Friday, September 23, 2011

Selling The Farm To Facebook

First of all, a simple lesson from recent history: Google managed to corner most of the UK and much of the world's online advertising market because the marketplace was complicit. By the time everyone from ad agencies to publishers had noticed, the situation was well over the tipping point and it was too late. Google are no so dominant that pretty much anyone involved in business, especially online business has to pay a 'Google tax' (although they, ironically, will do anything to avoid pay taxes themselves...).

Thankfully, in the content industry, companies like ITV in the UK avoided falling into the same trap with the now shelved launch of Hulu and this also explains why most premium content owners run shy of YouTube.

Now, let's have a closer look at Facebook, and especially Facebook Connect. This seemingly innocuous service, that conveniently allows users to use their Facebook credentials to log into other web sites and services (something known as single sign on - SSO) is key to their new strategy. But, think about this carefully. In the UK recently there have been a number of cases of squaters taking over people's homes whilst they were on holidays. Unbelievable, under UK law they cannot be touched without a convoluted legal process. What Facebook is doing is becoming a locksmith.

Now, we tend to trust locksmiths in the real world, and there's no reason why we wouldn't online. But Facebook's control goes well beyond this. This simple device gives them the ability to follow, view, control and access much of what you do online - and especially what you do on sites using this SSO.

So, Spotify, Hulu et al are playing with fire. They couldn't afford not to get involved, but it will be oh so easy for Facebook to impose whatever terms they want on them in future (see Apple for an existing example of this). I wonder what the rights owners who licence their content to these services are making of now being Facebook content providers by proxy ?