Brad Stone’s story in the New York Times yesterday about the Facebook app business has sparked discussion about the ability to make money from Facebook apps. You can read some of the discussion on Brad’s blog.

I have been criticized by several of my fellow app developers and stakeholders in the Facebook app business for referring to the Facebook app business as a “pyramid scheme.” I wanted to clarify my position.

First, the app business is not a pyramid scheme. But there is a key component that is not sustainable — specifically the practice of apps buying users from other opps. I saw this happen leading up to the crash in 2000. The cycle was not healthy. Venture-backed ecomm company (Pets.com, Chipshot.com, you take your pick) raised gobs of money to spend on marketing with venture-backed consumer-facing media business (Excite, Lycos, GOLF.com, Industry Standard, etc.). When the venture money dried up, so did the revenues.

Fast forward to today. App company X raises money to spend with app company Y. When there’s no more app company money, the revenues dry up.

Now here’s the difference and why I don’t think the Facebook app business is a killer business that I’m investing significant money and time into. In 2000, there was no other money. Brands weren’t spending online. That’s not the case today.

Depending on who you ask, more than $15 billion will be spent in online marketing this year. And one of the fastest growing segments is social media, which is projected to reach $2.5 billion in the next 5 years. I would argue that the number is extremely conservative and will be much higher.

The reason I raised $1.5M to fund Buddy Media is because the Facebook app business is not about today. It’s not about how much money I can make from selling space to other app developers. It’s about 18-24 months from today when there will be 100M+ people on Facebook and they’re spending 30 minutes a day there.

In order to capitalize on this, you need more than a great app. You need a great business and they’re different. It takes a developer to create a great app. It takes a team to build an amazing business. We want both (great apps and a great business) and that takes resources — people, marketing dollars, a worldclass backend hosting infrastructure and more. All of this costs money and I am excited to have the resources to try to execute.