First of all, I do believe location based services are going to be big. And foursquare and gowalla have gotten some things very right. Specifically, the idea of a checkin process is right on the money. No one wants to have their entire movements recoded and available on the internet (Google Lattitude, I’m looking at you). The user should decide when they want to advertise that they are in a location. What I think both of these services have not gotten right is the motivation for checkin in. People are going to do that because there is a benefit to them. Maybe they’ll get some good advice or tips about the place. In a restaurant, I want to know what’s really good on the menu. And what’s bad. If it’s a store, are there coupons I can use. Now to be fair, one of the problems with being the 1st app o the block, is that without a big user-base most of this doesn’t work. Hence why foursquare and gowalla use gaming techniques to get people to checkin more. I’ve heard businessmen talk about wanting to be the ‘mayor’ of a location on foursquare. Really! To be sure, gaming has allowed foursquare and gowalla to build that initial base. But gaming is not the end goal.

The issue I have is that a badge can’t be the real reward for checking in. These apps needs to give me a real return on my investment. And here is where Scoble’s post really makes sense. He talks about the malleable social graph. What he means by that is that your social graph adjusts based on what you are doing. He gave the example of going to Napa Valley winerys. If you are looking for advice on that topic, your social graph should be adjusted to only include people that have some knowledge of that topic. Maybe they live close by, maybe they are big wine buffs, etc. The point is, you are on a quest (to enjoy fine wine) and you want you social graph to aid in that goal. Right now most social graphs don’t have the ability to make those kind of adjustments.

One thing that Scoble didn’t talk about was the need for a much deeper reputation system on our social graphs. If I’m interested in wine (because I’m in Napa Valley), my social graph needs to know who knows about wine. If I’m struggling with a home repair, my social graph should know who is good at that kind of thing. One thing that foursqare and gowalla could easily do is make their badges meaningful. Have a badge for being a wine lover, another for being good a house repairs. While they are called badges, what they really are is the beginning of a deep reputation system. When I meet someone at a party, you spend the first few minutes getting to know each other. You are basically learning about their background, interests and skills. Wouldn’t it be great if you could immediately see a list of their interests and find out what you have in common. I’m sure I’ve met lots of people that I could have made great connections with if only I was able to find the common links. I remember telling someone I had just met how much I was enjoying watching the winter Olympics. Her response was that she didn’t like sports at all. If I had known a bit more about her, I could have talked about something that both of us would have found interesting.

Hats off to foursquare and gowalla for getting the ball rolling. They are making real inroads into location services. Buts we’re only in the early stages. As far as the technology goes, we have not crossed the chasm yet. Scoble’s thoughts provide some really good suggestions on where we should go next. I believe a deeper reputation system needs to be part of the solution. And the elephant in the room, Facebook, has yet to show its cards (I’ll be going to F8 next month to see if they have anything interesting to announce). Either way, with all the attention this area is getting, I’m sure that it won’t be too long before I start ‘checking in’ to places I visit.

On Facebook, apps are tightly integrated into the Facebook UI. Apps appear right in Facebook pages, you can discover new apps in the global directory and apps can add make updates to the news stream. All these means that if you have a good app, you can get away with a fraction of the marketing that you normally have to do. This opportunity has driven a lot of developers to create a Facebook app. Today there are over 500K apps that have being created (500K by Facebook’s own stats).

With LinkedIn, your app does not live inside the LinkedIn site. In fact, the LinkedIn API is more like Facebook Connect, which is geared for companies that already have their own website. It allows your site to not require users to have to create a new account on your site and allows you to access the user’s Facebook data. But as mentioned, all this happens on your own site. It is up to you to find ways to drive new traffic to your app. While there is an app directory on LinkedIn, it only has 13 apps on it. In terms of the actual API, it’s fairly robust. You are able to get at all of a user’s profile information. Also, you can get their connections and do updates to a user’s status.

So as long as you already have an installed base or feel comfortable building your vistor/customer base in the traditional way, the LinkedIn API does allow you to add social type features.

So while its great to see Facebook continuing to improve their payment system, what the larger Facebook development community needs is to have Facebook hurry up and finish the long drawn out beta that they have had for Facebook credits.  All is not gloomy though.  In 2010, social gaming is estimated to be a $1.3B business and in Asia it’s already a $7B business (http://www.slideshare.net/plus8star/social-networkings). But transacting payments with users is easier for the big companies like Zynga.  The bigest beneficiary of Facebook opening up their payment system, will be all the smaller developers, of which there are many.

Still, hats off to Facebook for now working with Paypal. I’m holding my breath that they are hard at work at finishing up the beta for their credits system so that all their application partners can benefit.

UPDATED: Looks like Facebook is suggesting Credits might come out of beta fairly soon. http://developers.facebook.com/news.php?blog=1&story=364