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E-Commerce on Facebook

Kim Hart

Facebook said today that it is working on an e-commerce platform that will let users pay application developers for virtual goods, premium services and other offerings.

Ben Ling, who runs Facebook's platform, said that "a transaction mechanism will enable new business models" for developers. He shared the news today at O'Reilly's Graphing Social Networks conference held this week in Crystal City. A lot of local social media companies, representatives from Silicon Valley companies and a few venture capitalists were there.

The developer community has been waiting for a development like this so they don't have to rely on advertising to make money. Some of the most popular applications are earning advertising revenue, but it hasn't been easy to get big marketers to experiment. Some gaming applications already sell virtual goods so users can dress up their characters, and Slide sells "premium pokes" to give paying users a more exclusive selection. An e-commerce component would give developers a more stable way to make money--that is, if consumers actually buy the goods.

And that's what a lot of investors are looking for these days. I had a quick conversation with Wagish Bhartiya of Grotech Ventures, a venture capital firm based in Vienna. He's looking into making an investment in the social media space, but has a skeptical eye. He said he's only interested in companies that have a solid revenue model, not just sites or applications that have a lot of users.

Ling said he couldn't give a time frame for the e-commerce release, and it's unclear whether it will even happen this year. But he said it was definitely something Facebook is working on.

By Kim Hart  |  June 11, 2008; 6:23 PM ET  | Category:  Kim Hart
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IT will be interesting to see the commerce application on Facebook. I also liked your article on the frontpage of the Washington Post http://tinyurl.com/5kyqo8 . Not many FAcebook members realize what it means to install a Facebook App even if it is just throwing sheep at each other. Imagine if an app was scoring your knowledge of English just because you were losing all your scabble games :) Just a thought .

Shashi

Posted by: Shashi Bellamkonda | June 12, 2008 8:20 AM

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