In a post at VentureBeat yesterday, Eric Eldon shared some estimates that suggest Facebook’s revenue from virtual gifts this year will be in the range of $28 million to $43 million. That’s a serious amount of coin for nothing more than an image on a web page.
Gifts are priced at $1 each, and the study found that an average of 470,000 are sold each week.
Facebook introduced the gifts feature in February of 2007. A gift is simply an image of something, like a heart, a flower, or hundreds of other options, that when given, shows up on a “gift box” in a user’s profile. If the gift is public, then the recipients’ friends can see it, too. If it’s private, only the recipient and the giver can see it.
I think the key there is “simply an image”. This is definitely one of those things where you can’t help but think “why didn’t I come up with that!”
Clearly, gifts are a good source of income for Facebook. I wonder who buys them though. Why are people so happy to pay $1 for a bunch of pixels on a web page?
Surely that $40 million could have been spent on something better?
MasterMaq's Blog 
“Why are people so happy to pay $1 for a bunch of pixels on a web page?
Surely that $40 million could have been spent on something better?”
Why are people to happy to spend to many hours a day on Facebook doing not a lot?
Surely those 100s of hours coulld have been spent on something more productive?
😀
People are funny beasts. Find a way to take their money.
I only use the ‘FREE’ ones. Sure I could spend a whole $1 but I’d rather not leave my creditcard number on Facebook 😉 bad enough they have full rights to photos I upload, right?
True enough Rob 🙂
I don’t think I’d be concerned about giving FB my credit card number Tyler, is the money for nothing that concerns me! Heh.
I think the key is that they are only $1. That’s the most brilliant part of Facebook’s idea. It’s not that they’re selling “nothing,” it’s that they’re selling it for a low enough price that people are willing to say, “Hey, it’s only a buck.”
To the guy that wants to send his girlfriend a little red heart on Valentine’s Day, it’s only a buck. To the girl who wants to send a virtual teddy bear to a sick friend, it’s only a buck.
Yes, these people are spending $1 on “nothing,” but to most people, a single dollar is the monetary equivalent of nothing. People view a dollar almost the same as they used to view a penny.
If Facebook raised the price of these virtual gifts by even a single dollar (to $2 each) I bet they’d see a huge drop in sales.
I guess you have a point there Adam. I don’t think they’d sell that many more if they cost 50 cents though. Or rather, not that many more people would buy them.
Now what would make the world of difference (I feel) is if they had a decent micro-payment system, so people could completly be devoid of “paying” – people now associate whiping out their CC with paying. Premium SMS would work well in this situation.