Imagine Facebook as the stable currency of Web 2.0
Ian Schafer knows a thing or two about reading the online environment, his PR company Deep Focus won numerous awards for their online campaigns that leverage social networks such as MySpace and Facebook.
So when he starts wonderingout loud what the Facebook Credit Economy is going to be like over the next few years, I for one am going to pay attention.
First up, Facebook Credits themselves are just the latest digital version of the token you would buy at the local arcade – you pay in your own local currency via credit card billing, Paypal, or other online transaction service, and you get credits that can be used in a wide range of Facebok
Most Facebook users will be familiar with the digital gifts that you can purchase and give to other users, and while this might seem a basic idea the value to Facebook is measured in the tens of millions of dollars of turnover.
Credits are also available to the developers of Facebook applications, and while Facebook themselves will take a cut of any money that is made, providing a sticky and easy way for developers to monetise their applications means that all Facebook need to do is manage the confidence and supply issues in their economy.
Both are closely tied together, but the size of Facebook, and the perception that they are a safe and growing business means that people will be confident that the credits are actually worth what they cost to purchase, and can be used all over the website.
The second area is supply. The value of credits is obviously backed by the cash paid when the users pick up their Credits, so they clearly have value and there is a cash reserve so they can be cashed out if needed – but supply also reflects on a supply on places for users to spend the credits, and Facebook have been signing up developers and publishers into the system to keep this side of the equation balanced.
With a huge number of users, facilities to deposit and withdraw cash, and attractive places to spend money, Schafer is right to keep an eye on Facebook Credits and to see where developers take the financial system. In app transaction systems are the obvious route, but how long till you can pay for a coffee with your Facebook login?
-Contributed by Ewan Spence