Breaking: Facebook adds New Revenue Channel: Social Gifts

February 7, 2007 - Get free updates of new posts here

This is something I knew about when I worked there but it is finally live today, Gifts. I think most people will see this as something to buy for Valentine’s day and for supporting breast cancer but the real question is will this be a significant revenue model for Facebook.

Will college students care to show social capital through buying virtual gifts for each other?

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23 responses to “Breaking: Facebook adds New Revenue Channel: Social Gifts

  1. Pingback: Facebook Testing Virtual Gifts

  2. Marshall Middle Reply

    I don’t really see this taking off. I’ve seen other places were you can purchase virtual items for your virtual self (Meez), but I don’t think that this will be as profitable as selling advertising space.

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  5. sri Reply

    This is so silly!!! This is along the lines of microsoft trying to make money by allowing private vendors to sell ‘avatars’ or emoticons for msn messengers.

    Dont these idiots ever do market research? If they want to see this take off, they should charge a penny for the gift. Then perhaps that would entice college students. Then again, how much can they really make.

  6. Nathaniel Reply

    Naw, Noah’s right: this could be huge: I remember reading about a South Korean social network that had monetized this way—selling users trinkets for the equivilant of about a dollar. They ended up making an average of 55 cents per user per month.
    $0.55/month x Facebook’s 7.5 million users* = $4,125,000/month
    And sure, college students are cheap, but we’re talking about a buck: the biggest barrier is signing up for Paypal or entering your credit card number.

    *I have no idea how many people are on facebook. This is according to Wikipedia, but as of 2005. I’m sure it’s much more now.

  7. Nathaniel Reply

    Naw, Noah’s right: this could be huge. I remember reading about a South Korean social network that had monetized this way—selling users trinkets for the equivalent of about a dollar. They ended up making an average of 55 cents per user per month.
    $0.55/month x Facebook’s 7.5 million users* = $4,125,000/month
    And sure, college students are cheap, but we’re talking about a buck: the biggest barrier is signing up for Paypal or entering your credit card number.

    *I have no idea how many people are on facebook. This is according to Wikipedia, but as of 2005. I’m sure it’s much more now.

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  9. sri Reply

    Attention Facebook! Sell yourself to a big corporate giant and get out before your market value drops. All these social network sites are a hype! You cant really make much money off them. I really dont know how myspace became so popular. Every page I have been too looks so messy and yucky!!! WTF is so attractive about myspace. I dont get it.

    Google’s 2 big major mistakes
    1) Buying Google Earth.
    2) Buying YouTube for that price.

  10. Noah Kagan Reply

    Nathaniel,

    Cyworld (Korea) is making hundreds of millions all off of virtual gifting. Yes, it is a different culture but the idea that it works so well somewhere is interesting. Also, there is a similarity with so many people spending real money in Second Life should suggest there is some potential….

  11. Jason H. Reply

    Cyworld just launched its U.S. version a few months ago, I wonder how they’re doing with their virtual currency with the American users so far?

    I think this is gonna be a minor hit, especially among the Male Facebookers, who forgot to buy a Valentine’s Day gift at the last moment.

    Nervertheless, Kudos to them for donating a portion of the revenue to charity :)

  12. sri Reply

    Japan, korea is a different market. Hello Kitty is a huge phenomena there….perhaps a billion dollar industry.

    College students in Asia are VERY different than college students here. College students in ASIA have money to spend. (I am from Asia).

    IF you have it, flaunt it. Thats the Asian style. Education is taken care of by parents in Asia, so there is usually no such thing as working towards college etc…So asian students have more spending power than US students. (When i say Asian countries, I am talking about selected Asian countries)

  13. Jason L. Baptiste Reply

    thumbs down from me. The throwing shit at the wall to see if it sticks strategy shouldn’t be in FB’s gameplan. The same way they built the community and userbase, they need to build their revenue models. The fact it’s for charity right now, is great.

    -JLB

  14. Nii A. Reply

    This might get some initial traction due to its initial novelty and valentines day (great timing on their part) I don’t think the American 15-22 year old is open to paying real money to give virtual gifts to real friends. Remember, Cyworld is an avatar based social networking site where the avatar takes precedence over the actual person. You buy/sell/trade articles of clothing/accessories for the avatar, not the in-flesh person. A more comparable website with a virtual gift giving feature would be HotorNot, who has run a program like this for years this for years for ‘real profiles.’ Though the program will likely generate incremental revenue, it’s unlikely to be a huge game changer or differentiator for facebook.

    -Nii A. Ahene

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  17. Doug Reply

    I’m a real college student… I use facebook and guess what: I got rid of my myspace account the moment I realized it was the hangout for people trying to steal my money. If facebook continues to try to make money I’ll choose to remove my virtual self from there too. I don’t know if I speak for college students outright, but the thing is, many of us have been living at computers for too long; we could make better icons than they’re trying to sell! I just don’t see the use.

  18. Arden Long Reply

    It is very popular in Asia. No doubt.
    Somebody paid 1500USD to purchase a virtual autobike in community, you even could purchase a autobike in real life in this price.
    About 4 years ago,I am surprise at this. But now,everybody used this.
    Maybe western users will have a little different,but it would works,anyway.
    Best regards