Aside from a few exceptions, the currency of the web (or at least, social media) is social capital. You know, the number of friends you have on Facebook, your 2 million views on YouTube, your “SuperUser” badge on Foursquare, your hundreds (or thousands) of followers on Twitter and Tumblr. None of those things have any direct monetary value, although some people are trying to cash in on them through things like the Twittad network, or a good old fashioned TV deal-a-Tequila. As things currently stand, money can’t buy you love or Elite status on Yelp; the only way to get that is by earning it through creation of “compelling content” and/or being an “influencer”. But something is in the works that’s going to change that, and potentially the way we view social currency in the online world.
Picture this: you’re playing an online game. You run around and interact with other players of the game, and get points for everything you do. You can buy things with these points, and give these points to other people. You can spend real money to get these points, or you can just earn them (although to get the really good stuff, it’s going to take a while). Sounds familiar, right? It’s Second Life, or World of Warcraft, right? Wrong. It’s Facebook. Or it will be, in about 6-12 months.
Last week, a sales rep from Facebook came to Flightpath to have a discussion with us concerning the most recent changes to the site. During the course of the meeting, he revealed that Facebook will soon be allowing users to earn Facebook Credits by simply engaging with their friends, whether it’s by “liking” a status, adding a friend, or posting a video. People will also be able to gift Facebook Credits to others, along with using credits to purchase gifts. In short, Facebook is going to have a currency. Holy Terms Of Service.
According to the calculations of Lightspeed Venture Partners, Facebook made $35 million on Facebook Gifts in 2008 alone. That’s right. Those tiny little icons for $1 (or 100 credits) netted Facebook tens of millions of dollars last year (which is paltry compared to Zynga's $50 million). Ok, you’re saying to yourself, so what? I don’t care about little icons on my profile. Facebook isn’t going to make any money off of me. Well, you’re right—for now. You’re also probably over 25. And while you may not care about a teddy bear icon or some other form of digital embellishment, there are at least 27 million other people who do. They’re kids under 12, and they’re the people Facebook is ultimately planning for.
Maybe not all of you have kids. But those of you who do, or who have ever been around a kid who’s 12 or under, know about Webkinz and Club Penguin. For the uninitiated, Webkinz and Club Penguin are sites that are essentially Facebook for the under 12 set, only instead of a picture of yourself and your dog, the kids are COPPA-compliantly represented by animated animals. A social network combined with a game, they can play for free, but the really good stuff (digital furniture, digital pets, special invites, etc) goes to those who fork over the dough. And fork over they do: with only 12 million registered members, Club Penguin made $35 million in profit ($65m in revenue) last year.
So what does this all mean? Well, it basically means that Facebook has the potential to make a lot of money. Kids who grew up having online access from an early age don’t have as many mental barriers between the online world and the real world. They don’t have problems spending a lot of (your) money to make their online room just as cool as their physical, brick-and-mortar room. Talking online for them is just another extension of talking in real life. So by attaching an actual value (10 credits, 15 credits) to the various actions one takes in the course of a 20 minute (or 4 hour) session on Facebook, Zuckerberg and Co. are actually monetizing social capital, which is pretty revolutionary. If you can get a special invite to a new Facebook feature by possessing a certain number of credits, you’ll essentially be able to buy your cool—which, ultimately, isn’t that different from the real world. But it’s certainly going to be a profitable revenue stream.
