I’m not a fan of Facebook. But I can see what they’re doing, and why their current advertising revenue is irrelevant to their long-term profitability. And it seems someone else (at TechCrunch of all places) seems to get it:
Facebook has won the identity wars. So their advertising income is relatively speaking peanuts. Who cares? They don’t need to invent a new form of monetization. They have one already: Facebook Credits. Right now their income from it is a rounding error. But as years go by, and people slowly get accustomed to buying and using and transferring them, and as Facebook grows more and more intertwined with every online action we take–which is to say, nearly every action we take–it could well become the first global virtual currency … and then ultimately lose that “virtual” disclaimer.
What Linden Lab did with their virtual currency within Second Life, Facebook is doing on the broader internet (and so, essentially, to the developed world as a whole): they are solving the micro-transaction problem. And they intend to take a little slice of the action — a tiny, tiny slice, percentage wise — and it will make them a mint. They will in fact become a mint, literally making the new currency for the online world.
Given how cavalier they have been with privacy, this frankly scares the pee out of me. If it had to be someone in that position, I’d prefer it was Google; not that Google is all that saintly, “Don’t be evil” notwithstanding, but they do seem to be the least-bad of the major powers on the ‘net.
An even better solution would be competing currencies: Facebucks, Amazon Credits, iDollars, Googold, and of course Microsoft Live Currency Units for Mobile Windows. (I kid.) (A little.) (No seriously, whatever the official name was, we’d have to call it Microsoft X-Bucks. I insist.)