Okay, so Seth, you’re going to start out by giving us a little bit of your background.

Seth Goldstein: Back in ‘95 I started one of the first internet advertising companies called “Site Specific.” We worked with leading brands like Duracell, AT&T and Travelocity to help build their online presences. And it quickly, maybe not so quickly, morphed into promoting their presences once they were launched. So once you build the website, you had to buy advertising to drive traffic to it.

What was interesting is we’re seeing some of those same dynamics played out twelve years later. We sold Site Specific to CKS Group. I joined Flat Iron Partners in New York as an entrepreneuring resident and then I was investment principal there and led a number of investments in pervasive computing technologies.

Sean Ammirati: You started your appeal into the Social Media space. How does that exactly work? I think it’s an interesting story.

Seth Goldstein: So the whole premise of attention as a technology, it probably goes back to my experience with del.icio.us, the Web 2.0 company in 2004. When people first start tagging the web with short phrases and saving bookmarks and tagging them and tagging photos and Flickr, all that was really about people leaving traces and remembering those traces for others.

Sean Ammirati: And now, just tell us a little bit about what SocialMedia.com is?

Seth Goldstein: SocialMedia.com is an advertising network for social networks like Facebook. There are a lot of applications being built by developers today for Facebook in the thousands. And soon there’ll be applications being built for other platforms like MySpace and Google and Yahoo, Hi5 and Bebo that also open up and expose their ’social graph’. And as these applications proliferate, I think my guess, and the guess of our team, is that you’ll see many of the same strategies and techniques and technologies play out just like when websites started to flourish in the mid-90’s.

Seth Goldstein: The value add is like in traditional websites and blogs. The content creators end up focusing on the content creation and they start to outsource and partner with others to handle the non-core aspects of the business such as analytics, monetization and even cross promotion. Those pieces are important in the economic sphere and typically reside in networks that consolidate and centralize those features for the content creators which in this case, Social Media is the developer of Social Media, the application.

Seth Goldstein: Yeah, I think you could also look inside the Google world and look at Google Analytics and Ad Sense as good analogies for what we’re trying to do inside the Facebook now.

Sean Ammirati: But you’re, I guess the difference between Google and you guys would be you’re not actually at all involved in creating a social network. You’re just involved in helping track and monetize them.

Seth Goldstein: Yeah, I think the difference in this specific case, Facebook has created a social network. Just because you have access to the social network, however, it doesn’t mean that you’re bringing it to life. And that bringing it to life is done through the application. The application is the skin that exposes the bones of the social graph, to butcher the metaphor, twice.

Sean Ammirati: Okay. So looking at these social networks and the tracking that you’re doing now, different experimentations with monetization, what has been a thing that surprised you most about the ecosystem of people who were developing Facebook applications?

Seth Goldstein: The thing that has surprised me the most about the developer community is how robust this has become so quickly. I think there is a fair amount of consolidation as people have noted in the top developers like Slide and Rockyou and us early on who were building very popular applications like Happy Hour and Food Fight.

So you have this incredible diversity of developers really around the world who are building really tight compelling, engaging applications that have real audiences. And when I saw that happening, this is really exciting and I wanted to see that continue for the benefit of all of us in the industry and the benefit of all these social networks that are opening up because a flourishing developer ecosystem really substantiates these core platforms underneath.

Seth Goldstein: It’s a little too soon to kind of break it down with too much granularity but I think bottom line is we’re just trying to see developers become professional. And this happened, you know, the Microsoft platform over the course of years, and it seems to be happening on the Facebook platform in the course of months. I’m not sure if it really happened on the blogging open web platform except in some specific cases for Weblogs and Boing Boing and others.

But we’re just trying to see independent developers who have full-time jobs and are building Facebook applications on the side. Their apps get so popular and they generate so many page views and so many clicks and so many installs that whether they’re using us or RockYou or somebody else’s ad network, they’re literally able to quit their job and hire someone and do it full time. And that’s great.

Seth Goldstein: Well, a couple of things. One is, Attention Trust is a non-profit so there’s really no connection between the non-profit and any commercial initiatives that I or anybody else might pursue.

So, the take away here is that when you search for something or when you click on something or when you fill out a form or when you leave a trail of websites that you have visited, that all that in one regard has a residue of your historical behavior. But increasingly, Web technologies and tools are enabling publishers, and I hope increasingly individuals themselves, to turn that data back into real end user benefit, whether that be personalized recommendations, better targeting, things like that that really benefit and leverage that historical data.

Sean Ammirati: All right. So let’s talk about that ecosystem for a little bit of helping developers create these sustainable models. There’s a lot of rumors around Facebook launching an ad network. There’s a lot of those rumors. There’s a lot of different options now for them to go get VC funding. Where does the social media and some of the Facebook ad networks fit into that?

If you go back to 2004 or so around the time in which Feedburner started, they had no advantage. They had no proprietary advantage. They had no special sauce different from these giants like Yahoo and Google that conceivably had a much better opportunity to do what Feedburner ended up doing. But the fact is that Feedburner kept innovating. They kept creating great, fun, easy to use, easy to understand tools for bloggers to understand their audience, to compare their audience to other audiences.

There’s no reason hypothetically why Google or Facebook or anybody else shouldn’t be able to dominate this new space. But they’re big companies and because we’re small and focused and really believed in experimentation, I think we have a good chance to innovate quickly, to iterate and to stay very, very close to our core audience which are developers.

Sean Ammirati: I’d go slightly and talk a little bit more about that though because I think that is true. I think that Dick really understood their customer very well. And this customer wasn’t consumers of feeds, it was the people that were producing the feeds.

Seth Goldstein: The way it works right now is developers are engaging with us via a tool that we provide on Facebook called “Absaholic”. It has a fairly loyal following of a couple of thousand developers who use it to track the success and the popularity of their applications relative to other applications. And within that framework, we also started to provide tools for buying and selling clicks across the network in an open and transparent manner like an auction market place.

Sean Ammirati: So do you chart? Is 20-30% a rev share?

Seth Goldstein: Right now that’s what it works out to be. We’re not religious about holding to it. 23% or something like that and we’re also pretty committed to not being a black box, to being transparent and open to really build trust in the developer community.

Seth Goldstein: My biggest competitor is the entropy and the internal conflicts of the advertising community. I was just talking to someone earlier today that building an enormous website and investing in it is the kind of new equivalent to the 30-second TV commercial. So that the ad agency community and many of the brands themselves have gotten conditioned that it’s really all about building big, enormous websites and driving traffic to them.

And yet what seems to be happening inside these social networks is that the users want to stay within them. They don’t want to leave. So if your advertising approach is to try and capture their attention inside the social network like Facebook and bring them out of it to a website, it’s just too expensive and it’s wasteful and it’s distracting to the user who wants to stay engaged in the social network.

But that’s really what it’s going to take and to me that’s the biggest challenge. It’s getting large advertisers and e-commerce companies to kind of get off their ass and start to develop, and iterate and take chances in may be what is an ephemereal way inside of these social networks.

Sean Ammirati: What are some of the advertisers that have done that so far with you?

Seth Goldstein: Very few. Right now the advertisers that we’re seeing are speculators. They’re pioneering Facebook application developers that had a little bit of money and are willing to pay for more users to get some critical mass.

Seth Goldstein: Absolutely. Without naming names there are a lot of Fortune 500 brands that are definitely starting to sniff around looking to develop custom applications, looking to both build them internally with their ad agencies or outsource them. Notably folks like MTV and Yahoo and others have started to build applications and release them on the Facebook platform.

But we still haven’t seen, you know, let’s take Detroit? Where are the car companies? General Motors, Ford, Nissan, you name it. There are a lot of very engaged college students that haven’t yet bought their first car. And that are no doubt very ripe for the picking in terms of brand loyalty. I think that auto companies could do a much better job of reaching natively inside the social network.

Seth Goldstein: Take chances. Don’t get hung up on your assumptions or get hung up on your plans. Be nimble. Make mistakes quickly. Don’t work with ‘yes’ people. Try to manage some balance of work and home. Look about 18 months out. No further, no closer. Work with people that can code. Don’t work with a lot of business people. I can keep going but that’s for now.

Sean Ammirati: That’s good. Thanks. Thank you very much.

And thank you for listening to this special episode of Read-Write-Talk: The people behind the web.