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The 30% Edge of the Wedge at Facebook

  • By Timothy Roberts
  • Tuesday, February 01, 2011

And now back to Facebook, as Mark Zuckerberg’s social network continues to push forward their virtual currency, Facebook Credits, and the handy for their bottom line 30% revenue tax. I’ve already raised my eyebrow at that 30% cut. It sounds nice and Web 2.0 (given it’s a similar number to that employed in many of the mobile application stores, such as those from Apple and Nokia), but it’s much higher than other payment methods.

While the likes of Zynga (Farmville, Cityville) and Playfish (Restaurant City) do make use of these alternatives, such as American Express loyalty points. Facebook Credits are still one of the largest drivers into the game. I was especially interested to read (via Inside Social Games) that while those alternatives have a lower fee to companies using them, the bulk nature of Facebook Credits means there is more raw income for the developers. That’s on top of the benefits of having the Facebook system promoted on an app running on Facebook to give users confidence to make a payment and get started with the currency.

Of course there’ must be an unspoken element of “you’re on Facebook’s highway, it might be a nice idea to use Facebook Credits” in all the negotiations and discussions. Applications need to monetize themselves, especially when they have hundred of thousands of users on the social network sites. For the moment Facebook is on the right side of the argument, but as the biggest gorilla in the room, they need to tread carefully.