Skip to main content

Is Facebook the future of micropayments?

By Pete Cashmore, Special to CNN
Mashable's Pete Cashmore thinks Facebook has the best chance of making micropayments work.
Mashable's Pete Cashmore thinks Facebook has the best chance of making micropayments work.
  • Mashable CEO Pete Cashmore: Facebook could make micropayments profitable
  • Facebook is now the purveyor of numerous digital transactions, such as virtual gifts
  • Cashmore: Facebook positioned to be content payment platform for the open Web
  • It's been proven consumers will pay for device-specific digital media, such as iPhone apps

Editor's note: Pete Cashmore is founder and CEO of Mashable, a popular blog about social media. He is writing a weekly column about social networking and tech for

London, England (CNN) -- In the ongoing saga of paid content on the Web, Rupert Murdoch is once again threatening to pull his Web sites from Google's search results.

In a Sky News interview posted online this week, he said "There's not enough advertising in the world to make all the Web sites profitable. We'd rather have fewer people coming to our Web sites, but paying."

Meanwhile, social game maker Playfish, with estimated revenues of up to $75 million from selling virtual goods in its games on Facebook and other platforms, has been acquired by Electronic Arts in a deal worth up to $400 million.

The company is not alone in turning virtual goods into gold: Playfish rival Zynga reportedly brings in over $100 million in revenue (a proportion of which, admittedly, is driven by schemes in which users receive virtual currency when signing up for questionable special offers).

Even The New York Times is heralding the "real paydays" being delivered by virtual goods on Facebook; such stories run counter to the common wisdom that social networking sites are difficult to monetize.

Facebook's Emerging Payments Platform

Facebook is establishing itself as the purveyor of numerous digital transactions. When a Facebook friend has a birthday, users are encouraged to spend $1 on a gift, posted to their profile page for all to see.

Altruistic members, meanwhile, might ask friends to donate to their favorite charities using Facebook Causes, once again drawing users into the world of Facebook micropayments. Not to mention the millions who are already at ease buying virtual fences and barns in Zynga's hugely popular FarmVille.

It doesn't take a great deal of imagination to connect the dots: Facebook is well-positioned to be a content payment platform for the open Web.

Media Sites Already Integrate Facebook

The puzzle pieces are already in place: media properties have jumped upon the Facebook Connect bandwagon, realizing that users are more engaged when they're able to connect to their friends on content sites.

In September this year, Hitwise observed: "The number of Web sites participating in Facebook Connect has grown quickly to over 15,000 Web sites [globally] including,,, Hulu,, The Huffington Post, and others."

Even Murdoch's own, often cited as the poster boy for paid content online, allows users to sign in with Facebook Connect.

Better than Free?

A powerful argument against paid content is the abundance of Web-based media: Build a paywall around your property and readers will simply hop over to the hundreds of other news outlets publishing broadly similar news and opinion.

Niche Web publishers like myself would rub our hands with glee if Murdoch were to pursue such a strategy: It would only mean more readers and ad revenue for these smaller, more efficient outlets. Or would it?

Could there be a price point and convenience level that would make micropayments feasible? iTunes famously struck upon a $0.99 price and tight integration with the iPod to make an offer that was "better than free": a service so much simpler than braving BitTorrent sites that consumers jumped aboard.

What is the price point for journalism? Could we postulate a world in which Google indexes everything, content is largely free and the hard-to-produce stuff so cheap that we don't notice?

Abundance and the Challenge of the Open Platform

While paying for Web content remains a matter of debate, we've established that content consumers will pay for the convenience of device-specific digital media. Whether it's iPhone apps, iTunes music, movies from Netflix or Kindle books, these platforms combine content scarcity with ease-of-access.

Even Facebook games create value through scarcity within a self-contained economy. On the open Web, however, content is abundant and time scarce: Hopping over to the next Web site is often preferable to climbing over a paywall. If we're to pay for Web content at all, the value proposition must be "cheaper" than hunting down other sources: scarce content at a low price and a transaction process that's effortless.

Can publishers build a paywall so low that readers will step over it? Only if they leverage existing platforms and established behaviors. And while Google, Amazon, PayPal and countless others yearn to be that platform, I'd wager that Facebook stands the best chance.

© 2013 All rights reserved.