Facebook Credits Get More Powerful, Hint at Facebook's Money-Minting Future

Mark Zuckerberg

Facebook's just signed a deal with PlaySpan, a marketplace for buying and selling digital goods, and added 20 new payment options for Facebook credits in one fell swoop. Combined with the new Bing search deal, it's a strong hint that Facebook has designs on all sorts of Web-dominating strategies for the future.

During the announcement about new payment partners, Facebook also revealed a few upgrades to its Credits system overall. It's now got the capability to add in three or four times as many credit partners to the scheme as it could previously—credits will now be available in over 50% of game systems on the network. The big push is to establish Credits as a Facebook-wide offering, which will encourage users to spend more on the system as there are fewer barriers to adoption (if, for example, different in-Facebook games had different credit systems, you'd probably be reluctant to sign up to too many of them).

The driving forces behind this are, not surprisingly, money and expansion. The cash income is the simplest part to understand: Facebook gets a 30% skim off every transaction in Credits, and so if it can tempt its millions of Facebook game addicts to use the system more, it'll result in a nice revenue stream. Credits are also proving to be a neat way to promote premium services, since they boost perceived value of the thing you're paying for—and a premium service will obviously earn Facebook more cash.

The move is more than that though. Combined with yesterday's partnership with Bing, and Zuckerberg's proud mention (during the recent press event) of the millions of people who use Facebook as an online photo repository, Facebook Credits is a huge hint that Facebook has some very expansionist plans for its future. After all, with 500 million people using Facebook, Credits could almost become a de facto world currency (with more relevance than Second Life's Linden Dollars—which already got economists excited).

Credits could be a very strong spine to support all of Facebook's potential expansions—from music downloads to premium photo sharing—all paid for with Facebook's own virtual currency.

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1 Comments

  • Joe Wagner

    Facebook Credits are well-positioned to become a leading virtual currency, but by taking 30% of every Credit sale, Facebook is limiting usage of Credits to digital items / virtual goods that have zero marginal cost. Sellers of real world goods, on the other hand, will be reluctant to deal in Facebook Credits because their goods and services can't be sold profitably with Facebook taking 30% off the top. For these merchants, 3% fees with PayPal and credit cards sounds a lot better than 30% with Facebook. So, Facebook will have to decide if it wants to make a huge margin on a small but rapidly growing virtual goods market or a much smaller margin in the combined digital and real world markets. If they want Credits to be everywhere, they should probably consider the 3% option.