How Facebook, Google, and Yahoo Are Making Ads Part of Your Life

The Valley's biggest players are all racing to be the center of your online life, collecting your photos, blog posts, Twitter messages, and comments into one stream — and then dosing it with real-time ads.

Facebook is unveiling a redesign (left) which replaces its friend-tracking News Feed feature with the Stream. The biggest difference: Corporate Facebook pages, for which users sign up to be "fans," can now place stories in the Stream much more frequently than they did with the News Feed.

Through a feature called Facebook Connect, Facebook already collects activities on other websites — like Flickr photos, YouTube videos, Digg headline votes, (and, yes, comments on Gawker Media sites like Gawker and Valleywag) — and posts them in the News Feed. Those will become even more prominent in the Stream.

The result: Facebook profiles will show less of what your real friends are doing, and more of what corporate pals like Starbucks and Ben & Jerry's are up to.

Facebook is not alone. Twitter's investors have been hinting that they're going to make money by helping companies have a presence on the site and get their messages out to users. It's not advertising like old-school banners or Google's text ads — it's something new, and more insidious.

Valley insiders call it "lifestreaming," but a more common term is "aggregation." ("Lifestreaming" is not to be confused with "lifecasting," which means broadcasting your life 24/7 on a mobile webcam.)

The trend was arguably pioneered by FriendFeed, a startup little-known outside Silicon Valley founded by some ex-Googlers. Like Facebook, FriendFeed pulls together updated of users' activities from across multiple websites and lets users comment on them. It has mostly been embraced by crazed early adopters who sign up for every new website that comes along. For people who have never heard of Plurk or Reddit or BrightKite, it's not as useful today — but the startup's ambitions have nevertheless sparked a competitive race for a market that barely exists today.

Google, the current king of online advertising, is racing to catch up to FriendFeed and Facebook. Last year, it poached Yahoo executive Bradley Horowitz, who formerly oversaw Flickr and other social websites, to run a secret social-networking project. We hear that's coming to fruition, and may be based on Google's Blogger blogging site, which already has user profiles. (Orkut, a Google-owned social network, will probably fall by the wayside; it is losing ground to Facebook in the few countries, like Pakistan, where it has dominated.)

Yahoo, even without Horowitz, has been proceeding with a plan to build a social profile; it may launch next month, according to a Yahoo insider. And AOL spent $850 million on also-ran social network Bebo, which is now merging with its AOL Instant Messenger chat client, in an effort to catch up to the lifestreaming trend. Microsoft, too, is experimenting with a social update service.

The goal with all of these is the same: Gather up users' scattered online lives, and then daub the result with personalized, real-time ads. Instead of waiting for you to search for something, advertisers will target every step you take on the Internet.

The irony, as ever in Silicon Valley, is that everyone is racing to corner a market that may not exist. Twitter is arguably the purest lifestreaming startup around, and it's not making any money at all; all of its business schemes are currently just dreams. Facebook's expenses grow with every user it adds. And yet Google, Yahoo, Microsoft, and AOL seem convinced that lifestreaming is a business they need to be in. Could it be, in the end, that our lives are not interesting enough for a commercial break?