What's a Widget Worth?

Software developers say their impact is being underrepresented; comScore hopes a new measurement tool will paint a clearer picture

by Aaron Ricadela

Online social networks will continue to grab the attention of Web users and the advertisers who want to reach them in 2008, but some software developers who help make the networks popular say they're missing out on the spoils.

Social sites such as MySpace, Facebook, and Google's (GOOG) Orkut could crack $1 billion in ad sales by year's end. Yet makers of the so-called "widget" software, whose programs have helped propel the networks' growth, have yet to see much of that revenue, in part because of a lack of reliable data about how many people use their products. "There are a huge amount of page views in social networking, but no one's figured out how to monetize them properly," says Duncan Davidson, a venture partner at VantagePoint Venture Partners, which invests in News Corp.'s (NWS) MySpace and smaller social networks Multiply, FanIQ, and Bluepulse. "It's still an experiment."

Who's Using What Widgets?

Market researcher comScore (SCOR) wants to end the mystery. Considered by many to be the industry standard for audience tracking on the Web, comScore will use a revamped yardstick that could give advertisers, software makers, and investors a better handle on just how many people are using the programs. Under the new method of calculating, almost 586 million individual Internet users viewed a piece of widget software in November, 2007, according to an exclusive look at the data comScore provided to BusinessWeek.com. That's nearly double comScore's estimate in July, the last month it measured using an old system. ComScore plans to release the new widget usage data in mid-January.

What's different? For starters, comScore will now include activity on Facebook, one of the fastest growing social networks. The new method can do that because it records how many Web users click on a given widget. ComScore's previous method only tracked the presence of Adobe Systems' (ADBE) Flash software. That's useful since Flash is used to create many of the widgets used today. But the method didn't work for Facebook, which bars the automatic loading of Flash animations.

The new version of comScore's tool will also account for widgets built with JavaScript, a Web programming language, in addition to those based on Flash. ComScore also plans to measure usage of Google's Gadgets software in future surveys. Linda Abraham, an executive vice-president at comScore, says the new data could give software developers, and companies that want to advertise through their applications, a truer picture of who's using what widgets, and how often. "Widgets are looked on as not yet proven," she says. "We talk to widget companies all the time, and it comes up in every conversation."

"Lumpy" Revenue

Two of the biggest agitators are Silicon Valley startups Slide and RockYou. The competing companies make lighthearted software that lets users add pizzazz to profiles on Facebook, MySpace, and other sites by creating slide shows, comparing friends, or scrawling messages on each others' home pages.