Facebook Credits and smart mobile payment biz dev

Facebook founder and CEO Mark Zuckerberg did an interview with InsideFacebook talking about the Facebook ecosystem. One thing touched upon was Facebook Credits and it not being a major profit driver for Facebook despite a 30 % fee for developers.

One reason is that Facebook Credits can be bought with premium text messages, which cost far more to process than credit cards or Paypal.

Facebook is using Zong for mobile payments, and it's worth noticing that Zong has done some really, really nice business development with their Zong+ product.

Basically, after a purchase of credits or virtual goods a user is asked if she wants to connect her credit card to her mobile phone number (in return for additional credits/virtual goods). The result is mobile-initiated credit card payments and the combination of easy to purchase (mobile) and a low-cost funding source (credit cards). Probably the smartest thing I've seen in online payments in the last year.

Facebook 2009 revenue was 700-800 million dollars

Facebook had revenues of up to $800 million in 2009, according to Reuters. Some quite obvious drivers of revenue growth last year:

* User and traffic growth
* A targeting system (age, geography, interest) that makes sense and allows smaller and larger advertisers to get started and find advertising that works on a CPA and optimize advertising campaigns. Combined with cost-per-click payment it is low risk to start advertising
* Zynga and other makers of Facebook games marketing their new games

With about 500 million users, a growing ad sales operation and a new micropayment system, Facebook will likely grow very quickly in 2010 too.

Consumer payments were driven by games and virtual goods

Ex Post Facto: Why paid consumer services are in a golden age. Ex Post Facto is becoming one of my, if not the, favorite curating/news commentary blogs. I'd argue that paid-for, even if freemium was quite widely discussed, was not a core Web 2.0 trait as many entrepreneurs and venture capitalists caught a bad case of the advertising bug when Web 2.0 was getting popular in 2005-2006.

Consumer payments have been fundamentally driven by increased consumer acceptance/usage of e-commerce, but went mass-market with the games/virtual goods, Facebook and premium text massage/mobile payments combination. That in combination with a greater number of experienced data-driven marketing and sales operators will make the next few years very interesting.

New York Times: One on One: Fred Wilson, Union Square Ventures. Good interview, but nothing spectacular if you've been following Fred's A VC blog for a long time.

Business Week: Zynga Receives $147 Million Investment From Japan’s Softbank. Apparently Zynga has attracted additional funding from the Japanese media/telecom/Internet investor.

New job

After 4.5 very, very good years with Stardoll I joined Spotify as Head of Premium Sales yesterday. From mid-June I will be based in London.