Wednesday, June 3, 2009

Social Networking Going User Pay

In an unsurprising move, Financial Times reports, Facebook informs people of the coming payment/credit system being implemented to increase revenue by 1/3 beginning soon.

Facebook Brings in Payment System
By David Gelles

Published: June 2 2009 17:36 | Last updated: June 2 2009 17:36

Facebook has begun tapping a new revenue stream with the introduction of an internal payments system, a move that might help the fast-growing social networking website achieve profitability while being less reliant on advertising.

The long-rumored payments system, which is in its early stages, will allow users to purchase Facebook credits, then use those credits to buy virtual goods from the third-party applications that run on the site, or from Facebook itself.

Facebook hopes that by offering a site-wide currency it will encourage more commerce on the website. By serving as the payment provider, it will capture a percentage of every transaction.

Over time, this will be very significant, said Ray Valdes, an analyst with Gartner Research. Social networking sites have suffered with monetizing [their services], but this leverages [the fact that] users are there on Facebook.

Mr Valdes said revenue from its payments system could soon represent one-third of Facebook’s income.

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