Facebook Credits

I find the virtual currency economy an interesting area. Cyworld and SecondLife have been successful in implementing their virtual currencies, but many others have failed such as Flooz.com. In recent weeks, the buzz about Facebook’s Credits, a virtual currency system that allows users to purchase virtual gifts or send the currency to friends. Facbook's objective is to generate revenue streams by fostering commerce on its platform. The currency system encourages participation by having users develop more content, and accumulating credits. Facebook has grown at a rapid pace to over 200 million users, and the potential to generate revenue streams is enormous.

I know that generating revenue in a social media ecosystem is complicated - especially when the users are accustomed to the platform being a free and fun service. Introducing the payment system that works well will be a challenge for the management team. Other feature that should be considered are expanding the currency use on Facebook Connect sites and being able to easily convert the credits to real work dollars. A successful deployment of currency system will make it more relevant and potentially a major competitor for PayPal. Facebook has to justify their $10 billion market value, and banking on the currency payment system as significant revenue stream is an excellent idea but a risky one too.