Silicon Ally Insider reports today that Slide is giving up making new FB apps. Instead they intend to focus on monetizing their existing apps. Just last week Slide also announced the opening of a new office in NY specifically focused on selling advertising, so does this spell trouble?

Top FB apps are apparently not selling their ad inventory so easily.

slide Slide says NO MORE Facebook Applications

Max Levchin (co-founder of Paypal) founder of Slide is no lightweight in the startup arena, with more cash on hand than most after the recent $50M funding round that put a $500M valuation on Slide, Max appears to be sending out a very dark signal about the value of top FB applications.

Slide currently hold positions two and three in the leader board for most active FB users with their FunWall and Top Friends apps reaching four million users daily, they are probably better placed than anyone to make money from this traffic, but if they can’t make money, can anyone else?

Dilemma: Users or Developers?

The problem is that FB have shut the doors on viral for apps. After receiving a flood of complaints from irate users who set up hundreds of user groups complaining in a backlash to the early spam from application requests, FB then closed the doors, effectively throttling ‘viral’ apps. Early adopters already past the gate were in, new comers were out. Simple but smart?

Facebook in fear of loosing their user-base because of app spam reacted limiting app requests to just a trickle, now application developers are reacting harshly asking what’s the point? Given there are no profits anywhere insight for FB and the current top players in apps are saying NO MORE, it begs serious questions for the future…

In reaction to the mess of Myspace profiles and spam, FB built their user-base up on a diet of a clean styles and no spam, then when the API came along so did the spam. But the API was the secret source that Myspace didn’t have and it was the API that propelled FB into the limelight with an entourage of apparent overnight success stories. These apparent success brought with them thousands of free developers all competing to add value to FB which forced Google and Myspace to follow API suit.

Steven Carroll’s Four Point Plan to stop FB from sliding into the pit:

1) Accept it! Spam is fundamental to growth. You need more of the right kind, not less of all of it.

2) Instead of completely blocking applications, open the flood gates on a logarithmic scale, forcing apps to gain trust before they get to spam the network, but let them have a chance!

3) Competition is King! Early apps that got users quickly should loose users just as quick, what goes up must come down. There is nothing working against apps to bring them back down. Apps should be constantly and automatically threatened with removal if users don’t use (want) them.

4) Advertising is Queen! Current advertising space is too limited and too complicated for app developers to individually sell. FB need to adopt a proper advertising sharing model with application developers. Advertising should be automatically integrated as part of an application, which is sold by FB and sharing 70% of profits with developers (like Google Adsense).

Only by making fundamental changes which increase the noise level (then automatically remove it) can FB hope to reverse their current trajectory of a downhill slide…