Even as the globe has lurched into recession, the Facebook economy seems to be booming

Is Facebook a phenomenon — or a fad?

In the two years since Facebook opened its platform to outside developers, more than 300,000 Facebook applications, or "apps," have been created — games, quizzes, digital gifts and more. The successful apps boost users' engagement with Facebook — sometimes called "stickiness" — but do not directly provide revenue.

Piggybacking on Facebook has been profitable for several startups. Zynga, which according to some reports is raking in annual revenues of $100 million with the poker game Texas Hold'em and other games, has grown from 45 employees to more than 250 in the past year, Pincus said. About "70 percent, perhaps 80 percent" of Zynga's growth, he said, could be attributed to Facebook.

Flixster's growth also illustrates Facebook's role as a driver of Web innovation. Founded in January 2006, Flixster.com was attracting about 4 million monthly unique visitors when Facebook opened its development platform. Fearing competition, Flixster built its own Facebook app. That app's traffic quickly surpassed visitors to Flixster.com.

More recently, Flixster built an app for Apple's iPhone — and it's activated via Facebook Connect. "It's the glue," Greenstein said.

The success of Facebook's development platform has inspired a trend: Google, MySpace, Twitter, Bebo, Yahoo and the Apple iPhone have all opened up to outside developers.

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