Yesterday the Wall Street Journal had an article entitled Why So Many Want to Create Facebook Applications which gives an overview of the burst of activity surrounding the three month old Facebook platform. If a gold rush, complete with dedicated VC funds targetting widget developers, around building embedded applications in a social networking site sounds weirdly familar to you, that’s because it is. This time last year people were saying the same thing about building MySpace widgets. The conventional wisdom at the time was that sites like YouTube (acquired for $1.65 billion) and PhotoBucket (acquired for $250 million) rose in popularity due to their MySpace widget strategy.

So, why would developers who’ve witnessed the success of companies developing MySpace widgets rush to target a competing social networking site that has less users and requires more code to integrate with the site? The answer is that MySpace made the mistake of thinking that they were a distribution channel instead of a platform. If you are a distribution channel, you hold all the cards. Without you, they have no customers. On the other hand, if you are a platform vendor you realize that it is a symbiotic relationship and you have to make people building on your platform successful because of [not in spite of] your efforts.

Here are the three classic mistakes the folks at MySpace made which made it possible for Facebook to steal their thunder and their widget developers.

This is pretty much the story of all successful technology platforms that fall out of favor. If you do not invest in your platform, it will become obsolete. If people are always scared that you will cut off their air supply out of jealousy, they’ll bolt the first chance they get. And if people can’t make money building on your platform, then there is no reason for them to be there in the first place. Don’t make the same mistakes.

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