This article was published on January 24, 2008

Social networks making money through giving presents


Social networks making money through giving presents

Two weeks ago we ran a story about the main problem of Facebook: monetization. Dave McClure, an internet expert from the Valley, wrote an extensive post about this matter. Now Lightspeed Ventures discovered a good flow of Facebook cash: those corny digital gifts.

Facebook | Gift ShopLightspeed tracked the number of available gifts for a seven week period to better understand the sales rate of digital gifts. They excluded the free gifts, and found out that the average number of sales per week for a gift was 846. Since there were 322 different gifts available this means that 272.412 people are making other people happy with a 60 by 60 pixels birthday cake, hugging teddy bears or a freaky clown.

It’s easy to make fun of the concept, yet the numbers are pretty good. The price of a gift is 1 dollar, that implies an annual run rate of just under 15 million dollars.

My advice for European social networks, introduce this concept right-a-way. We have the euro, so you guys would even make more money per gift. Find a slightly different locally-adapted format and start monetizing. What about an (extended) cupid service on Hyves? For a few euros, the social network sends a iTunes love song to your secret love. I’m sure some users would be interested in such services.

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Giving presents is an important aspect of the social discourse, so why wouldn’t the social networks make some money out of it?

[WebTipr: Yaniv Solnik, Israel]

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