There are almost 50,000 custom Facebook Applications running now on Facebook, and many more will spring up. Developers never had any costs, until now. Facebook has made its Verified App Program official. The idea is that trust worthy apps would be approved based on their usefulness and bad ones would essentially be screened out. However, the catch is that developers must pay a $375 USD fee to Facebook just to try to get approved. If your app is approved, it will get more publicity including in a new approved app list and in the news feeds. If your app isn’t on the list, it will become increasingly difficult to scale your app because it will be less visible and people simply won’t install it due to security concerns – no matter how good it really is.

Facebook is continuing to experience exponential growth, according to Compete, its traffic is up 84.1% (to 45 million visitors per month) year over year (Oct 08). Facebook has never released any financial information, though it is believed it is operating cash flow negative because of the immense operations costs and its main source of revenue is simply from advertising. This is probably why we won’t be seeing a Facebook IPO. Facebook needs to become more competitive given increased competition from Google and Apple. It must also diversify its business model to generate more revenue, but charging all developers a hefty fee shouldn’t be one of the ways. However, I do agree that it would be reasonable for Facebook to apply some fee to the highly profitable apps – it’s only fair, right? Hopefully Facebook will change its stance about charging all developers, especially as developers can easily port their apps to the iPhone. The new Facebook principles can be found here.