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May 10, 2008

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Larry Yudelson

Facebook may have been silly to accept such a valuation, but a quarter billion dollars was probably worth it for a foot in the door of what is, after all, the Holy Grail of Web 2.0: The single sign-in.

I discovered this when it came time to upload graduation pictures and videos to share with the grandparents. If I upload to Snapfish or Flickr, my parents need a password, or I have to forward a particular URL, or the pictures will be public. Facebook promises one account which lets my parents and cousins -- but not random strangers -- see the cute pictures and video. So while I'm sure Flickr and Picassa offer better features, I'm sticking to Facebook. And pictures of the grandchildren will be the killer app that makes my mom sign up.

Why is this important? Let me give you an example from my line of work: Publishing. There's a problem with e-books. How do you impose a reasonable license on an e-book, so you can read it on your iPhone or Palm, and maybe even lend or give it to a friend -- but not have it circulating freely on usenet?

Clearly, linking an e-book to a user is a solution. (Kindle solves the problem in its own way, but neither users nor publishers want their books to be locked to an Amazon-owned device). I'm sure that's the idea behind Adobe's new Acrobat.com PDF site. But another password for e-books? Feh.

Enter Facebook. As Facebook heads toward 100% penetration, associating one's e-book library with one's Facebook identity makes a lot of sense. I suspect that for MS, owning that identity piece rather than any IPO end-game was the point of the purchase.

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