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Facebook Places vs Foursquare: Who Will Win and Why It Matters

The Business Model and The Competition

Unlike most social media services, location based social networking has a rapidly developing business model. Whereas at present telling friends where you are may seem pointless or deliberately visiting areas multiple times to win badges absurd, it has attracted the attention of big business.

Consequently rewards, loyalty schemes and prizes are just some of the by-products being discussed. Imagine not needing a store loyalty card because every time you enter a particular store your simple presence within it will be counted and build towards discounts. Check in to three or four different stores owned by a retail group on a certain day and claim a prize, participate in a treasure hunt, be the thousandth person to enter a flagship branch. It may be tacky, but it has customer appeal and gives companies another string to their bow as they look to strengthen relations and improve brand loyalty. What's more, trials so far have produced results.

The best part of all for Facebook though is it doesn't need this to happen. Unlike Foursquare, it is already financially sound and while such commercial interest would be welcomed the primary aim is to provide users with another reason to use the site and to stick around longer. As I mentioned in my feature Facebook Terrifies Apple Google & Microsoft, Facebook's biggest weapon is its 500m user base. If it can bring even a fraction of them to any new venture it tries it can dominate that sector and fortify its business.

So if location based social networking is the next growth market where are the other major players? For now Apple and Microsoft have been looking more at working with Foursquare (I suspect one will eventually buy it) while Google has been in this space since February 2009 with Latitude. Unfortunately as the failures of Buzz, Wave and the stagnation of Knol, Answers and Orkut have shown, the search giant's Achilles heel has long been dealing with our more emotive needs for collaboration and social networking. Amusingly even Latitude only rose from the ashes of Dodgeball, a location-based social networking service it acquired in 2005 from - guess who? - Foursquare founder Dennis Crowley who subsequently quit Google in 2007 describing the experience as "incredibly frustrating".

As for the immediate future, expect other companies to jump on the bandwagon. As with any emerging sector we don't yet know how many competing services it can support and Facebook will face its usual privacy backlash having controversially allowed Places users to check their friends into locations as well as themselves. Meanwhile Foursquare is currently benefitting from the Places publicity with Crowley tweeting that Friday was its "biggest day ever in terms of new user signups."

A furious battle looms, but in the meantime you'll find me @...

...no, let's not go there.

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