
Why hi5 Might Have an Edge on Facebook - babyshake
http://20bits.com/articles/why-hi5-might-have-an-edge-on-facebook/
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brm
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

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jfarmer
Hey, thanks for the constructive feedback. I really appreciate it. :)

Is there anything specific you disagree with, or do you just think it's absurd
in general?

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dandelany
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?

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teej
> 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.

What value do people get out of Virtual Goods? Good question. Let's ask Jeremy
Liew - <http://online.wsj.com/article/SB123395867963658435.html>

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?

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dandelany
> 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.

It's 8 figures (between $28,500,000 and $43,500,000:
<http://news.cnet.com/8301-13846_3-10030354-62.html> ), and consists almost
entirely of cute pictures of cats (and dogs and hearts and thongs).

> 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.

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paulgb
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)

