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Facebook & virtual currency

May 20th, 2009 (Visited 5124 times) Tags: facebook, virtual economics

I wrote a blog post about this yesterday, but alas, I lost it. CNN has an article about Facebook’s virtual currency plans, which are already moving into alpha.

Facebook is researching the idea of creating a unified currency but is “very early” in the process and has not committed to it, the site said in a statement to CNN.
Currently, applications on the site — which allow users to play games with each other and trade gifts — are powered by currencies made by the application’s developers, not by Facebook.
These developers are making good money on the system, and Facebook is missing out on profits in that area, said Hudson, of the Virtual Goods Summit.
– ‘Virtual currencies’ power social networks, online games – CNN.com.

Now, Facebook already has a virtual currency — credits — which you use to buy gifts. But what is being talked about is opening up an API to their currency system through apps.

For those who haven’t noticed, the open APIs Facebook is creating are allowing access to data such as login from anywhere on the Net. So in effect, this could lead to a fairly standard currency fo any site that accepts Facebook logins.

The real play here, as Information Week notes, is to become a “gold standard” of sorts, similar to the way in which Facebook and LinkedIn are already becoming stronger standards for online identity than OpenID is (the flip side is, of course, than you can now use OpenId to log into Facebook!).

The notion of “customer ownership” starts getting very blurry in a world like this. It won’t be long until you see major MMORPGs allowing you to log in with social networking credentials rather than requiring you to create their own account (we at Metaplace already allow this). And if these currency plans move forward and go far enough, we could see many users just paying their subs or their microtransactions with Facebook credits.

For smaller apps and websites, this can make a great deal of sense. Lots of other players are trying to establish base virtual currencies that work across sites and apps.

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Scopique said on May 20th, 2009 at 9:38 am:

Fantastic (IMO)! I’m a fan of SOE’s Station Access, so extending something like a “universal currency” to other, disparate MMOs to pay for subscriptions would be something I could really get behind.

Yukon Sam said on May 20th, 2009 at 10:19 am:

There are definite benefits to a universal virtual currency, but there are distinct challenges as well, particularly in regards to game balance. We’re already seeing the emergence in many titles of a two-tier class system, where one class grinds and farms to provide gold and loot to the other class in exchange for a small sum of real-world money. Real-world distinctions between haves and have-nots are carried over into the virtual realm, and rules to prevent such exchanges usually prove to have little real effect.

If cash flows between systems, will this accelerate these trends? Are we looking at a future in which the best loot always ends up in the hands of the player with the most real-world wealth? Project Entropia has something like this already, and I’d have to say that being broke in Entropia is just about the least fun experience this side of razor-wire bungee jumping.

Whether you’re running an MMO or a VW, people will pay you extra for advanced status. But how does that impact the morale of your community?

I’m willing to give anything a spin, but until I start getting royalty payments for use of my Spore creations, I’m cautiously pessimistic about the benefits of cross-platform virtual currencies for games.

PlayNoEvil said on May 20th, 2009 at 12:48 pm:

Don’t forget Q-Coins – the hugely popular virtual currency of the QQ service from Tencent that is used for all sorts of things in China (and, I believe, is available to partner companies).

Ishmael E Gold said on May 21st, 2009 at 7:30 am:

Someone’s going to have to keep track of the exchange rates. There could be some money to be made here.

The taxman cometh not far behind. Don’t blink.

Todd Coleman said on May 21st, 2009 at 8:08 am:

this is going to be a HUGE boon to MMO developers IMO, especially the indie shops. billing (and chargebacks, and account, and all that hooplah) is a fundamental challenge to our business, and one that doesn’t really add any value to your offering. No customer decides to play a game because of a fantastic billing system, but some will absolutely NOT play if the billing system sucks.

Plus it removes a huge barrier from the purchasing decision, and for the FTP model, removing obstacles to get them into the game (and subsequently paying for it) is the #1 priority. A small percentage increase can have a HUGE impact on your margins… and IMO this would be a non-significant increase across the board.

Oh, and it’s going to increase the value of facebook by at least 10x.

Andrew said on May 21st, 2009 at 4:36 pm:

A global currency would be great, but why should it involve Facebook? That seems to cross an uncomfortable line, where your customers not only have to provide billing info — they have to give up details of their social network. If a game that takes advantage of a shared currency want to make use of Facebook’s extended social features, that’s great. But tying both together so tightly doesn’t seem like a good thing to me. And as many Silicon Valley people seem to forget, not everyone in the universe has (or wants) a Facebook/Twitter/Livejournal/etc account…

Michael Chui said on May 21st, 2009 at 8:11 pm:

A global currency would be great, but why should it involve Facebook?

Because they’re doing it, and no one else willing can really out-clout them? And the primary initial userbase is going to be full of people who don’t tend to know better?

We Fly Spitfires said on May 22nd, 2009 at 3:59 pm:

Kinda scary concept if you consider that all of your information could eventually be stored on a single system and just propagated into others. It may be a lot more convenient but I more risky too – imagine it ever got hacked!

Still, no doubt will be interesting to see how things develop.

cube said on May 23rd, 2009 at 1:53 pm:

the ability to have ones “reality” wiped out in a nanasecond by the consididated “economy of the virtual network” of a facebook or paypal plus is not a concept.. its a reality for some already and the mass mess that the stock markets code showed as well as bernie madoffs “computers” will be showing up in your small bank accounts any day soon.
if the last 20 years of run amok credit card companies and banks werent enough, now you want a non profiting- non answering, only vc funded company like facebook to run/ruin your lifes?

cool yeah? perfect time to be a geek?

to “be” ironman i get..but to be a “borg drone”. that one eludes the pre 1980 pubescent geeks.:) enlighten me.:)

Sepp said on May 25th, 2009 at 6:33 am:

Because Facebook already has what all the developers of alt currencies are looking for but unable to reach: the number of users that makes a currency viable.

Be even better if there was an open source facebook clone…

len said on May 26th, 2009 at 6:56 am:

Kinda scary concept if you consider that all of your information could eventually be stored on a single system and just propagated into others. It may be a lot more convenient but I more risky too – imagine it ever got hacked!
Still, no doubt will be interesting to see how things develop.

The W3C has formed a working group on the topic of social web standards.

public-xg-socialweb-request@w3.org

I agree with Cube. This is another ‘web rushes to do something stupid before anyone else can claim credit for the stupid thing’.

Facebook & virtual currency

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