Facebook Widget Acquisitions; Google Funding Widgets Through Venture Program

Couple of interesting macro developments in the micro-industry: A
few Facebook-resident widgets (or gadgets, if you so insist) have been
bought out by relatively bigger companies. For instance: a
Facebook-only application Favorite Peeps was acquired by slideshow
creator Slide; and Extended Info app was acquired by travel startup
SideStep. So in essence, a small Facebook economy is emerging, a bit
like the big MySpace economy (which resulted in one, Photobucket, being
bought for $300 million by MySpace). This post on RWW looks
at whether this Facebook economy is sustainable: “With more than 38,000
developers already using the Facebook Developer app...buying popular
apps is a good way for companies looking to get into the Facebook
ecosystem to screen developers.

Then, in a similar vein, though Google-style, Google has started a ”Google Gadget Ventures”
program, where it will fund third-party widget/gadget developers who
develop apps for its iGoogle personalized homepage service. “$5,000
grants for gadget developers who want to invest time making their
already successful gadget even better, and $100,000 seed investments for new gadget-related businesses.” More details in the Google blog post here, and funding FAQs are here.

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Micropayment

Micropayments are means for transferring very small amounts of
money, in situations where collecting such small amounts of money with
the usual payment systems
is impractical, or very expensive, in terms of the amount of money
being collected. "Micropayment" originally meant 1/1000th of a US
dollar,[1][2],
meaning a payment system that could efficiently handle payments at
least as small as a tenth of a cent, but now is often defined to mean
payments too small to be affordably processed by credit card or other
electronic transaction processing mechanism. The use of micropayments
may be called Microcommerce.

Almost all real-world examples touted by micropayment supporters
actually involve a larger granularity than the traditional penny. The
minimal granularity in Yoho! Puzzle Pirates is a "doubloon", which
costs between $0.20 and $0.25. iTunes
can be seen as a failure of micropayments since Apple chose a very
large price granularity: one dollar, far higher than the traditional
granularity of one cent. This confirms a critic prediction that
tolerable price granularity is somewhat larger on the Internet than in
traditional markets because the average budget of the Internet shopper
is higher, and such a shopper puts in less shopping effort per dollar.
This effect will be reduced as more poor people get on the Internet for
services in which the poor form a substantial part of the customer base.

At least one critic has suggested that the mental transaction cost
problem may be solvable in some circumstances, via innovative user
interfaces that input persistent customer preferences. However,
micropayment vendors have generally failed to address this problem,
choosing instead to focus on what critics see as irrelevant reductions
in computational transaction costs.

Another criticism is that minors and others without credit cards may be deterred; even in a developed country where credit cards are widely held, borrowing a friend’s credit card is a further inconvenience.

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Social sites reveal class divide

Teenage users of social sites have very different aspirations

Fans of MySpace and Facebook are divided by much more than which music they like, suggests a study

he conclusions are based on interviews with many
teenage users of the social networking sites by PhD student Danah Boyd
from the School of Information Sciences at UC Berkeley.

In a preliminary draft of the research, Ms Boyd said
defining "class" in the US was difficult because, unlike many other
nations, it did not map directly to income.

Instead, she said, class in the US was more about social
life and networks - how people define themselves and who they define
themselves with.

"Social networks are strongly connected to geography,
race, and religion; these are also huge factors in lifestyle divisions
and thus 'class'," she wrote.

Broadly, Ms Boyd found Facebook users tend to be white
and come from families who are keen for children to get the most out of
school and go on to college.

This division is just another way in which technology is mirroring societal values Danah Boyd

Characterising Facebook users she said: "They are in honors classes,
looking forward to the prom, and live in a world dictated by after
school activities."

By contrast, the average MySpace teenager tends to come from families where parents did not go to college, she said.

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Making Real Money from Virtual Goods

The latest revenue model for online communities doesn’t
exist—literally. Several companies are already making quite a lot of
actual money, not through advertising or subscriptions, but by selling
items that are really just images on a screen. That’s the main theme of
the Virtual Goods Summit, a
conference held at Stanford last week, the brainchild of Google’s
Charles Hudson and my friend Susan Wu, a VC at Charles River Ventures.

• Three Rings’
  CEO Daniel James on Puzzle Pirates, a casual MMO: “We do about $350,000
  a month in revenue, of which $250,000 is virtual currency sales.”

• Craig Sherman of teen hangout Gaia Online:
  “Virtual economy, we have about 50,000 completed auctions every day.
  Plus 12 virtual stores that are like an Amazon space, 6,000 items sold.”

• Dan Kelly from virtual currency exchange site Sparter,
  on the total value of the industry: “It’s easily a billion dollar
  [secondary] market. Consumers have told us these things have value, the
  industry now is trying to reconcile that with their business model.”

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Five Insights From What Teens Want

1. Integrity and attitude as key social network traits in the long run (and the rise of Facebook)


2. Teens aren’t buying much music. Can brands fix the music industry?


3. Consumer-generated-media (CGM) is the key approach to drive brand advocacy with youth


4. As a marketer, if you’re not creating utility you’re pretty much just crashing the party


5. The general view of privacy is shifting from anonymity to control





A Few Quotes from Teens:

A Few Quotes from Teens:

"I'm grounded right now, but normally I spend about 89% of my time on MySpace when I'm online."


- Female member of the teen panel

"I would describe my style as awesome, because I am the ultimate man."


- Male teen from the The N research presentation in context of Millennial high confidence

"The whole IM language has gotten out of control. The other day my friend said LOL to my face and I was like WHAT!?!?"


- Female teen from The N research

And some stats:

It’s like crack for youth marketers isn't it:

From Radha Subreamanyam of the N (who it's worth noting gave a killer research presentation):

• "Chill" is the top attitude/lifestlye teens associate with at 40%. Others include Urban (23%), Prep (23%) and Hip Hop (19%)
  
  
  
• African Americans and Hispanics use social networking sites more than whites (both at 84% vs. 81%)
  
  
  
• Music as defining their identity (44%), with family a close second (39%)
  
  
  
• Surprisingly high disdain for brands. 56% see them as creating
  negative stereotypes. But it's totally love/hate: "infatuation tempered
  with contempt."

From Michael Barnett of Fox Interactive:

• Fox’s eight week old The “Never Ending Friending” study can be found online
  
  
  
• 20 million teens 12-17 are online. That’s 83% penetration which will grow to 88% in the next few years
  
  
  
• 75% of teens that are online use social networking sites
  
  
  
• MySpace is the #18 ranked youth brand, ahead of iPod and Nike
  
  
  
• MySpace teens spend more time online (9.8 hrs) than watch TV (9.2 hrs)
  
  
  
• Combined use of SNS sites beats highest cable TV and magazine audience with teens
  
  
  
• If those 14-18 had 15 mins of free time, they’re most inclined to use an SNS site (21%) over cell phone (19%)

Alloy multicultural research:

• 46% of Hispanics in US are under 25
  
  
  
• There are 800,000 new teens each month. The total teen population is 33.9 million (12-19 yrs)
  
  
  
• Purchasing power from 1990 to 2001 amongst teens has increased
  189% in total. But between ethnicities, there’s been a 457% increase
  among Hispanics, 431% among Asians, 251% among blacks, and 176% among
  whites.

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Lending Club Passes $100,000 Mark In Loans To Facebook Users

Lending Club, the Facebook exclusive person-to-person lending service has passed the $100,000 mark in loans to Facebook users.

Lending Club was an original Facebook Platform/ F8
partner having launched with F8 on May 24. The company closed its first
loan on June 6, and has since closed 27 more loans for a total of
$101,250. An additional $212,650 in loans will close in the next 12
days. More than $180,000 is currently available from 271 lenders with
around 10-15 new lenders transferring money to Lending Club every day.

The social networking angle of Facebook allows Lending Club to
leverage trust by enabling lenders to find borrowers within shared
networks. Lending Club uses technology to pair the two parties based on
shared connections without giving lenders direct access to the
borrowers Facebook profile.

P2P lending is a rapidly growing market. Lending Club faces stiff competition from companies such as Zopa, CircleLending and Prosper.
Although it may not be the market leader in terms of volume, Lending
Club’s growing success demonstrates the potential of Facebook as a
sales and finance platform.

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T-Shirt Maker's Style, Drawn From Web Users

The two teenagers were short of nearly everything when they kick-started their Chicago
T-shirt business seven years ago. Jake Nickell and Jacob DeHart each
chipped in $500. They ran it out of Nickell's apartment since DeHart
still lived with his mother. For shipping, they enlisted friends to
carry the shirts to the post office.

But they had a killer design
team: the Web. They solicited designs from thousands of Internet users
and then had them vote on which to manufacture. Outsourcing design work
to the Web's mass audience has built the company, now called
Threadless, into one of the country's hottest T-shirt retailers, with
estimated annual revenue of about $15 million.

"It's a way to access the distributed knowledge that is out there on the Web," said Karim R. Lakhani, a professor at Harvard Business School who has studied the trend. "You can now basically focus on your core business."

This approach exploits the vast human wisdom and expertise available
via the Internet. But crowdsourcing is less of a collaborative endeavor
than a means of finding individuals with the right skills for the right
price.

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What People are Doing Online

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Sparter Launches, Go Buy Some World of Warcraft Gold

Sparter,
a stealth startup founded by Bessemer Venture Partners, launched this
evening. They are jumping into the middle of the estimated $1 billion
market for buying and selling virtual currencies in games like World of
Warcraft (WOW), EverQuest, Eve and others. The current spot price of
100 gold on WOW? About $10.

The company is a true person to person trading company. Users can
sign up and either buy or sell virtual currencies at market prices.
There are already a number of sites that sell these currencies directly
to users (IGE is the largest), but they don’t take sellers, just buyers. And the prices are set by the company, not the market.

I spoke to Dan Kelly and Boris Putanec, the two executives Bessemer
brought in to start the company, earlier this week. They say that a
major supply of WOW gold today comes directly or indirectly from
“farmers” in China and India. People are paid a very low wage to play
the game and gather small amounts of gold, which are then sold directly
to players or to services like IGE. Those models are fine, they say,
for people who want to buy currency. But it gives no way for people who
want to liquidate their virtual gold into real world money.

eBay is one place where gamers currently try to trade virtual
currency for real money, but the company started restricting the sale
of virtual goods on the site earlier this year, and proactively removing
listings that include virtual money and other items. Sparter is simply
filling the void that eBay has voluntarily created, the company says.

Others note that eBay left the market due to trademark and other
concerns. In particular, it is a violation of the terms of service of
many of these services to exchange currency in this way. Whether these
virtual worlds will turn a blind eye to Sparter’s activities, or
attempt to fight it, remains to be seen.

Sparter acts as the go-between for the parties, keeping payments in
escrow until both sides say the virtual transfer went through properly.
Users are also asked to rate each other after a transaction. Users with
higher reputational ratings may be able to charge a premium.

The company only supports trading in currency for now. Other digital
goods cannot be traded on the platform. They say they have no plans to
deviate from that strategy, unless users show strong demand down the
road.

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Ztail, online listings made easy

It has been a weekend of relative quiet and peace – where most of the time was spentcleaning up the apartment, and discovering that I had more digital device clutter than any sane person should have. In other words, time to head on over to eBay and list some old stuff to make room for the new gee-gaws. Apparently I am not alone: a recent survey released by eBay shows that the average US household has approximately $3,000 of unused things in their home

Call is serendipity, but right after watching Roger Clemens right the New York Yankees’ ship, I met with Bill Hudak, cofounder and CEO of Palo Alto, Calif.-based Ztail, that has come up with web service that allows you to easily create “classifieds”and then publish them to not only eBay, but to other sites such as Edgeio, Facebook, MySpace, TypePad and WordPress blogs, and of course the Ztail listings site. The company launched earlier this week has been bootstrapped by Hudak and Dave Keefer, and the duo have lot of online commerce experience, having worked at companies such as Google, Shopping.com and Epinions. Ztail is a dead simple and easy to use. Once you go to their site, Ztail starts you off by asking you the question, what do you want to sell today? You type in, say, Nokia E61 – and Ztail gives you all options, including photos and technical specifications that you might have to otherwise type out. You personalize this information, describe the condition of the item; add your eBay ID (or Facebook ID or your blog credentials) and hit publish. That’s it! You are done. Being someone who is flummoxed by the eBay listings process, I found Ztail a time saving utility. Of course there is the added bonus of listing my stuff in many different places and thus increasing the chances of selling makes Ztail worth giving a whirl. Okay, time for me to go make listings, create a special blog for listing the items, and then have a massive virtual garage sale!