Acebucks, a Facebook vitural currency application, just relaunched today. The new version is mainly an improved UI and better sponsor integration. It also touts the tagline “You Gotta Earn ‘Em to Burn ‘Em”
If you haven’t already, you can read my (mostly negative) thoughts on Acebucks and you can install the application here if you must. But really…why?
An article this morning in the New York Times paints a negative light on the commonly assumed lucrative environment of Facebook applications.
“Rajat Agarwalla, 26, and his brother Jayant, 21, developers based in Calcutta, created Scrabulous, a popular Facebook adaptation of the word game Scrabble that has been added to more than 840,000 pages. Rajat Agarwalla said he had tried all the Facebook advertising networks and found that none earned much money. Now he is using Google AdSense to put text advertising links on the Scrabulous canvas page, and he said he is barely recouping his swelling bandwidth costs.”
While a quickly coded Scrabble application would probably take up more bandwidth than a common virtual gift Facebook app, this article should serve as a warning for developers and entrepreneurs looking to make it rich on the Facebook platform. For those unfamiliar, Facebook gives app developers 100% of ad revenue generated on their “canvas” pages. These are the pages visited when Facebook users install and interact with their application. Sadly, most of the ads on applications today are ads promoting other Facebook appllications. This is obviously an unsustainable model and there needs to be another form of revenue to support the growing number of Facebook platform developers.
Either way, it looks like the New York Times doesn’t expect to make too much money on its own Facebook App.
In an interview recently with TimesOnline, Steve Ballmer, Microsoft’s chief executive, gave a warning to social network sites such as Facebook and, in essence, to would be developers on the Facebook platform…
“I think these things are going to have some legs, and yet there’s a … faddish nature about anything that appeals to younger people.”
While this could all be a negotiating tactic, since they follow reports that Microsoft is weighing up paying as much as $500 million for a 5 per cent stake in Facebook, I think it has its merits. Fanboys seem to put Facebook in the same league as Microsoft and Google, building businesses solely around the Facebook platform. If you’re looking for a two year exit, then that’s fine, but if you have longevity in mind, you may want to reconsider you’re options.
Facebook is popular now, much like MySpace, Friendster, and Xanga were popular in preceding years, but where do you think they will stand three years from now? I already posted on my feelings on Facebook’s future before. Really, what makes Facebook any different from the fizzed out SNs of the past? Is the news feed so revolutionary that Facebook is not simply YASN?
Michael Lazerow, CEO of Buddy Media, recently defended the company’s Facebook application AceBucks on his blog. Basically with the application, Facebook users can obtain virtual currency called AceBucks by doing certain actions such as adding other partner apps, frequenting a partners’ store, sending an invite to a friend or playing the jumble word game, Griddle. These earned AceBucks can then be used to buy virtual goods in the AceBucks Mall, to bid on items via AceBuck auctions, or to buy stuff from other AceBucks members.
AceBuck critics have cited past virtual currency flops and have pointed out the fact that Facebook is already developing a payment platform which would be a direct competitor. Michael defends AceBucks by responding that it is not in the market to compete with PayPal or any other virtual currency to real currency exchange. He claims AceBucks to simply be a “Facebook-wide loyalty program”. In his own words:
“…while AceBucks has been set up as a currency — you can earn ‘em and then burn ‘em — it really is a Facebook wide loyalty program that rewards users for doing stuff that we want them to do.”
Seriously, why the hell do I want AceBucks? It seems that most people are still waiting for Michael to answer that question. If users are going to spend their valuable time earning AceBucks, there better be a pretty nice reward, not some paltry array of items with whom AceBucks happens to have partnerships with.
It seems to me that Michael, along with a lot of people, are trying to ride this “virtual goods” Web 2.0 wave brought along by MMORPGs. However, they all see to miss the target on the number one rule. Great incentives. MMORPGs have this ingrained into their framework where more virtual currency rewards users with more powerful items used to progress further into the game. There is no such “progression” outside of a MMORPG. I can’t level up my Facebook profile and I don’t want to buy boring little jpeg images that can be displayed on my profile. Unless web companies can offer substantial incentives (much like the way poker sites reward play money users with real money), virtual currency outside a game setting will never work.
Prefer updates via email?
Tuff nuts.