Jeremy Liew recently posted on the wave of posts (most notably Marc Andreesen and Seth Goldstein) about API power and how that works with Facebook. I am working on my own post in this area, but obviously the part I gravitated toward was his mentions of the need for a social network advertising standard for widget vendors. He cites this as the key to creating an environment for API developers to create revenue streams.
I am not so sure. Before you have common standards for social network advertising, there has to be a demonstrated success of a mechanism that actually makes money (and probably competing incompatible standards that both appear to work). I cannot think of a single widget (and maybe this is my lack of exposure) that is generating anything more than pennies in revenue. Widgets are marketing expense. They are part of a service/drive traffic to a service by adding some sort of value on other pages. There have not been nearly enough good examples of a monetization model that works across widget genres. For example, pre-roll ads would work in video widgets or slide widgets, but not in something like mybloglog. Until some common ideas emerge for how to monetize these things, how can we drive to a standard?
Even his post on the need for a standard starts by citing a study where MySpace basically tries to sell that “friending brands works”. Can a widget company survive on selling skins? I have no idea. Jeremy needs to be telling his portfolio companies to have Dynamic Logic run a branding study or something on the impact of widget skins.