It was just a few days ago that Facebook launched new status update APIs. Today, Xoopit is launching an update to its Xoopit for Gmail Firefox add-on that lets users set their status update and view friends’ status updates from within Gmail through Facebook Connect.

Here’s how it works:

1. First, you need to install the Xoopit for Gmail Firefox add-on.

2. Then, you’ll need to authenticate through Facebook Connect by clicking the Facebook “F” icon in the upper right corner of Gmail.

3. You can then update your Facebook status from directly within Gmail.

4. And finally, your Gmail Messages with people who are also on Facebook now contains their Facebook status updates and profile photos just to the right of your Gmail messages in the light blue Xoopit box.

Xoopit for Gmail is one of the first apps that we’ve seen to take advantage of the new Facebook status APIs, and we think it works really well. Xoopit COO Jonathan Katzman says the new tool “gives Gmail users a much more complete and perhaps a little more fun view of their relationships.”

Email is a very logical context for the extension of Facebook status updates. It’d be great if Xoopit’s plugin also offered Facebook Chat directly within email – but I expect we’ll be seeing more tools along these lines soon!

Web analytics firm Hitwise says Facebook continued to steal more market share of US visits from MySpace in January. However, the report says MySpace still has a commanding lead over Facebook in terms of overall US visits to social networking sites.

Here’s how the latest data breaks down. In January 2009, MySpace’s share of US visits to social networking sites fell to 57% from 60.6% in December. Last January, MySpace’s share stood at 72.5%.

By contrast, Facebook’s share increased to 31.1% in January from 27% in December.  Facebook’s share of US social networking visits was just 15% according to Hitwise a year ago.

Tagged ranked third in US social networking share at 2.3%, flat from December, while MyYearbook held steady at 1.67%. AOL’s Bebo saw a slight uptick in share to 0.8%, though that is down from its levels a year ago.

Hitwise’s data on overall share of visits appears to contrast recent Compete data for January, which showed Facebook with a clear lead over MySpace in US reach. According to Compete, Facebook reached 68.5 million people in the US in January, while MySpace reached just under 60 million.

Yesterday, we reported the story from Law.com in which Quinn Emmanuel, counsel for ConnectU in its case against Facebook, claimed in a marketing brochure that its settlement in the Facebook suit was valued at “$65 million.” Today, the AP has uncovered additional data about the settlement by (of all things) copying and pasting text from a court document and accidentally finding redacted information.

According to the report, Facebook paid the founders of ConnectU $20 million in cash and 1.25 million shares of stock which – depending on the valuation used – pegs the valuation of the company at either $3.7 billion (Facebook’s own appraisal) or $15 billion (the valuation if the price Microsoft paid for its preferred shares were applied across the table).

Under their settlement, Facebook agreed to pay ConnectU $20 million in cash and 1,253,326 shares of common stock. The stock was worth $45 million, based on the Microsoft valuation, but only $11 million under Facebook’s own appraisal.

That means ConnectU received anywhere from $31 million and $65 million for settling the suit, depending on which stock valuation is used.

The $20 million cash payment certainly raises eyebrows given the apparent light weight of ConnectU’s case. For more details on the history of the case and settlement, click here.

Much like last week’s launch of scheduled virtual gifts for friends’ birthdays, Facebook today launched a new feature allowing users to schedule gifts for delivery on Valentine’s Day, marking the first time Facebook has built in support for holiday-themed virtual gifts to this degree.

With the new feature, Facebook gifts will appear “wrapped” on friends’ Walls until Valentine’s Day. On February 14, the gifts will be revealed to their recipients.

According to Facebook, “This way, you will know if someone special—or someone unexpected—is planning a Valentine’s Day surprise. You’ll get the delight of receiving a gift twice, and you’ll also have a chance to reciprocate.”

Facebook is continuing to roll out new features around its virtual gifts product, a high margin revenue stream that may generate up to 25% of Facebook’s overall revenue this year.

Last week, Inside Facebook reported that the fastest growing segment of Facebook users in recent months is women over 55. Now, new data from Hitwise confirms that Facebook’s American audience as a whole is becoming older and wealthier.

According to Hitwise, users aged 18-24 accounted for 42% of all US Facebook visits in January 2008, but that same age group accounted for only 24% of all US visits in January 2009. Today, over three fourths of Facebook’s US traffic comes from people over 25: 28% are 35-34, 23% are 35-44, 18% are 45-54, and 7% are over 55. Clearly, Facebook is catching on amongst people in their 30′s, 40′s, and 50′s in the US.

And with the shift in demographics has come a shift in household income characteristics for Facebook’s audience. Facebook leads MySpace in US social networking traffic in all income brackets over $60,000/year. Look out for more Audi virtual gifts in 2009!

The Facebook Platform team is holding a Developer Garage next Thursday, February 19, at the Blue Chalk Cafe in Palo Alto.

The topic of the evening will be getting the best results from feed stories and requests in your applications. In addition, developers will get a “preview of some upcoming improvements to Feed forms and Feed stories.”

Developers interested in attending should RSVP to the Facebook event.

Event Details

• When: Thursday, February 19th, 2009
• Time: 6:30 PM – 9 :30 PM
• Location: Blue Chalk Café – Palo Alto

Quinn Emanuel Urquhart Oliver & Hedges, the law firm that represented ConnectU and the Winklevoss brothers in their protracted lawsuit against Facebook that ended in settlement last April, has claimed in a marketing brochure for the firm that the amount of the settlement totaled “$65 million,” according to Law.com.

The disclosure was “apparently inadvertent.”

ConnectU, founded by twins Cameron and Tyler Winklevoss along with Harvard classmate Divya Narendra, originally filed suit against Facebook in 2004, claiming that Mark Zuckerberg and his fellow Facebook co-founders (also Harvard classmates) essentially stole the idea and initial code from ConnectU, then called HarvardConnection, and instead launched their own site, at the time called TheFacebook. However, the suit was eventually dismissed on a technicality, and nothing much more came of it. ConnectU then resuscitated the case in 2007, and Facebook counter-sued in response before settling in 2008 for a mix of cash and stock.

It’s not clear what valuation on Facebook’s stock Quinn Emmanuel used to calculate the $65 million number. Ironically, after reaching the settlement last year, the Winklevoss brothers dismissed Quinn Emmanuel, apparently upset with the settlement, and the firm immediately filed a lien against any settlement collected by ConnectU.

Just over one year has passed since the launch of the MySpace Developer platform on February 5, 2008. At that time, MySpace opened up the platform for all developers. Now, one year later, what apps are doing well on MySpace?

Here’s the list of the MySpace Platform’s top 25 apps as ranked by total installs:

Clearly, gaming apps dominate the MySpace platform. On Inside Social Games, we closely track the top gaming apps on the platform, most of which appear in the overall top 25 above. The latest numbers as of February 3 show Zynga’s second place Mafia Wars is growing at a rate nearly 3x that of the platform’s top application, Mobsters, in terms of total installs

Of the top 25 applications, 8 are developed by Zynga. Contributing to Zynga’s install strength is their use of promotions on MySpace, including both banners and Sponsored app placement in the MySpace app gallery.

While the comparisons to Facebook are unavoidable, the MySpace platform is a different enviroment altogether. The past year has proven that success on one platform does not neccesarily equate to success on another. That said, these results and a glance at the AppData Facebook Application Leaderboard confirm that thus far games are doing very well across social platforms.

This is a guest post by Jeremy Liew, Managing Director at Lightspeed Venture Partners. Jeremy invests primarily in the Internet and mobile sectors, with a particular interest in social media, commerce, gaming and methods for increasing monetization.

Last September I estimated that Facebook is doing around $35m in digital goods sales. In November anonymous insiders suggested that it was closer to $50-60m in digital goods sales. That’s a healthy run rate, but I think Facebook could make a few product changes to do even better.

I’ll split my suggestions into three categories: Opportunity, Means, and Motive.

I. Opportunity

Facebook has made some smart changes to its digital goods/gifts product recently, highlighting upcoming friends birthdays on the home page, prompting gifts on birthdays and allowing users to buy birthday gifts in advance. As birthday gifting is the most common usecase for Facebook digital goods, these are changes that increase a users opportunity to buy virtual goods.

Facebook could increase gifting opportunities by prompting gift giving on other calendar events as well. Some are natural gift giving holidays, such as Christmas, Chinese New Year, Valentines day etc. It already provides a selection of holiday specific gifts for each of these occasions. Facebook could generalize the “birthday” section on the homepage into a “calendar” and note upcoming events that are gift worthy, and perhaps even suggest recipients. For example, if you are “in a relationship” with someone on Facebook, then they would be a natural person to prompt for a Valentines day gift.

Chinese New Year themed virtual gifts

Facebook could also prompt gift giving on certain notifications in the feed that might be “gift worthy”. Especially notable are changes in relationship status (e.g. moving from “in a relationship” to “married” or to “single” for example), but others might include changing address (housewarming gift?), changing educational or job status (graduation gift, or new job gift etc).

Finally, Facebook could prompt for gifting more generally through more, and more direct, calls to action. “Give a gift” is the fourth option for writing on someone’s wall, and moving it to first would likely increase gifting immediately. So would prompting for gift giving (not just comments) on Status Updates on a profile and in the news feed. Simply putting a link to “gifts” as the default first application in the application box in the right rail would help.

I suspect that increasing opportunity could increase gift giving by 50-100%.

II. Means

Last year Facebook switched from denominating gifts in dollars to gift credits. This was a good first step as users tend to be more willing to spend virtual currencies than real money, even when they are readily interchangeable.

Currently there is only one way to buy Facebook gift credits, and that is via a credit card. But a lot of Facebook users don’t have or don’t use credit cards. They may want to be able to buy and give gifts, but they can’t do so. This is a common problem for a lot of game developers, including many game developers on Facebook. The techniques that worked for them can work for Facebook too.

As a start, Facebook could enable additional payment mechanisms, including Paypal, cell phone billing (including premium SMS) and direct debit from checking accounts. With such an international audience, additional payments mechanisms would allow many of Facebook’s international users to more easily buy gift credits.

Some Facebook users, especially those younger than 18, may not have access to any payment mechanisms other than cash. Accepting cash in envelopes for Facebook points would not scale very well. However, many game companies have been successful in getting their branded prepaid cards distributed at retail. This is one way of turning user’s cash into a payment mechanism that can be used online. Facebook has the brand awareness to do the same thing by striking deals directly with the two biggest distributors of prepaid cards, Incomm and Blackhawk. Alternatively, if they did not want to deal with retailers directly, a company like GMG Entertainment could handle it for them.

However, some users don’t have any money at all to spend on gift credits. Super Rewards and Offerpal have found one way to reach this market, through incentive offers. These companies allow users to trade their attention (through filling out market research surveys, applying for credit cards, getting a free trial of a service, signing up for email newsletters or other activities) for virtual currency. They take the bounty paid by the company acquiring the user, and use some of that to buy the user their virtual currency. Facebook could enable users to buy gift credits with incentive offers.

The combination of these tactics to increase Means to buy digital goods could provide an additional lift of 50-100% in digital gifts revenue.

III. Motive

Let us start by understanding the motives of gift givers. Gifting serves the same purposes on Facebook as it does in the real world. Firstly, it serves to strengthen social ties. Secondly, it serves to draw the receivers attention to the gift giver. Facebook can increase motivation for gift giving by playing into these two familiar behaviors, looking to the real world for conventions that can easily be borrowed.

Strengthening Social Ties

One of the strongest conventions of gift giving is reciprocity. It is awkward to receive a holiday card from someone that you did not send a card to. So too with virtual gifts. But right now it is difficult to know who has given you a Facebook gift. Since virtual gifts are given with the context of the wall, the wall is the best place to highlight gift giving. If each time I visited a friends wall I could prominently see what gifts that friend had given me, that would increase the pressure for me to buy a virtual gift for my friend to accompany my wall posting, especially so if it was a gift giving occassion (such as a birthday, holiday etc). Of course the opposite is also true – if a friend had not given me any virtual gifts you would not want to highlight that at the point at which I was considering whether to give a gift myself.

Gift giving is strongly influenced by immediate social norms. If I were to show up a dinner party empty handed when all the other guest had brought a bottle of wine, I would also feel awkward. People look to the behavior of others to see what is appropriate for their own behavior. Once again, the wall is the right place to highlight this. Right now the wall displays all postings in reverse chronological order. Since a new wall posting appears on the top of the wall, you will only see the most recent postings on your friends wall, many of which may not have digital gifts attached. What if the top postings on the wall were those with virtual gifts attached, and then reverse chronological order after that? (Perhaps with some time limitation, so that top posts would be virtual gifts received say in the last week). This would create a sense of social pressure to a visitor to the wall who would see virtual gift giving as a social norm. This will be especially effective around traditional gifting occasions as before. By highlighting desired behavior, you can influence social norms in the direction that you want.

Drawing Attention to the Gift Giver

Facebook can be a noisy environment. On your birthday you can receive 10s and even 100s of birthday well wishes. That is a lot of messages to sort through, and often these wishes are not responded to individually due to the volume. How can I make my well wishes stand out from the rest? How can I show how good a friend I am or how much I care? One way is to attach a virtual gift. Because the gift is not free, the very act of attaching a gift serves to differentiate my message from the rest. This is visible not just to the recipient, but also to all other visitors to the profile. Facebook could makes product changes to make this differentiation more prominent. One way would be to “pin” gifts to the top of the wall for some period, as noted in the preceding paragraph. Another would be to similarly “pin” gifts received to the top of the News Feed page for some period, ensuring that the gift is noticed and emphasized to the recipient. Finally, having a small profile picture accompany the gift, instead of just the name of the giver on the News Feed would serve to further draw attention to the gift giver.

Building from this approach, gift giving draws attention but it currently cannot draw gradations of attention. The absence or presence of a gift is the only distinction because all gifts currently cost the same (with the exception of free sponsored gifts). If Facebook were to provide gifts of different prices and levels, this would enable a gift giver to express their interest in a more nuanced way. One problem with implementing this approach on Facebook is the sheer volume of available gifts. There are over 300 Facebook gifts available today. It will be hard, if not impossible, for a gift recipient to tell what is a more valuable gift versus a less valuable gift just by looking at the gift. HotOrNot’s Meet Me solved this problem by starting with a small range of gifts with value tied to a conventional scale; flowers, ranging from the least valuable daisies to the most valuable red roses. Given the profusion of gifts available on Facebook today, Facebook would need to find some other way of demonstrating value to a recipient than relying on the image itself. Perhaps it could show the point value of each gift when the gift displays. But that is a bit crass – it is like leaving the price tag on a gift.  It may need more creativity to make this obvious. Facebook could change the background color of the gifts according to a scale of value that is well enough understood: perhaps white – bronze – silver – gold? This would allow for the current large range of gifts but make it easy to tell at a glance the gradations of value.

Obviously, allowing gifts to have a range of prices will increase the average sales price of gifts, hence increasing revenue from digital gifts sales.

Motivation for Gift Receivers

Looking at gift givers motivations is only half the story. The other half of the story is the gift recipient. What are their motivations?

One simple dynamic to increase gift recipients’ motivation to receive gifts is to make gift getting competitive. Keep track of how many gifts have been received and display this prominently. This could be done on the profile page; in the same way that number of friends is tracked and thumbnails of friends shown, number of gifts receieved and thumbnails of gifts received could also be shown. Or it could be made even more explicit with leaderboards for the people who have received the most gifts. The power of displaying metrics to drive behavior is well documented by game designers. (If you haven’t read Amy Jo Kim’s work on game design for social environments, you should). Once people want to receive more gifts, they will start acting in ways that encourage gift giving, whatever that might be.

Game design provides a second possible mechanic to induce gift recipients to want more gifts; collecting. Gifts are all treated the same right now. If Facebook were to offer awards and achievements for getting “sets” of gifts, you would most likely see some users work very hard to collect gifts to complete those sets. PackRat has shown just how powerful and addictive collecting behavior can be on Facebook. Facebook could for example offer a free [birthday cupcake] to give to someone else if you were given five [birthday cupcakes], or put a custom Christmas skin on your wall if you received 10 Christmas themed gifts.

I believe that through increasing the motivations of gift givers and gift receivers, Facebook could see a more than doubling of their virtual gifts revenue.

This article is based on a series of posts that can be found here, here, and here.

It’s all about presentation, or at least that’s the latest word from the Facebook Platform Team in a recent post on the Developers Forums.

Invite/request incentivation has been around since the Facebook Platform initially launched 2 years ago. In essence, incentivization is the act of rewarding users for sending an invite (or using some other other integration point such as a notification, the publisher, etc.) to use an application. With the dawn of the redesign several months back, Facebook placed an emphasis on eliminating these ungenuine invites with the introduction of Platform Policy #8.4. Fast forward to today — while it would seem the problem has been reduced, it has been all but elimated.

It’s a regular occurrence on the Developers Forum: a user reports some application XYZ for incentivizing an integration point. A typical thread includes comments from other developers about how Facebook doesn’t enforce its policies, or about how the platform is unfair, and subsequently the Facebook Platform Team will respond with a standard message that they will look into the pressing issue at hand. In the past two weeks, however, the Platform Team has taken a different approach to the topic.

About a week ago, Inside Facebook reported on a new trend revolving around some of the Pacman applications on Facebook. In particular, this was fueled by lengthy discussions on the Developers Forums about the application’s misuse of the platform and policy violations. There, the Facebook Platform team went into great detail regarding the work they put in behind the scenes to preemptively catch incentivizing apps:

“While we catch and remove most violations before you know about them, there are on some occasions violations which you are able to find first. The latter are by far more rare than the former.”

However, last week, the Platform Team more specifically addressed the issue of incentivation with their reply in this thread. The response boils down to a few details:

• The current incentivization rules exist despite a “gray area” of enforcement.
• Facebook is actively looking into ways to further define these rules.
• If your application associates app invites or requests with rewards, it will cross the line.

Essentially the gray area they refer to is about how your application portrays its integration points. For example, if your application is a poker app and you reward users with virtual currency strictly for the number of friends they have playing the game, you are currently in the clear. However, if you reward the user for the action of actually sending invites to their friends, you’ll be crossing the line.

While these two scenarios seem very close (and in reality, are), they highlight two different mentalities. With the former, you are encouraging users to spread the game, not necessarily through the use of an integration point – while with the latter you are explicitly encouraging users to send spammy app invites.

The gray area is further expanded by “gameplay necessity” — that is, the platform policy states you may allow incentivized app invites to take place if it’s a crucial part of gameplay or application functionality. Several applications have tried to design themselves around this notion, strictly so to skirt the platform policy.

This is the first time we’ve seen the Platform Team explicitly talk about the incentivization platform policy, and this newfound approach looks promising. We hope to see more explanations of this caliber from Facebook in the future, and will keep you updated.