Last Thursday, Facebook officially announced the alpha testing of their Facebook Payment platform. While they are just rolling it out now, it certainly hasn’t hindered a virtual goods ecosystem from forming across many applications. Certain bloggers have even predicted up to $500 million in 2009 virtual goods revenue for application developers. But now that Facebook has started focusing on a key component which will accelerate the development of the virtual goods ecosystem, how will this impact virtual goods sales on Facebook? 1. Facebook Payments Will Expand The Market Of Virtual Goods Purchasers Facebook’s...

The Virtual Goods industry is growing extremely quickly. Some estimate the size of the industry to reach $5.5 billion globally this year, and it is just beginning. There is no escaping the fact that consumers spend money on virtual goods, even in economic down times. Others in the virtual goods industry, such as Charles Hudson and Jeremy Liew, have written articles explaining the psychology behind buying virtual items. Yet, the question of why people spend money on virtual goods is still one of the most common questions I am asked. So I decided I would add an additional perspective as to why...

Jeremy Liew over at Lightspeed Ventures had an interesting post today titled, “Top Social Networks For Engagement” where he proceeds to list out of the top social networks in rank of engagement. I was glad to see some lesser known communities like VampireFreaks, which I have covered before, on the list. Jeremy defines engagement by average pages per visitor per month, and average visits per user per month. I think Jeremy did a good job on the post, and he definitely includes a lot of valuable information. But the question that becomes most apparent to me is, is this the best way...

I think a lot of people don’t understand that when it comes to building an amazing online community, it is less about the features, and more about the environment that you create. Many have a hard time grasping this concept because a community’s environment is an intangible item. You can’t explain it in numbers, or paragraphs of text. Its just there. And if you partake in the community, you know when a kick ass environment exists, and when it doesn’t. Do features, design and UI help create the environment? Absolutely. But...

There are user interaction designers, user interface designers, ui architects, user experience gurus, etc, etc. With communities there is a new breed of designer that is becoming extremely valuable; social interaction design. A lot of UI design in the past was focused around strict conversion. Monetary conversions, converting to a registered user, converting users to more page views, conversion from one step to another. But in a community or social network conversion to certain actions are important, there are many other factors at play. Social interaction design isn’t about strict conversion...

Last night in the shower (yes, the shower…I do my best thinking there) the question came into mind, will an online community ever offer stock options to community members? It sounds ridiculous at first, but there are some interesting reasons for why it might happen, and at the same time be a very powerful community builder. 1. Companies offer stock options to employees, employees help build the company. Community contributers also help build the company, just in a different way. 2. The same economics of stock options apply. The early users would get bigger chunks of stock options than...

There is no question that the new Facebook platform is going to have a massive impact on the market. A FB app and integration is going to become an essential part to any social site and startup, just like the rage of widgets was middle of last year. With only days under its belt, we’ve already seen one massive success with iLike’s music service. Despite all of this I do think that there will be challenges for developers and entrepreneurs ahead: Overcrowding With massive popularity, the Facebook platform is going to get flooded with new applications. It won’t be long until...

Articles such as this one, “Pitfalls Ahead for Social Networks?” from InternetNews can get me really riled up sometimes. There are still a lot of critics of social networks. It might be different people, but it is always the same arguments. They are trying to answer new problems with old solutions. How well does that work? Valid concerns? Yes. Unsolvable Problems? Absolutely not. When search came along in the late 90’s everyone wondered how they were going to monetize it. They tried to fit old solutions to a new problem by turning them into portals. Then….the google...

Social Networks are often criticized as having a hard time at being profitable. Most are supporting themselves in one of two ways, traditional online advertising, or a subscription model. But I wanted to briefly take a look at some other ways that social networks are trying to increase their revenue streams. Virtual Gifts The next largest monetization method taking form behind advertising and subscriptions are virtual gifts. With the massive success of virtual gifts in foreign markets (i.e. Cyworld) a lot of US properties have started experimenting. Most notably Facebook recently launched their...

A challenge for every online community is getting users to engage and participate. Many sites see an incredibly high churn rate for new users. A common response is to go back and add more features, change the layout, or edit the messaging in an effort to create more “hooks” to participation. But I contend that while all of these things may have an impact, the deciding factor of if a user will engage is the context in which they enter the site. If a user enters a site through an online advertisement, radio ad, spam, or some other blatant promotional effort, they don’t value...