apps. See our Inside Virtual Goods report for more research on the market.

For most of the history of the platform, Facebook has not taken any fee from developers on its platform. When it launched the platform, the company even told developers that they would be able to keep all of the revenue they generated from applications.

Most developers have built their own virtual currencies within their apps, that users can buy using credit cards or through a service like PayPal or earn through offers then use the currency to buy the goods. In many cases, apps will have one currency that users can buy, and another currency that users earn through taking actions within a game, like weeding a crop patch in FarmVille, cleaning the fishbowl in Happy Aquarium, etc.

Credits, in Facebook’s view, will somehow take a central role in this new ecosystem. The company said in April that “there’s just going to be one currency that people use” on Facebook — meaning Credits. It more recently said that it hasn’t decided if Credits will replace other options to be the only currency. At this point, one can observe a variety of Credits implementations in third party apps, from exclusive Credits usage within Crowdstar’s games, to Credits as one of several currency purchasing options in Zynga’s hit game, FarmVille.

The Cost of Credits

Some developers, as we have been chronicling for many months, either do not believe that Credits can actually make them more money, ever, or else do not believe that the long-term benefit is worth the near-term costs. Their main line of criticism now is that non-obvious costs that are adding up — especially if Facebook decides to exclude other currencies. Here are the main issues:

Breakage: This industry term means that users pay for an amount of virtual money, but abandon it after a period of time, and thereby forfeit it to the company — outside of Facebook, this often happens with unredeemed gift cards, for example. On Facebook, users will sometimes purchase currency within an app but then, for whatever reason, never use it to buy virtual goods. This form of breakage can account for up to 25% of revenue in some applications, according to industry sources.

Laws covering breakage differ between states and countries. For breakage on Credits itself, Facebook follows California law: If a user doesn’t access their account for three years, the company forfeits the money to the state, per its Unclaimed Property Law (which is based on the common law doctrine of escheating). Developers, especially those based elsewhere, may account for breakage differently, per the state and national laws where they are based. They may, for example, count the initial purchase of virtual currency as revenue, and — entirely within the law — keep the breakage for themselves.

The concern here is that Credits, if somehow mandatory, would replace the currency that users buy but don’t spend, thereby removing this revenue from developers’ balance sheets. Given the uncertainty around how Credits will eventually be implemented, the actual cost to developers is currently unknown.

Loss of Control: The significance of this problem — which one source refers to as “the lack of ability to optimize” a given app — is even less easy to quantify than breakage, although still very real for some developers.

Here’s the concept: By carefully controlling the price and volume of currency in an app, a developer can get more people spending more money, not unlike how central governments control currency supplies in the real world.

For example, games will often promote their virtual currency through special incentives, like deals to buy currency in bulk, at discounts, on a certain day. Or they might introduce new actions into a game that put more virtual currency into the app economy.

So if Facebook mandates Credits and sets a single dollar value for all apps ($0.10 per Credit), developers can no longer use these techniques as they see fit. Again, the issue here assumes that Facebook would make Credits the only currency available, which may not prove to be the case.

Note: Facebook itself is testing the sale of Credits in bulk discounts. Some users are seeing the following, for example: $5.00 for 50 Credits, $10.00 for 105 Credits, or $20.00 for 240 Credits. It is essentially using the same technique as developers, but its goal is to get more Credits into the system; it is footing the bill for the discount, itself, as developers are still getting paid 70% of all Credits transactions in their apps.

A final point here is that, as with breakage, adjusting the value of the currency can be a meaningful way to make more money, but it is not the core mechanic making the revenue stream work. In other words, loss of control may result in lost money, but Credits may also be worth that cost.

Loss of Virality, Rising Ad Prices: Due to a variety changes Facebook has made to its platform over the last half a year or so, many developers are seeing traffic losses. Some are propping themselves up through advertising, but this traffic source has also gotten more expensive due to more advertisers bidding for the most valuable demographics.

However, some apps continue to gain new users despite the changes. And, Facebook is also trying to improve virality on the platform for the long term, now making improvements like adding a bookmarks tab to canvas pages. Overall, user acquisition has become significantly more expensive on Facebook in recent months, according to many developers.

Rumors about Other Issues: As has always been the case on Facebook’s platform, unsubstantiated rumors are also circling. One is that Facebook is charging additional, hidden fees for Credits — many credible industry sources have told us that this is not the case, though. Another rumor is that some developers are getting special deals to mitigate the costs of Credits. Zynga, the largest social game developer, agreed to commit long-term to the platform last month — some believe that this was in exchange for a discount on Facebook advertising, or a similar cost-saving technique, or higher limits to its communication channel allocation limits.

The Case for Credits

To be clear, the negative sentiments here are not unanimous. A recent Wall Street Journal article quoted several well-known companies extolling the currency’s benefits, with Playfish, CrowdStar, PopCap Games and Arkadium saying they are seeing “positive results.” CrowdStar, Facebook’s official Credits test partner, claims that sales of its virtual goods have doubled after it made Credits the only currency in its games. Arkadium told the Journal that Credits users are three times more likely to buy goods versus those who used other options.

Yet other factors could have influenced CrowdStar’s results, like iterative improvements to game mechanics; Arkadium, meanwhile, features Credits more prominently than other payment options.

The real question is what it has been for months. Can Facebook execute on its plans without fundamentally damaging the platform? We’ve heard that the costs for developers do add up to around 50%, given all the factors.

Despite some developers’ negativity, here are the benefits of what Credits will eventually provide, as Facebook explains: better security, more payment options, a simpler user interface, and a range of smaller incentives and promotions. (Read more details on our recent Inside Facebook Gold report on Credits). Right now, only 1% to 3% of users buy virtual goods in the average social game. The company thinks Credits can help developers bring that number far higher, as high as 20%. If it can in fact grow developers’ overall revenue by substantial margins over today’s numbers, developers themselves will make more than than they have been, despite any of the additional costs.

We believe some of the skepticism is due to developers seeing the costs now without getting most of the benefits yet. However, the lack of clarity on Facebook’s part also makes developers more cautious about the company’s ability to bring about the change it envisions.

A new Facebook application, HealthSeeker, wants to help people with diabetes become more informed about their disease, as well as make tangible lifestyle changes that might affect their health. The app was created in part by the non-profit Diabetes Hands Foundation, the Joslin Diabetes Center (a research affiliate of the Harvard Medical School) and Boehringer Ingelheim Pharmaceuticals, Inc.

Diabetes is a degenerative disease that affects 23.6 million people in the United States, 7.8% of the population, and disproportionately affects minorities there. It may result in death, but often results in amputations or vision and heart problems if not controlled. Thus far, the app has about 1,900 monthly active users.

We’ve previously written that health-related industries like pharmaceutical companies approach social networks like Facebook with caution due to a gray area of law where medical claims must be countered by disclosure of risks or side effects. Consequently HealthSeeker includes a lengthy and prominent disclaimer that the game is for providing information — not to provide medical advice or services.

HealthSeeker has a very easy-to-use interface that’s colorful, interesting and also provides useful information — even to those that do not have diabetes. There are several elements to the app common to other Facebook apps: several opportunities to invite friends, tabs, leaderboards, individual scores, specific goals within the game and a type of level. One interesting difference is that the app prompts users to complete a survey about diabetes.

The tabs showcase 15 “missions” that players can complete, which really amount to changes in lifestyle, such as adding more vegetables to your diet or doing more exercise. With the completion of each mission, players receive points, and additional points for inviting friends (either Facebook or with email) to play, or updating Facebook or Twitter with your activity. More in depth information about app usage on Facebook is available in our Inside Facebook Gold service.

Other indicators in the game track the progress of overall lifestyle goals, such as controlling diabetes or maintaining a healthy weight, a daily health tip/quote, the ability to “write” a message reminder on your fridge within the app, a friend activity feed and tracking of your progress, along with the progress of all other users.

Facebook may not be the most likely place to help people change their health, after all one is usually seated when using it, but it wouldn’t be unprecedented. Games like Dance Dance Revolution and Nintendo’s Wii Fit have assisted some people with their physical health in recent years and since more people are spending increasing amounts of time on Facebook, it may make more sense to keep reminders to get in a little extra fiber or veggies on HealthSeeker’s fridge than your own, physical refrigerator.

Earlier this morning, we noted that Facebook has made some significant changes in public statistics reporting for applications on its platform. While these changes appear to have mainly affected stats, rather than the way the apps work, they have nonetheless revealed some interesting, previously unknown facts about the platform.

For example, the top five quiz-creator apps, a long time popular category that sustains several companies, are actually massive, holding 42 million monthly active users between themselves (non-deduplicated, of course — one user could be using all of them, and be counted separately for each one). Here they are, by MAU size.

	Name	MAU	Gain	Gain, %
1.	Quiz Planet!	18,759,590	+15,281,967	+439.44
2.	Quiz Monster	14,642,051	+9,218,591	+169.98
3.	Quiz Creator	4,813,376	+4,524,233	+1,564.70
4.	Create your Quiz	3,173,185	+3,170,358	+112,145.67
5.	QuizBone	844,279	+794,302	+1,589.34

A quick explanation of these apps: users visit them to create quizzes, for friends or strangers, like Which Sex and the City Girl are you??? and Your personality in one word. These quizzes are generally far from professionally written, but they do attract lots of users.

The successful quiz creators all started out with the same mechanic, which is  spinning out a new app for each quiz created. While the quizzes all had internal links that moved their takers on to more quizzes from the same parent application, the sheer number of quizzes made it difficult to tally up how many MAU each app had captured.

Now that Facebook is counting the traffic of created quizzes toward the total of the parent, we can see that the top-ranked quiz creator, Quiz Planet! by Friendly Quizzes, has 18.7 million MAU, making it Facebook’s ninth-largest app overall by MAU, ranking just behind Mafia Wars. Not far behind, Quiz Monster has 14.6 million MAU.

Any given quiz creator, of course, will make its owner much less money than an equivalently-sized game — there are usually no virtual goods for users to buy, and far fewer come back as daily active users, as you can see from the AppData pages of any of the five quiz creator apps above. But millions of users still add up to significant revenue, if mainly through in-app advertising. This way, one of the listed quiz creators, simply named Quiz Creator, is helping to ease developer LOLapps‘ transition to becoming a game publisher (the company also owns Gift Creator, a variation on the quiz creator theme that turns out to have 4.6 million MAU).

For now, Facebook doesn’t appear to have forced the quiz creators to actually integrate their quizzes into their respective quiz parent apps — although Quiz Monster has done so on its own. The change in reporting could be an intermediate step to Facebook directing the quiz creators to keep all the quizzes within one app.

Usually this weekly list of fast-gaining apps by monthly active users is reserved for new apps. However, a quick scan over the list below will present regular readers with an unusual sight: over a dozen older apps appear to have gained millions of new users, with an incredible 15 million new MAU being taken in by the top app on the list.

We’re still investigating these stats. However, we’ve so far found that there appear to have been two changes on Facebook’s end. The first, which you can see in the various quiz apps below, is that Facebook has started counting user-generated quizzes toward the total of their parent apps. So, for the first time, we can see how many MAU quiz apps like Quiz Planet! and Quiz Monster truly attract.

The second change from Facebook appears to be a bug fix that previously affected reporting on apps. We found one of these issues earlier this month, when we reported that Facebook for Android showed only 67 MAU but in actuality had several million. You can see that app below, along with others like Status Shuffle, Twitter, and Xbox LIVE.

Here’s the AppData list:

	Name	MAU	Gain	Gain, %
1.	Quiz Planet!	18,759,590	+15,281,967	+439.44
2.	Quiz Monster	14,642,051	+9,218,591	+169.98
3.	Friend Interview	13,146,031	+7,622,791	+138.01
4.	Status Shuffle	11,565,460	+6,722,142	+138.79
5.	Twitter	6,672,847	+6,200,579	+1,312.94
6.	Social Interview	11,385,171	+6,000,118	+111.42
7.	FrontierVille	6,284,067	+5,452,890	+656.04
8.	Entrevista tus Amigos	10,045,319	+5,053,985	+101.26
9.	Facebook for Android	4,686,756	+4,686,691	+7,210,293.85
10.	Quiz Creator	4,813,376	+4,524,233	+1,564.70
11.	Gift Creator	4,591,694	+4,485,404	+4,219.97
12.	Create your Quiz	2,624,556	+2,621,853	+96,997.89
13.	Frases Diarias	9,529,671	+2,020,754	+26.91
14.	BandPage by RootMusic	1,706,153	+1,700,021	+27,723.76
15.	Hello City	4,402,158	+1,624,120	+58.46
16.	Friends Emotions [Emociones de Amigos]	3,877,346	+1,549,609	+66.57
17.	Xbox LIVE	1,471,597	+1,429,750	+3,416.61
18.	LivingSocial	5,254,307	+1,418,012	+36.96
19.	Flag Balls World Cup 2010	1,845,479	+1,399,677	+313.97
20.	BuddyPoke	4,634,653	+1,202,328	+35.03

Four of the apps on the list, from Quiz Planet! to Create your Quiz, are affected by the quiz creator changes. Together, they’ve accumulated 31.6 million “new” MAU, which were previously scattered across countless quiz apps that had been created by users. We’ll be writing more about this group shortly.

The other group of apps, those that appear to have had a reporting bug fixed, is perhaps more interesting — especially those from large media companies. For instance, Twitter seems to have actually had some 6.2 million more MAU on Facebook than previously realized. The new numbers mean the micro-messaging app is actually a fairly significant force on Facebook. Below is its chart; the day you see the hockey-stick growth is June 15th, the same day that most of the apps began reporting revised numbers.

Facebook for Android we wrote about more extensively when we found its reporting errors in early June, although notably Facebook told us at the time that the app had six million MAU, while it’s now reporting just 4.7 million. We haven’t heard back from Facebook yet about the changes, though, so we have no explanation for the discrepancy yet.

Take a look over the rest of the list; almost all of the apps were affected by the reporting changes. There are some interesting gainers, like BandPage by RootMusic, which creates a custom page for bands that rivals what’s available on MySpace. Also take note of Xbox LIVE, which suggests that Microsoft’s social media strategy for the gaming platform is finding at least a little bit of success.

Of course, our list above stops at 20 entries. For much more, just head over to AppData’s MAU growth list, where there are more interesting appearances, including Tumblr, MOTOBLUR, Foursquare and the PlayStation®Network app.

Check out the top headlines and insights this week from Inside Social Games – tracking all the latest developments at the intersection of games and social platforms.

Monday, June 14th, 2010

• Cities and Soccer Add the Most New MAUs on our Weekly List of Facebook Gainers
• Austin-Based Social Developer Sneaky Games Raises First Round of Venture Funding
• European Dev MegaZebra Launches Jewels Rock on Facebook
• Mytopia Acquired by Online Casino 888 Holdings for Up to $48 Million
• Zynga Readies for Major International Expansion With $147M SoftBank Investment

Tuesday, June 15th, 2010

• City-Builders Take to the Night with Vampire Mob City on Facebook
• Last Week to Pre-Order Inside Virtual Goods: Spending and Usage Patterns of the Social Gaming Audience
• Apple Opens Game Center for Developer Signups
• Ninjas, Evil Trees and Social Integration Fly High on the iPhone in Ninjatown
• DeNa Invites Western Developers to Japan, Touting $27.5M Fund and a New Yahoo Social Network

Wednesday, June 16th, 2010

• Playdom Reaches Out to Strategy Gamers With Verdonia
• Zynga Runs Virtual Goods Charity Campaign to Aid Gulf Coast Oil Spill Victims
• Backstage Launches Vinyl City for Facebook
• Performance Advertising’s Future on Social Platforms: Bright, but with Room for Improvement
• New Games Add the Most DAU on This Week’s List of Facebook Gainers

Thursday, June 17th, 2010

• A Look at an Older iPad Title, Flight Contrl HD
• Offerpal Urges Developers Toward In-Game Offers
• Scoreloop Spreads Its Social Features Across the Remaining Large Mobile Platforms
• New Hires in Social Gaming: Playfish, Zynga, MindJolt & More
• Who’s Playing Social Games Outside the US? App Demographics for Facebook’s Second Largest Market, the UK

Friday, June 18th, 2010

• Evony and Fashion World Vie on This Week’s List of Emerging Games on Facebook
• LOLapps to Stop Making Branded Games, Start Using Facebook Credits Exclusively
• World Cup Goods Fill Facebook’s Virtual Stores
• Zynga’s Confusing Deal Terms Result in Acquisitions, Padding in Case of Hard Times
• Social Gaming Roundup: Android, Bebo, SGN, & More

Last week, we posted some data from developers who have been seeing very slow performance with basic parts of Facebook’s new Graph API with the latest version of Facebook’s PHP SDK. Since then, Facebook has let us know that they are working on resolving the problems, and yesterday Facebook Platform engineer Naitik Shah let us know that he has committed a fix to the Facebook PHP SDK that addresses a key issue slowing the SDK down.

According to Naitik:

We found the key issue slowing the new SDK down, which seems to be related to curl handling the serialization. When we do the serialization ourselves, the issue does not manifest itself. It’s fixed in v2.0.5 of the SDK. Here’s the change: [link].

This means developers interested in using the new Graph APIs should see some meaningful performance improvements. Before the fix, basic FQL functions were taking many seconds.

With nearly 55 million monthly active users, Facebook for iPhone has continued to grow as an increasingly primary way that people access Facebook. Now, Facebook has just released version 3.1.3, which adds a few new features that people have been asking for and that should further increase engagement:

• You can now watch Facebook videos on Facebook for iPhone
• You can now view and write on walls of Facebook Events
• Uploaded photos are now 720 pixels wide

Nothing in the release indicates that Facebook for iPhone has been updated for iOS4 compatibility, and Facebook users are still waiting for Facebook to better support the iPad. We’ll let you know as Facebook talks more about its iPhone and iPad product roadmap.

Just a few weeks ago, Facebook launched its “0″ mobile site in partnership with many carriers around the world.

Additional bug fixes included in this release:

• Could not comment on photos accessed from Notifications
  
• Could not upload photos smaller than a certain size
  
• No more than 2 notifications were highlighted as unread
  
• Status updates appeared out of order in News Feed
  
• Broken photo album links in News Feed
  
• Birthdays view had months in wrong order
  
• Last section of friend list was incomplete if you had fewer than 8 friends
  
• Notes with non-ASCII text were cut off at the end

Like Button Boosts Blog Traffic - Six Apart’s blog platform, TypePad, reported this week that the installation of Facebook’s new Like Button boosted bloggers’ referral traffic by up to 50%. Adding the Like button for the post footer, which gave users the chance to Like and share on Facebook, boosted traffic for some up to 200%.

Facebook, Localeze, Localization - Facebook may have struck a deal with Localeze, right after the company premiered Twitter Places with Twitter to add venues to geolocation updates. Localize, a business listing service,  counts 14 million businesses and Facebook, fresh off its recent location partnership with McDonald’s, wants to use the data for “some new kind of fan pages for places, that businesses will be able to then claim on the network.”

Facebook Users Like Videos - Facebook has the fifth largest video site audience, counting 41 million people, which is more than Hulu, CBS or Microsoft. Facebook video viewers watch longer than other sites and more video ads (40%) are watched in their entirety than on other sites (25% on the web).

Amazon Patents ‘Social Network’ - Amazon has been awarded a patent for a “social networking system” to do things similar to what Facebook and other social networks are already doing, such as “locating, and establishing contacts with, other users.”

More Facebook Privacy, Instant Personalization Worries - Privacy advocates are still on Facebook about its instant personalization and privacy issues; this week the ACLU and the Electronic Frontier Foundation, among others, sent Mark Zuckerberg a letter urging him to make the instant personalization program opt-in by default. Facebook’s Andrew Noyes responded that the company is testing SSL access, has been praised for privacy sensitivity and also that the instant personalization program is misunderstood.

TiVo Users Can Update Facebook - Users of TiVo may now access Facebook, Twitter, Flickr, Digg, RSS and other updates through a new widget that Framechannel has created. Synching the DVR device with a users’ social network accounts allows for the updates.

New York Goes After Facebook Child Porn - Facebook and New York Attorney General Andrew Cuomo announced an initiative to fight child pornography this week; although Facebook already blocks child porn, a new database is set to increase protection against the offensive content by using a strategy similar to music piracy efforts. Facebook, MySpace and other social networks will identify offensive images by their hash values, or “digital fingerprints,” and block them from being uploaded.

[Cuomo photo via NY Attorney General's Office]

25% of People Dumped on Facebook - SNAP Interactive released some interesting, if distressing, news this week: 25% of people who date online have been dumped via Facebook. That is to say, they, they found out about the end of a relationship via Facebook; part of online dating’s appeal, apparently, is avoiding the face-to-face confrontation involve with breakups. More stats: 21% said they’d break up with someone by changing their relationship status to single; 40% updated their status so others see they have plans; 35% changed a status to allude to plans, even if they didn’t have any and respondents broke down 70% male to 30% female.

North Social Does Facebook For Brands - North Social is a Facebook platform that aims to help small, medium and large businesses better manage their Facebook presence by allowing users to creating photo showcases, landing pages, e-commerce sites, coupons and sweepstakes for a starting subscription of $29 a month.

Pakistani Law Goes After Zuckerberg - Pakistan’s Deputy Attorney General has begun a criminal investigation into Mark Zuckerberg in response to the “Everybody Draw Mohammed Day” Facebook fiasco in May. The legal proceedings began when attorney Muhammad Azhar Siddique filed an application for a First Information Report (FIR) against Facebook for use of derogatory remarks against Islam’s prophet Muhammad (some Muslims believe depicting Muhammad is blasphemous), the FIR has purportedly gone through and the penal code allows for punishment by death.