Facebook To Make Facebook Credits Mandatory For Games

An anonymous reader sends this excerpt from TechCrunch: "Facebook has confirmed that it is indeed making Facebook Credits mandatory for Games, with the rule going into effect on July 1 2011. Facebook says that Credits will be the exclusive way for users to get their 'real money' into a game, but developers are still allowed to keep their own in-game currencies (FarmBucks, FishPoints, whatever). For example, Zynga can charge you 90 Facebook Credits for 75 CityCash in CityVille. ... The company acknowledges that some developers may not be pleased with the news, explaining this is why it is announcing the news five months in advance, so it can 'have an open conversation with developers.' The rule only applies to Canvas games (games that use Facebook Connect aren't affected), and while it's games only at this part, Facebook says that it eventually would like to see all apps using Facebook Credits. It's a move that's been a long time coming — there has been speculation that Facebook would do this for a year now, spurring plenty of angst in the developer community."

Comments

Thirty Percent Cut?

[eldavojohn]

The company acknowledges that some developers may not be pleased with the news

Hmmm, why would that be? Perhaps because:

Of course, Facebook gets something out of it: they take an industry-standard 30% cut whenever users purchase anything with Facebook Credits. That can add up to a lot of money -- we’ve heard elsewhere that Zynga is paying Facebook around $30 million a month for its Credits tax.

If anyone came up to me and said that five months from now they'd be harvesting thirty percent of my revenue, I don't think that conversation would last very long. My understanding is that a lot (if not all) of these game models is to get the user into the game for free and then urge them to pay small sums to improve their abilities in the game. I understand this move by Facebook avoids user lock-in to one developer but you'd think some credit card model could be implemented by a third party that would take far less than a thirty percent cut.

Also you're overlooking the interest. When an entity makes currency or "prints money" that is yet to be a realized transfer to the individual as goods or services, that money has the ability to accrue in value through interest or investing or whatever. The old model might have seen someone buying $50 of city cash and parceling it out over the course of the year. That cash flow will change subtly but importantly now as Facebook will be holding that $50 as it is parceled out to the possible game services. Facebook's cash reserves grow even if it eventually will be transferring that cash to game developers.

I understand these games would not have had the success they are enjoying without Facebook but surely there is some symbiotic relationship now that Zynga and other casual games have increased Facebook's crack-like effects.

Re:Thirty Percent Cut?

[somersault]

I understand these games would not have had the success they are enjoying without Facebook

I think that is the key point. Facebook needs to be able to turn a decent profit to survive, and they are the ones providing the users for these games. If the developers don't like the 30% policy, they're free to go elsewhere.. and have no players.

I'm addicted to Facebook without playing the games. You could say I'm addicted despite the games and apps. The last time I clicked on an app, it seemed to be malware, constantly reloading, presumably posting lots of crap on my friends' walls or something. I'm happy with just the ability to send messages/organise events, share links and photos.

Re:Thirty Percent Cut?

[Tukz]

If anyone came up to me and said that five months from now they'd be harvesting thirty percent of my revenue, I don't think that conversation would last very long.

Don't forget that you're only having that revenue because of them in the first place.

Re:Thirty Percent Cut?

[houghi]

I'm addicted to Facebook

That is the first step. Only 11 more to go.
Step 1: We admitted we were powerless over Facebook--that our lives had become unmanageable.

Or are you already at step 12?
Step 12: Having had a spiritual awakening as the result of these steps, we tried to carry this message to Facebook users, and to practice these principles in all our affairs.

Re:Thirty Percent Cut?

[somersault]

Eh, I'm not going to try and quit while it's still serving a useful purpose. I should probably cut down my frequency of checking for messages though, or just enable Facebook notifications on my phone so that I can just glance at it instead of visiting Facebook.com. I already found out what time we're out training tonight, so I probably won't visit so much this afternoon.

Re:Thirty Percent Cut?

[Gerzel]

Indeed. These game makers should simply go somewhere else it isn't like they are dependently locked-in to Facebook such that Facebook can dictate such a 30% overhead or that Facebook has become so big that they would lose their audience without Facebook, or at least fear they might.

Basically Facebook is levying a tax. This is what happens with any private organization that gets a good lock-in on a large customer base. With government at least, or at least democratic government, you get a vote somewhere along the line and are able to voice your opinion in such a way that if you get enough like-minded people together a change can happen. Private industry well you're out of luck.

Death and Taxes. You pay em one way or the other.

Re:Thirty Percent Cut?

[theVarangian]

Don't forget that you're only having that revenue because of them in the first place.

The same can be said about Apple and Microsoft. Anybody who develops software for their OS'es has revenue because of MS and Apple. That does not give them the right to mandate a 30% ' industry-standard' tax on anybody who develops for their platform. Apple has done that with the iPhone and is trying it with OS X and I for one will not be paying that tax if I can in any way avoid it. I can make up my own mind about who does my marketing, payment processing, distribution, in-game-sales, etc.. and what currency I choose to do business in. These things are still going to cut into my profits but at least I'll be free to choose service providers and switch providers if somebody doesn't perform. Mind you with the Apple app store tax at least you are getting free distribution and access to marketing resources, and a few other things. That at least is something worth thinking about even if I am skeptical as to the value of those services since IMHO the AppStore is suboptimal in terms of being a way to sell your product... that plus I deeply dislike lock-in of any kind. As far as I can tell, with this Facebook tax, you get nothing back other than the privilege of integrating your app on Facebook's web page. Do you at least get the App hosted on Facebook's server farms in return for that 30% cut? Do you get free advertising? Does their support center handle your customer's service requests? If the answer to any of that is yes I might reconsider but I still don't care for lock-in. I am pleased that in Google Android, Apple and it's iPhone/iPod franchise finally has a competitor capable of dishing out some punishment and I sure as hell hope Facebook get's some of that same medicine.

Re:Thirty Percent Cut?

[ikkonoishi]

When the developers of facebook games rip off facebook users the users complain to facebook. This gives facebook a way to push the problem off on the developers, and provides a layer between their users and possible scammers. The established developers won't like it, but new, non scamming, developers will because once the users have bought some facebook credits they will be more inclined to spend them on unknown titles since they don't have to give strangers their credit card information.

Re:Thirty Percent Cut?

[maxwell demon]

I think that is the key point. Facebook needs to be able to turn a decent profit to survive, and they are the ones providing the users for these games. If the developers don't like the 30% policy, they're free to go elsewhere.. and have no players.

Or maybe take their current players with them to a new platform? If enough games move from facebook to the same new platform (which could be created by the game developers themselves), I guess it would gain enough popularity to stand on its own.

Re:Thirty Percent Cut?

[somersault]

Possibly. Many people are too stupid to even find Facebook though, so if all the games moved they might be unable to find them. There was a hilarious incident a couple of years ago where the number 1 Google result for "Facebook" was a news article about Facebook. The comments were littered with thousands of comments saying stuff like "the new Facebook login screen sucks, bring back the old one!".

Re:Thirty Percent Cut?

[Eivind]

But the steps are bullshit, because they have as one of the early ones, to admit defeat, and say we can only be saved by, in essence, God.

i.e. if you're atheist you're doomed.

But that's nonsense, atheists addicts have comparable chances to believing addicts, at quitting.

Re:Thirty Percent Cut?

[mr_gorkajuice]

If anyone came up to me and said that five months from now they'd be harvesting thirty percent of my revenue, I don't think that conversation would last very long.

Given that this "anyone" is your outlet, your means for making a profit *at all*, I'm sure you're right. The conversation would go: "Of course, whatever you say".

Re:Thirty Percent Cut?

[elrous0]

Well, it's a slightly better deal than you would get with a crack dealer, at least.

Re:Thirty Percent Cut?

[CCarrot]

Facebook needs to be able to turn a decent profit to survive,

Yeah, I suppose they're looking at the recent discussions about the need to reduce user data tracking and realizing that their current revenue generation policy of selling everything they legally can about their users to advertisers is threatened...poor Facebook...

Re:Thirty Percent Cut?

[KiwiCanuck]

I agree. Plus companies like Zynga can just say no thanks and launch their own site.

Re:Thirty Percent Cut?

[Penguinisto]

They could go somewhere else (e.g. Farmville already has farmville.com, IIRC), but I doubt they'd get nearly the same amount of marketing. I'm not even sure they could get nearly as many existing customers to move.

There's also the social mechanisms, and the unholy ease with which players can spam the crap out of their Facebook friends with game messages.

Facebook has, IMHO, reached a stage now where they can dictate terms. The question is, how many new game developers will instead say "fuck that" and decide to write an iPhone app instead? Zynga may be stuck (and who knows? Maybe they will get an under-the-table discount?) OTOH, new and outside game developers (e.g. Rovio, the maker of Angry Birds) certainly aren't stuck at all.

Re:Thirty Percent Cut?

[HAKdragon]

I found an article aboue it on El Reg, for those who are interested: http://www.theregister.co.uk/2010/02/12/google_de_facto_internet_gateway/

Re:Thirty Percent Cut?

[dafarian]

Yeah That makes sense!!! So if you couldn't start a business because you needed a loan from a bank, if they give you the loan it's ok if they take 30% of your business in perpetuity? I can also say the opposite, Facebook might not have been as popular if it weren't for the apps.What do you say to that?

Re:Thirty Percent Cut?

[hibiki_r]

Making money out of delayed payment is how entire industries work. It's a significant part of how insurance companies get a good investment of capital returns. Supermarkets often sell items at cost plus overhead, but rely on the fact that, if the supermarket is well run, all the merchandise is sold weeks before they pay for it. Similar things happen with import-export intermediaries.

When operating this way, one doesn't really need a very high profit margin on the things they sell: Having very low capital requirements when compared to revenues makes the number that is really important for the investor, the rate of capital returns, far higher than the margins would make you believe.

Re:Thirty Percent Cut?

[Kitkoan]

Here is the original story with people thinking it was a new Facebook page in the comments section at the bottom of the article.

Re:Thirty Percent Cut?

[DragonWriter]

Don't forget that you're only having that revenue because of them in the first place.

I don't think the relationship is that simple and unidirectional; even the games that launched through Facebook are now available off of the Facebook UI using Facebook for universal login. (e.g., the iOS versions of many of them.)

If some of the popular game shops extricated themselves from Facebook, they'd take a hit -- but so would Facebook's stickiness. And if Facebook tries to milk them, that creates a bigger incentive for them to split; a new 30% cut off the top is a pretty big hit they'll take to stay.

Re:Thirty Percent Cut?

[tlhIngan]

They could go somewhere else (e.g. Farmville already has farmville.com, IIRC), but I doubt they'd get nearly the same amount of marketing. I'm not even sure they could get nearly as many existing customers to move.

There's also the social mechanisms, and the unholy ease with which players can spam the crap out of their Facebook friends with game messages.

Facebook has, IMHO, reached a stage now where they can dictate terms. The question is, how many new game developers will instead say "fuck that" and decide to write an iPhone app instead? Zynga may be stuck (and who knows? Maybe they will get an under-the-table discount?) OTOH, new and outside game developers (e.g. Rovio, the maker of Angry Birds) certainly aren't stuck at all.

Zynga has been diversifying ever since the iPhone couldn't run Flash, and most Facebook games have iPhone apps, including Zynga. Heck, I think last year when Steve Jobs was introducing GameCenter and iOS4, Zynga was a company he trotted out to demonstrate their new FarmVille apps.

Heck, many of these apps are better because they send notifications out when it's time to do something instead of the constant Facebook polling.

I've also started seeing a lot of Flash games in the App Store recently (flash games compiled with Adobe's tools).

All Facebook's really done is the initial startup and get users to blindly install their apps (most won't read even the Android warning instead wanting to try out the Farmville app... even though it probably requests every priviledge so it can rape and pillage all the data contained within).

Re:Thirty Percent Cut?

[bigstrat2003]

But that's nonsense, atheists addicts have comparable chances to believing addicts, at quitting.

Who are you compared to the mighty truth-tellers at AA? Why should I believe you, and not them? :P

Re:Thirty Percent Cut?

[DerekLyons]

I have to say this is a positively brilliant move on the part of Facebook (and that's an admiring 'brilliant', not an ironic one).
 
The usual model on the 'net had been to charge the users for access. Facebook reverses this and now we have the same model that a shopping mall or retail store uses - they let the users in free, but charge the people who want to make money from the users.
 
Yes, before some 'brilliant' individual replies with the obvious... Shopping malls and retailers die all the time, but some show surprising lifespans.
 

If anyone came up to me and said that five months from now they'd be harvesting thirty percent of my revenue, I don't think that conversation would last very long.

Yep.
 
You: "that's ridiculous"
Them "OK, as of midnight tonight you're cut off from our network"
You: (calls his lawyer to start investigating bankruptcy)
 
Seriously, this is why people making physical goods work so hard to get their products onto store shelves, even though $RETAILER "harvests (marks up) thirty percent of their revenue" - without $RETAILER and it's proven and existing network of 'users', they likely wouldn't have any customers at all. Direct marketing (the rough equivalent of indie games) is a very tough row to hoe, you want to make the big bucks, you go where the people (and bucks) are. There's an old saying in retail - "Sell to the classes, live with the masses. Sell to the masses, live with the classes".
 

I understand these games would not have had the success they are enjoying without Facebook but surely there is some symbiotic relationship now that Zynga and other casual games have increased Facebook's crack-like effects.

If Facebook is smart, they'll do like Wal-Mart does to it's suppliers - someone like Proctor & Gamble gets a better rate because Wally World moves a lot of P&G merchandise. The higher rates are for the little guy who has yet to prove his track record and that his product will pay the rent on the shelf space it occupies.

Re:Thirty Percent Cut?

[Tukz]

Not that I agree that 30% is acceptable, but some sort of price is.
Facebook is stuck with the hosting bill.

As Facebook said, this is meant to spark a debate amongst the application developers and Facebook about what is a fair price.

Re:Thirty Percent Cut?

[EdIII]

Well, it's a slightly better deal than you would get with a crack dealer, at least.

You mean the developers are not walking into Facebook HQ, getting on their knees, and blowing somebody?

Probably not, but I am betting Zynga still feels like it is getting bent over.....

Re:Thirty Percent Cut?

[chrylis]

They only host the outer shell. The content of apps is in an IFRAME hosted entirely from the developer's servers.

Re:Thirty Percent Cut?

[asdf7890]

But that's nonsense, atheists addicts have comparable chances to believing addicts, at quitting.

Do we? Hic. Bugger. Hic. There goes hic that excuse. Hic.

Re:Thirty Percent Cut?

[maxwell demon]

Interesting. So a sure way to get many facebook passwords would be to write something about facebook, have some login form on that page (which doesn't need to claim it logs into facebook, maybe have a login to comment the story) and get it to the top on Google, and wait for confused users to try to log in and thus give you their credentials. Moreover, it will be the most stupid ones, i.e. those whose login credentials are most easily misused.

Re:Thirty Percent Cut?

[Tukz]

I did not know that.

Re:Thirty Percent Cut?

[Joe Mucchiello]

Zynga stuck? Their apps are on iOS and presumably Android sooner if not later. Aren't they already on/moving to XBox Live and similar set-top living room boxes? No one needs to shed a tear for Zynga. As soon as Facebook created facebook credits, Zynga was already seeking out diverse platforms.

I wonder what the reaction will be...

[Haedrian]

Given that companies like Zynga already have a bunch of user information - probably including email or whatever - I wonder if they'll leave Facebook and offer the same services on a different base - using facebook only for advertising?

Plausable?

Re:I wonder what the reaction will be...

[Relyx]

The article seems to suggest that Zynga and the other main social gaming companies are already on board...

Re:I wonder what the reaction will be...

[RoverDaddy]

That was my first thought after spending all of about 2 seconds considering the issue. I'm not familiar with the FB development community at all, but I wonder whether this would just encourage people to abandon plans to make direct revenue within the FB platform, and just use their FB apps to drive traffic to an external platform.

Re:I wonder what the reaction will be...

[sortius_nod]

Quite possibly, but you have to remember what the median is for their user base. These are people who don't understand computers and most of their information is coming from Facebook. There's no way you can get that many people to swap platforms.

This is a big problem MMOs have at the moment, getting users to abandon WoW for something new. It hasn't worked yet, we haven't seen millions shift from WoW to another game, I think Facebook is pretty safe at the moment.

NB: I do not have a Facebook account at all, it's been deleted.

Re:I wonder what the reaction will be...

[nickrw]

NB: I do not have a Facebook account at all, it's been deleted.

Facebook doesn't delete your account, it 'deactivates' it. The only way not to have a facebook account "at all" is not to have had a facebook account in the first place.

Re:I wonder what the reaction will be...

[Rhaban]

Facebook can ask for as big a cut as they want and developers have to bend over or look for another job.

And the bigger the cut, the more they will chose the latter option over the former.

Re:I wonder what the reaction will be...

[game kid]

Facebook doesn't delete your account, it 'deactivates' it.

You can request to be "permanently deleted with no option for recovery". I had a FB acct but requested a perma-delete in 2009 (inspired by a Slashdot story, but before "dumb fucks"-gate). Two weeks later I got a mail saying that it was re-activated, but I think that was just the staff (or their scripts) logging in to make it final: the emails (school and non-school) I used are "not associated" with an acct as of today, and I couldn't find me in a search by name (a partial list 'cause I wasn't logged in).

Still, Facebook being a big website, and Facebook being Facebook, their staff probably have an old backup anyway. :)

Re:I wonder what the reaction will be...

[sortius_nod]

Pretty much when I deleted mine. It doesn't exist at all. No doubt they still have the metrics they collected.

Re:I wonder what the reaction will be...

[vegiVamp]

> The only way not to have a facebook account "at all" is not to have had a facebook account in the first place.

And check.

Re:I wonder what the reaction will be...

[DragonWriter]

The article seems to suggest that Zynga and the other main social gaming companies are already on board...

Actually, it flat-out states that Facebook has "worked out deals" with Zynga and other large developers. Which suggests to me that they've carved special sweetheart deals with the people making the games that are already popular (the developers that, if they left, would hurt Facebook) and that its the small existing developers and new developers that will actually be paying full charge on this. The bigs will be paying something, but they'll have a built-in advantage over new upstarts, so its a net positive for them, for now.

Desperate to make money

[golden age villain]

They seem quite desperate to make a buck these days. I wonder if they are really worth 50 billion $. My guess is that they aren't and that we might see a beautiful collapse in the coming years.

Re:Desperate to make money

[harddriveerror]

50 billion Facebook credits

Re:Desperate to make money

[AHuxley]

Facebook can get real names, hopes to get 30% real cash via addictive fun games and cellphone numbers.
That kind of real data has value to govs, the private databases that feed govs and other private groups seeking info in bulk or on a single person.
Can ads, games and 'real data' add up to 50 billion $ over 'years' before the next 'big' web 3.0 thing is tested?
Facebooks way of making people enter personal data for free is still rather unique.
As for the credits and not offering in the US, someone is going to win big :)

Re:Desperate to make money

[pinkushun]

Why would facebook (or any other viral entity) stop trying to make more money, even if they don't need it?

Re:Desperate to make money

[Rinnon]

They seem quite desperate to make a buck these days. I wonder if they are really worth 50 billion $. My guess is that they aren't and that we might see a beautiful collapse in the coming years.

I truly wish I could believe you.

Re:Desperate to make money

[Isaac Remuant]

I wouldn't call it desperate. They're just, very strongly, launching a huge propaganda campaign that has a way of reaching me everywhere I go.

1 Goldman Sachs buy FB shares or something
2 Suddenly I hear people say FB has beaten google in who-cares-to-explain-what-ranking
3 Today I hear that The Social Network is going to win some kind of Movie Prize.

There news/rumors, if they spread, are probably going to get FB's value closer to what they pretend it is.

Re:Desperate to make money

[JackieBrown]

Why would facebook (or any other viral entity) stop trying to make more money, even if they don't need it?

I'll take it further - why would anybody stop trying to make money even if they don't need it? I don't need the quarterly bonus I receive, but I am not about to turn it down. If there was a way to get more, I would take it.

Re:Desperate to make money

[miffo.swe]

Im convinced we will see a really big collapse in the future. They have lots of money to burn through before that but i suspect it will go a lot faster than most people think. All it takes is a "new" social interaction platform thats hip and popular and Facebook is but a faint memory, just as Usenet, Irc, Icq, Myspace, Aol, Second Life, BBS, FidoNet etc in an endless list. I said the exact same thing about for eg. Second Life and was laughed out of my chair while countries even built embassies, that now stands empty and abandoned.

Re:Desperate to make money

[pinkushun]

Awe I only get an annual bonus, you beat me, Sir! And I would take it too! (Any openings? ;p)

Re:Desperate to make money

[Inda]

A functioning society needs money to circulate. Earning more than you need and hording it is bad for everyone.

Overcharging for a product eventually has the same effect. It even affects the mega-rich. When your favourite coffee shop closes because a software company is taking more than it's fair share of money, then the minions no longer have spare money for coffee, then you'll understand.

PS I play the game, but I know the rules are wrong.

Re:Desperate to make money

[ToadMan8]

A functioning society needs money to circulate. Earning more than you need and hording it is bad for everyone.

If people "hoard" money, demand decreases, and prices fall. As prices fall, the "hoarders", one-by-one, decide that a "deal" can be had, and buy. This slows the decline of prices until equilibrium is attained.

If you are arguing that growth slows if people don't buy, I'll somewhat agree, but I'll exchange a few points of growth for more meaningful growth, e.g. McDonalds toys, DVDs, cigarettes, thousand-dollar purses, etc. VS investment in efficient manufacturing techniques, sustainability, etc.

Suggesting that the economy must operate on deficit spending like the government and many households is irresponsible. China manages to pull off growth and a trade surplus.

This was somewhat disjointed, sorry. No time to edit; back to work.

Re:Desperate to make money

[Nineteen-Delta]

A fool and his money are soon parted. - And on Facebook, a fool and his privacy are parted before he pays.

Re:Desperate to make money

[adamdoyle]

A functioning society needs money to circulate. Earning more than you need and hording it is bad for everyone.

If people "hoard" money, demand decreases, and prices fall. As prices fall, the "hoarders", one-by-one, decide that a "deal" can be had, and buy. This slows the decline of prices until equilibrium is attained.

If you are arguing that growth slows if people don't buy, I'll somewhat agree, but I'll exchange a few points of growth for more meaningful growth, e.g. McDonalds toys, DVDs, cigarettes, thousand-dollar purses, etc. VS investment in efficient manufacturing techniques, sustainability, etc.

Suggesting that the economy must operate on deficit spending like the government and many households is irresponsible. China manages to pull off growth and a trade surplus.

This was somewhat disjointed, sorry. No time to edit; back to work.

This is the conservative argument and it's exactly right. The system will work itself out without the need for excessive government intervention.

Re:Desperate to make money

[nametaken]

Well, need is a non-issue. They're a business, they try to make money. That's what they do.

That said, I'm surprised they didn't do this sooner. Honestly, almost none of the Facebook games are worth a dime without Facebook. The service brings in the customers, handles all the viral advertising (word of mouth), etc. To put it bluntly, Farmville is not a good game... it's Facebook that "puts the asses in the seats". It exists because of Facebook, and only because of Facebook. A 30% cut to the company that makes any of it even remotely viable doesn't seem like an unfair percentage.

Anyone that doesn't like it is free to walk away. But they won't, because despite the fact that they've gotten a free ride, they're worthless without FB. The only other place these craptastic app's could even begin to exist is in the iphone marketplace. And even there they wouldn't do nearly the kind of business they do on facebook, and would have to rewrite their trashy flash games for iOS.

Re:Desperate to make money

[Dogtanian]

Im convinced we will see a really big collapse in the future. [..] All it takes is a "new" social interaction platform thats hip and popular and Facebook is but a faint memory [..] I said the exact same thing about for eg. Second Life and was laughed out of my chair while countries even built embassies, that now stands empty and abandoned.

I'm not disagreeing with you, but the comparison with Second Life is flawed. You're mistaking the media hype and prominence of Second Life at its "peak" with actual usage- and I'm not convinced that Second Life was anywhere *near* as popular as the former would have suggested. It certainly wasn't even in the same league as Facebook.

I'm convinced that everyone in the media thought that Second Life was going to be the Next Big Thing and was worried about being left behind. Hence the slew of news stories.

It was also quite a cool sort of "virtual reality here at last" type situation that was good for stories, but how many people do you know that *actually* used SL versus those who use Facebook? Even if SL did peak in real terms, I'm pretty sure that neither its rise nor fall were as sharp as its "hot thing/yesterday's news" status would suggest- that was more the media abandoning something that was never as big as they expected it to be.

Re:Desperate to make money

[mattack2]

I don't necessarily disagree with you.. But short it (on the private exchanges now).

In Soviet America...

[Akratist]

...Farmville farms you!

For those not familiar with web content

[SmallFurryCreature]

30% is NOTHING. Really, it is a trivial amount. It is not uncommon for affiliate systems to have an even split on any revenue generated through an affiliate and Facebook is one HELL of an affiliate. Yes boys and girls, that is all it is. Nothing different from porn or game sites that link to payed content except Facebook already gets people to surrender a lot of privacy before ever clicking through to the real content. Facebook is not in the business of making a social website anymore then google is about search results. It gets its cash from people clicking on ads displayed on its site. It has done this advertising thing so well, that now people are even willing to pay for the advertisement.

Smart.

If you read the article, the big boys have no problem with this, it is advertisement cost to them and in the online world the costs of aquiring paying customers is very high. A "normal" business cannot afford to spend up to 50% of its revenue on advertising... or can it? Think of the massive sponsorship deals done by Coca Cola or Nike? You don't think that the price for sugar water in a can is really what you pay for a Coke do you? Same with Farmville. You, the paying customer, pay for getting more players to play the game.

Zynga isn't going to leave facebook, not only do they consider the cost more then fair and part of how their business operate, but where would they go next? Farmville IS facebook, it wouldn't survive a second in the cold hard banner world. Facebook has created the eco system in which Farmville can survive.

Read up on affiliate systems, they are the back bone of much of the internet.

Re:For those not familiar with web content

[Permutation Citizen]

Of course, game operators will not like it, but what can they do? Their success depends on operating within a proprietary platform. They have put themselves in position of Facebook's vassals and they largely benefited from this position. Even with 30% cut for FB, they still can make large profits.

Remember how aggressively these games have grown a large user base. Game mechanics made mandatory for players to recruit amongst their friend. They spread like viruses or like chain mail in the social network. Facebook had to change policies several times to limit abuses.

However, Facebook also benefits a lot from the games. They force players to connect to facebook everyday or more. They also encourage players to create many fake accounts that make facebook looks bigger that it really is.

Re:For those not familiar with web content

[Tim C]

except Facebook already gets people to surrender a lot of privacy before ever clicking through to the real content

Games are the real content on Faecbook? And there I was thinking it was keeping in touch with distant friends and what they're doing without having to write emails/messages to every single one of them individually...

Re:For those not familiar with web content

[Syberz]

If 30% is nothing, then could you forward 30% of your pay-cheque to me?

If from the get go the devs had to fork over 30% to even be allowed to play the game, then yeah it's alright because you plan for it in your business model. But this isn't what's happening, they now have to take a 30% cut to their revenue.

Re:For those not familiar with web content

[synthesizerpatel]

30% is NOTHING.

A common misconception unless the value you're taking 30% from is also nothing.

Otherwise if you round up, it's about a third.

Re:For those not familiar with web content

[Ash-Fox]

Of course, game operators will not like it, but what can they do?

Charge a very high price on the facebook credits side.

Re:For those not familiar with web content

[mr_gorkajuice]

Way to dodge the point there.
Honestly, you think Farmville or any other Facebook game could dream of making 70% of their current revenue without using the Facebook platform for distribution?
Those who think so are *of course* welcome to try. I predict 99% of Facebook games staying put.

Re:For those not familiar with web content

[Permutation Citizen]

According to article: "Facebook says that Credits will be the exclusive way for users to get their ‘real money’ into a game".

Re:For those not familiar with web content

[DragonWriter]

Zynga isn't going to leave facebook, not only do they consider the cost more then fair and part of how their business operate, but where would they go next?

Well, there is a certain major online company that made a major investment in Zynga last year that provides a unified logon alternative to Facebooks, a large existing user-based, and is also an OS vendor for mobile devices, smart TVs, and very soon consumer netbooks, all of which come with apps that tie to that vendors unified logon system.

Given 5 months lead time to prepare...

Re:For those not familiar with web content

[apt142]

Sure it sucks if you're there already and you have to fork it over. But, what the parent is saying is that you're foregoing 30% of your revenue to go from the small sliver of pie and get in on a much bigger whole pie. You can lose 30% of your income and not even notice if the opportunity nets you 1000%+ gain in new customers and revenue. That's totally worth it. That doesn't change the fact that this is a dick move, but still worth it in monetarily.

Re:For those not familiar with web content

[merreborn]

If you read the article, the big boys have no problem with this

Word on the street is Zynga spent months fighting it, and threatened to leave facebook entirely -- that's why they launched http://www.farmville.com/ Of course, both Zynga and Facebook would take a huge profit hit without each other, so the odds of a divorce were always slim.

In fact, here's some evidence that the fight was bitter indeed

Everyone has a problem with someone taking 30% of the revenue. Lord knows Zynga's other payment processors never charged that much.

more reasons:

[uncanny]

Wow, as if i didn't have a million reasons not to play those games on facebook, they just keep adding more!

An easy fix

[Chaugnar]

Isn't it then possible for the developers to set their rate of exchange very high and offer their currency directly for much less?

Re:An easy fix

[Chaugnar]

Was the Ad Hominem attack at the end really necessary?

Re:An easy fix

[DragonWriter]

Isn't it then possible for the developers to set their rate of exchange very high and offer their currency directly for much less?

Possibly; obviously, if you do it through your Canvas-based game, it will break the terms of the requirement. But since it applies only to Canvas-based games (not to non-canvas apps, and not to non-game apps), if you have a shared credit system used in a non-game app or a non-canvas app (e.g., a mobile app that uses Facebook Connect), then you may still be able to have direct purchasing through the other apps. (E.g., many games that are Facebook Canvas games also have iPhone and/or Android versions that use Facebook Connect, and use the same credit system.)

Re:An easy fix

[WolphFang]

That's funny, it was the immigrants from the mid 1800's that drove the Cherokee out from Georgia.

Ahh

[soupforare]

So this is how Facebook falls. I wonder if Zynga themselves will start a new social networking site or if they'll just buy some up and hope they picked the next one.

Re:Ahh

[rcuhljr]

Your amusing optimism is quite humorous, you should bookmark this post so you can come back in the future and admire your naivete.

Thieves Stealing from Thieves

[Charliemopps]

Does anyone care?

I again predict the demise of Facebook. They have less than 5 years. The path they are on is well traveled. Facebook is building a cliff of customer hate. The second there is anything on the net that can even remotely compete they're going to get shoved right off that click... just like AOL.

Great, next we'll have to use ISPBux

[tm2b]

I am just waiting for ISPs to want their cut, too, and require that all on-line purchases be made in ISPbux.

Then people will have to use ISPbux to buy FB Credits, and use FB Credits to buy ZyngaSheckles.

Then Microsoft will get in on the act... And they already have their own currency.

With Facebook users...

[NuKe_MoNgOoSe]

Totalling like 1/3 of the population of the planet or some other crazy number, facebook currency could end up rivalling the US dollar lol probably not but that WOULD be hilarious.

Cue Facebook losing smaller devs

[JustAnotherIdiot]

Some of the smaller games not making all that much aren't going to look too kindly at a 30% cut. I'd imagine the larger ones won't either, but I don't think the larger ones will leave because of it.

Re:and Facebok can have 30%....

[kcitren]

! I AM NOT A DAIRY COW, THEREFORE I DO NOT EXIST SIMPLY FOR SOME ASSHOLE TO MAKE MONEY OFF OF ME!

Thank god that up until now Facebook has been operating out of the goodness of their heart. Thanks to all the hundreds [thousands?] of volunteers who operate their data centers and develop their code. Thanks to all the people who have so generously donated their servers and bandwidth to the Facebook operation [I'm sure they got a tax deduction, so it's not purely altruistic] so that you've been able to play your games for free until now. Get off it. Facebook is a business, just like any other business. They exist to make money; they exist to pay their employees and shareholders. They offer services, which you may or may not decide to pay the price of [this is true for both the users, i.e., people and for the companies that do business with Facebook, i.e., the advertisers and game/app developers]. Do you get angry at Amazon for making you pay for books? Do you think it's unfair that EBay takes a percentage of the sellers price as commission? Do you have a job? Who pays your salary? I can guarantee the money for your salary comes from the sale of goods and/or services. Do you wish your customers felt the same way as you do, that everything should be free? I'm sure you'd have a lot of customers for a while with a "give the product away for free attitude", but I don't think your business would last very long. Remember, if you're not paying for it, you're not the customer, you're most likely the product.

Pray I don't alter it any further.

[Maxo-Texas]

The company acknowledges that some developers may not be pleased with the news

Darth Vader: Calrissian. Take the princess and the Wookie to my ship.
Lando: You said they'd be left at the city under my supervision!
Darth Vader: I am altering the deal. Pray I don't alter it any further.

facebook as a gaming platform

[clydemaxwell]

I just don't understand why any gamer, casual or otherwise, would choose a gaming platform that requires so much personal information. I didn't give it to Microsoft, and I'm not giving it to Facebook. plenty of flash games elsewhere!

Re:Trust?

[Cwix]

"Uncheck this box if you do not wish for Facebook to share your credit card information with its "Trusted Partners" (tm).

Good of them...

[VendettaMF]

I actually appreciate them announcing this now.
I was due to start integrating the Facebook API to my current game project next week. That's a bit of work saved.

I see nothing wrong with this.

[a Flatbed Darkly]

Were this a market and were the government enforcing similar, or were this an industry and a regulator enforcing similar, or were this the internet and an ISP enforcing similar, I'd complain as you are. But this is Facebook's platform. Yes, it's unnecessarily grasping, or so one would think if Facebook are really as profitable as they're telling us. Yes, this will panic the stock monkeys. But this is not an entire market, this is not an entire industry, this is not an entire content platform, this is one service. Besides, perhaps this will even out competition with the minor developer exodus it'll probably end up causing.

So what does that mean....

[mark-t]

... for games that are currently free to play?

Re:So what does that mean....

[jpenguin]

AFAIK, Nothing. All this means is you can't use a credit card or paypal to buy virtual currency... AFAIK, you will still be able to use credit cards to buy facebook credits, and use the credits to buy virtual currency. I don't think this will affect users.

Re:excessive government intervention

[DocSavage64109]

"excessive government intervention" These sound like weasel words that are logically useless. Isn't Excessive by definition, more than the required amount? Or did you mean that no government intervention is preferable?

Re:excessive government intervention

[adamdoyle]

I'm not following you.

I could have said: "without the need for government intervention," but that's not what I was trying to say. Sometimes government intervention _is_ necessary. That's why we have the SEC and the legal system. It's all about balance. I would say, though, that "weasel words" is in fact "logically useless," or at least unnecessary to make your point.

Re:excessive government intervention

[DocSavage64109]

So in essence, you are saying that the correct amount of government intervention is the correct amount. I'll agree with you on that, it just seemed like you were trying to say that government intervention is unnecessary while leaving a loophole that may or may not have been on purpose.

Re:excessive government intervention

[adamdoyle]

I suppose. I would prefer, though, to word it as "there exists a correct amount of government intervention such that less is more."

Re:and Facebok can have 30%....

[RockDoctor]

Sounds to me like you need to play some CowClicker. No, seriously! This is not (quite) a joke.