JCPenney recently launched an app on Facebook called Dorm Life. It's targeted to college freshmen, and although this is a major portion of Facebook's demographic and the app is well executed, it doesn't seem to be doing well. It allows users to put pictures of JCPenney products on their profiles and suffers from what can be called the "free ad" mentality. Unfortunately, people will not flock to put something on their profiles just because YOU care about it. People will put something on their profile because it provides value to THEM.

Flirting is definitely something of value to the Facebook demographic, and an app for Calvin Klein call In2U would seem have tapped this perfectly in allowing users to anonymously flirt with each other. However, a basic premise alone is not enough; the details of the execution always matter and this app is clumsily made. Despite all the communication channels available through the Facebook API, there is an awkward requirement to know a friend's external email in order to flirt with them and for them to notice a strange generic email received amongst all the other spam as something intriguing to act upon. Thus, any viral growth from friend to friend is severly hindered.

At least these apps tried to create something specifically tailored to the social networking environment. More often than not, the expedient course is to take the "round peg in square hole" approach and repackage pre-existing content from something completely unrelated into something vaguely resembling an application. This is what ABC did by taking widgets for its popular shows like Ugly Betty and allowing people to put them on their profiles. They are just pushed content and contain nothing in them that makes social media powerful. No personalization, no communication with friends, no user generated content, no interaction between people at all.

One can only imagine all the conference calls and PowerPoint presentations that went into creating these apps. It's a shame that so much money and the time of so many otherwise talented and intelligent people could be spent on creating products so boring and useless. Unfortunately, this seems to be the norm in corporate America. Occasionally, however, a gem manages to make its way through the maze of cubicles and quarterly reports.

This is the case with an application called Parking Wars, which was created for an A&E show of the same name. Rather than taking the obvious route of aggregating clips and news from the show into something that no one would care about, they instead produced a thematically related game in which people park cars on each others' profiles. It utilizes many of the hooks provided by Facebook to create an engaging social activity that allows people to have fun with their friends. Oh, and the show probably got a lot of promotion from it too.

This can be seen in My Starbucks on Facebook. It is a very well done gifting application, so well done in fact, that most people probably think it is an official Starbucks application. The Starbucks logo and numerous graphical assets of Starbucks products have been incorporated into it. This association with Starbucks, which has many avid followers, is a major factor in its popularity. It has over half a million installs. If it were just "my coffee", it would likely have gotten nowhere near that many users.

The two college students who created it are not trying to hide the fact that they did this without Starbucks' permission and include a disclaimer on the app's about page. They are making money from advertising incorporated into the app, none of which goes to Starbucks, but they probably feel they are actually doing Starbucks a huge favor by promoting their brand. Maybe they are. It is certainly the view shared by many as represented by Nick O'Neill of AllFacebook who wrote, "If I was a brand I would be extremely happy about this."

Perhaps nothing serves as a better example of the issues involved than the saga of Scrabulous, an online version of the game Scrabble which has become a huge hit and makes $25,000 a month for its creators, two brothers in India. Hasbro, the owner of the brand which has licensed the online rights to two other companies, has threatened to sue to have it removed from Facebook. Needless to say, the fans of Scrabulous are upset and many bloggers seem to hold the opinion that Hasbro should buy out Scrabulous as exemplified by Josh Quittner of Fortune:

If I were an evil genius running a board games company whose product line spanned everything from Monopoly to Clue, I might do this: Wait until someone comes up with an excellent implementation of my games and does the hard work of coding and debugging the thing and signing up the masses. Then, once it got to scale, I'd sweep in and take it over. Let the best pirate site win!

Is this the new business model for aspiring entrepreneurs? Don't bother to negotiate pricey licensing deals; just find a hugely popular brand and leverage that popularity to create successful unofficial products, and then wait for the big pay day from the brand that is either grateful for all the hard work or fearful of the backlash from fans.

It certainly puts brands like Hasbro in an awkward position. Who would bother to license rights anymore if the people who simply steal intellectual property are being rewarded? On the other hand, these unofficial products are helping to promote brands and fighting against them would result in negative publicity. But isn't this "pay me off or face harmful consequences" attitude a little like extortion?

It will be interesting to see how it all plays out. In the long run, technological changes and evolving cultural attitudes will certainly transform business models and intellectual property laws.

This is very good news for application developers as a whole, but individual developers are primarily interested in their own applications. A critical factor that Compete neglected is the exponential increase in the number of applications from less than 100 at the platform’s launch to almost 17,000 now. The exact historical number of apps over time is difficult to determine, but simply assuming a linear growth rate to 15,000 in January, it’s possible to do a “back of the envelope” calculation of the engagement of the average application.

The average app now receives about 1,000 visits and 100,000 views. While visits/app have declined, there has been a steady increase in views/visit which has offset some of the decline in visits/app and actually slightly increased it in the last few months.

It is intuitive that as the space becomes more crowded, every new application is fighting over an increasingly smaller portion of the pie. The distribution is also likely very skewed with a few huge successes and many apps that hardly anyone uses.

However, the Facebook platform still represents an amazing opportunity to engage a high number of users with relatively low effort (as opposed to developing other interactive media such as web sites.) It just now requires a thorough understanding of the characteristics of the platform and its users.

Instead reality set in quite quickly after the platform launched and the much vaunted openness of the social graph allowed it to become a morass of zombie hugs and super pokes with dozens of invites and notices filling every home page. People began ignoring them outright and these things became running gags about how much useless garbage was on Facebook. Even MySpace, the poster child of glitter text and webcam girl invites, differentiated itself from Facebook when it announced its platform, claiming it would "avoid the feed spam issues that have plagued ‘other players in the space'".

Unfortunately, the letter of new policy still allows forced invites; users just have to be told about them upfront and given a way out rather than ambushed and trapped. And various technical limitations won't change the essence of the types of applications that become popular.

What are the things that are popular on Facebook and likely will be on other platforms and social networks? They are difficult to categorize, but some successful characteristics can be identified:

• Things that facilitate cool self-expression or personal representation
• Things that help pass time in an entertaining way
• Things that help people flirt or hookup
• Things with vaguely illicit or titillating content
• Things that leverage the fan base of something already popular

So given a blank slate, it's kind of easy to pick two or three and combine them into something with mass appeal: send naughty pokes to friends, put favorite sports teams logos on your profile, play a knock-off of well-known game.

Legal rights and ethical issues aside, the challenge is that the application landscape on Facebook is now very crowded. It was one thing for these types of apps to spread virally when there were a few hundred and no limitations on communication with users and quite another when then are over 16,000 and tight restrictions.

A key question now when developing a new app is whether to try to gain the more difficult mass appeal or to create something more tightly targeted to a smaller, but perhaps more loyal and relevant user base. This is especially pertinent to applications created as part of marketing for brands. Should an app provide utility directly related to a brand or should it be something only tangentially connected with the potential to reach more people?

Unfortunately, success on Facebook is currently primarily measured by total reach with more users always being better. This is what has led to the spam mess in the first place. Maybe with the new changes, there will be a trend towards an appreciation of quality over quantity. I certainly hope so.

Update:
All Facebook and TechCrunch have interesting articles on Facebook spam.