Facebook is wildly popular, the latest comScore report shows that it currently has 38.3% reach across all internet users and they have doubled their unique visitors (111%) over 2009. Facebook’s success has led to a massive economy of third party applications built around their 400 million strong (and growing) user base.

Most of those applications make money through advertising or virtual goods and currency. Regardless of the mechanism, the underlying success factor is attracting a large number of users. That either creates an attractive demographic for advertisers, or creates a user base that will convert at some percentage into paying customers. Over the last few months Facebook made several changes that change the playing field for application developers monetizing on their platform.

1) The biggest of these changes is Facebook Payments. They’ve spent a lot of time working on building a payment infrastructure and it won’t be long before the only method of payment for applications will be Facebook Credits (at a 30% cut to Facebook ala Apple’s iTunes)- http://news.cnet.com/8301-13577_3-10460201-36.html

2) Secondly, there is an increasing shift towards limiting communication between applications and users, this has been ongoing for quite a while as Facebook balances notification spam and the major source of customer acquisition for many apps –  http://www.readwriteweb.com/archives/facebook_silences_app_notification_spam.php

3)   Facebook has been shifting more and more burden onto developers. This is a good thing overall for the community and encouraging developers to contribute value for the community. They are basically forcing their developers to shift from being a dev shop into providing a full customer experience including customer service, policies and monitoring. http://wiki.developers.facebook.com/index.php/Policy_Examples_and_Explanations

These trends will continue as Facebook continues to grow – it will be harder and harder to create a profitable business on their platform. The outstanding question now is will developers re-evaluate their relationship with Facebook and develop their own stand-alone portals?  The difference between offering an application on Facebook and offering it on a stand-alone site used to be quite large, but that gap is narrowing quickly. The freedom to control the customer experience is compelling, as is the ability to control customer billing and put more revenue in your bank account.

Will Facebook work with developers and entice them to stay on the platform? Or will it become a marketing channel for users to get acquainted with off-platform brands? Either way, it’s going to be an interesting year for social apps!

For more on the tradeoffs associated with “on or off” platform applications – Susan Wu of ohai! has a great post on her blog.