How Airtime could end up filling Facebook's coffers

The much-hyped Airtime launched today, with Sean Parker and Shawn Fanning running the show. It's a risky bet -- but if it pays off, it could return big dividends to Facebook.

Paul Sloan Former Editor
Paul Sloan is editor in chief of CNET News. Before joining CNET, he had been a San Francisco-based correspondent for Fortune magazine, an editor at large for Business 2.0 magazine, and a senior producer for CNN. When his fingers aren't on a keyboard, they're usually on a guitar. Email him here.
Paul Sloan
5 min read

Sean Parker and Shawn Fanning Airtime

When Sean Parker and Shawn Fanning launched their latest startup this morning -- a social video chat service called Airtime -- you can bet that one person hoping for its success was Parker's longtime pal and onetime business partner, Mark Zuckerberg.

Zuckerberg wasn't on hand at the celeb-filled launch in New York City -- though Zuck was spotted on Airtime later in the day -- and this wasn't a Facebook event by any means. But the pitch by Parker, who was Facebook's founding president and still owns a chunk of the newly public company, at times sounded very much like Zuckerberg -- at least the Zuckerberg who talks about connecting all of humanity.

"We are building a network service very different from a consumer software product," said Parker. "It's not something you can hold in your hand; the value is all in the connections between users."

And that, of course, is exactly what gives Facebook its value -- the 526 million people across the planet who use Facebook at least once a day, and 901 million who do so monthly.

Punching up the social part of Facebook
Airtime, like so many sites across the Web, uses Facebook Connect as a way to let people log in. But it goes farther than most sites; this isn't about sharing what you're doing in your News Feed. In many ways, Airtime seems like a Facebook feature -- almost like something that Facebook should have built itself.

At its basic level, Airtime allows simple video chat with your Facebook friends. Fire up Airtime and the site shows you which of your Facebook friends are also available. That's easy enough, and something that frankly seems expected at this point. Google offers instant video chatting via Gmail. Google+ has hangouts. It's only logical that Facebook should have this, too.

Zuckerberg himself started talking up video chatting last summer, when he announced an integration with Skype with much fanfare. He rolled out the service at an event at Facebook's headquarters, and spent time talking about how much people wanted video chat baked into Facebook. Then, Skype deepened the partnership last fall by adding Facebook video calling to Skype's desktop apps -- so Skype users could initiate a video chat with someone on Facebook without having to log onto the social network.

How many people are using Skype through Facebook, though, is unclear. A spokeswoman for Skype said that the service, now part of Microsoft, has 250 million "monthly connected users," about half of whom are using Skype for video. But she wouldn't break out the usage by platforms. A Facebook spokeswoman also wouldn't share details.

The key to Airtime -- though this could be the thing that could also make it flop -- is that it lets you meet strangers. This is why it's being compared with the short-lived Chat Roulette, although Airtime claims that it has measures in place to prevent it from deteriorating into a porn platform. Airtime takes your likes and interests and, if you want, connects you with people who share some connection -- either through friends or through interests.

What the audience for this looks like is unclear at best. But even if it turns to be just a small sliver of Facebook users, that could be huge. The fact that Airtime is so easy to use could help it achieve Skype-like numbers quickly. Moreover, the people most likely interested in meeting new people -- presumably the younger set -- are exactly the users Facebook needs to keep on the site. A successful Airtime could help keep Facebook cool, and that's no trivial thing for a site that large.

At the launch, Parker said he's hoping Airtime will spice up online life. A question he keeps asking himself, he said, is, "Why is the Internet so boring?" People's habit of "looping" in and out of their social network isn't fun anymore, he said. "There's no serendipity."

More video chatting leads to more data
If enough people agree with Parker, that will help Facebook with what it needs more and more of: data. Rich and accurate data, after all, is the only way Facebook can make more money, which for now is almost entirely through advertising. And with Facebook's stock now 29 percent down from its offering price of $38 a share, money must be on the minds of execs at Facebook.

If Airtime catches on, those who use its social features are likely to start paying more attention to what they "like" and don't like on Facebook. For Airtime to do a good job of connecting you to people who share your interests, it's important for you, the Facebook user, to do a good job selecting the things that really do interest you. (Changes you make to your interests on Airtime aren't reflected on Facebook, however). Don't want to be connected to fans of, say, the Toyota Prius? Then unlike that brand.

Maybe you want to meet people to talk about Maroon 5 or -- gasp -- "American Idol." Airtime will encourage you to like those brands, and that, in turn, will help Facebook figure out smarter ways to target ads or offers that you might be interested in.

Zuckerberg has to love that. In fact, now that Facebook is sitting on a pile of cash -- having pulled off the largest and messiest tech IPO in history -- it wouldn't be surprising if Facebook eventually acquired Airtime outright, taking the Instagram route.

Like Instagram, Parker might find it easier to sell to Zuck than to come up with a business model. If he does, though, odds are good he'll want more cash than stock.

But Airtime certainly has some big hype to live up to. These are the boys who launched Napster, after all. They've also raised $33 million from some big Silicon Valley investors -- many of whom, incidentally, were key backers of Facebook. That includes Accel Partners, Peter Thiel's Founders Fund (where Parker also works), and Andreessen Horowitz.

And judging by today's live demo, a presentation filled with technical flubs, the service still has some kinks to work out.

CNET's Greg Sandoval contributed to this report.