You'd think there'd be a pretty large market for professional internet headline writers these days since it seems to be all you need to do to get some traction for an otherwise absurd post
I dunno... I have a hard time believing that charging actual money for pictures of flowers and puppies is really the game-changing business plan Facebook has been looking for. If they can find some 'virtual goods' that have value beyond 'aww, that's cute,' my opinion might change. Any ideas?
> If they can find some 'virtual goods' that have value beyond 'aww, that's cute,' my opinion might change.
I really, really wish people would stop boiling "Virtual Goods" down to "cute pictures of cats". If it were that simple, there wouldn't be a 9-figure virtual good economy on Facebook today.
He boils it down to three big categories - Doing More, Building Relationships, and Establishing identity. Of course, these are all things that we realistically lots of money for in the real world. Therefore it's not a stretch that there is a subset of people who are willing to pay money for these things online.
In the same way MySpace has proven that US social-network traffic can be monetized by ads, tencent has proven that Chinese social-network traffic can be monetized by virtual goods. To the tune of 800M and 1B respectively. The question isn't "is the value there", the question is - are you monetizing your international traffic sufficiently?
Zynga and Facebook accounted for over $80 M in virtual goods in 2008 between the two of them. The revenue numbers from payment processors (Gambit, Spare Change, etc) easily account for the rest.
> I really, really wish people would stop boiling "Virtual Goods" down to "cute pictures of cats". If it were that simple, there wouldn't be a 9-figure virtual good economy on Facebook today.
> He boils it down to three big categories - Doing More, Building Relationships, and Establishing identity.
It will be interesting to see if Facebook can expand their strategy to include these. I contend that they are not really doing so now - GIF's on a FB wall are not meaningful ways of building or maintaining a relationship, and I pity/dread a world in which they are.
Doing More - Can FB legitimately charge for certain features on their site? I would pay to remove ads, but I can't think of much else. Since they have an free/open apps API, almost any feature they could think to charge for could easily be replaced by a free app, no?
Building Relationships - Again, I think people will soon realize that gifts on walls do not actually provide any tangible relationship value. Are there any services they can provide that do? I can think of one - networking, hooking me up to potential employers, partners, VC's, etc. The problem here is asymmetric power structures: I might pay a little money to meet some local people who share some of my same interests and hobbies, and so might they. However, I'd also pay money to get my name in front of a big VC, but what incentive would the VC have to pay attention and follow up?
Establishing Identity - I'd bet that 90% of users today are happy with the 'identity' that the standard facebook profile gives them, and those who aren't can add apps to augment it. The only niche I see is enabling custom page layouts and designs for paying users, and seeing as how they've held out on this for many years (even with lots of pressure), I don't see it happening anytime soon.
I'd gladly take this a little more seriously if you could come up with some concrete examples of virtual goods FB could provide. Whether you call the current economy of virtual goods "relationship-builders" or "silly," it is currently comprised almost entirely of image-based "gifts." Unless these sites figure out some meaningful ways to augment them, I'd bet this revenue stream turns out to be mostly unsustainable.
Virtual goods sold on Facebook extend beyond what Facebook themselves sell, because of third-party apps. (Think in-Facebook RPGs where users can real cash to buy items, or flash games where you can use real cash to buy a new gun)
