While some businesses working with Facebook have been able to get a Facebook vanity URL for some time now, rumors are surfacing that Facebook may soon open up vanity URL registration to any user who wants one in a first come, first served land rush.

Under such a system, users would be able to get URLs like facebook.com/mark for their own personal profiles. (However, some of the most common first names are already taken.)

Administering such a landrush would be a significant challenge. Presumably, Facebook wouldn’t let users register trademarked terms or generic words like “lasvegashotels” that could be used to simply generate spammy SEO traffic. Facebook would have to establish clear rules for how the vanity URLs would be distributed.

Clearly, vanity URLs represent one of the best SEO opportunities on Facebook ever – and more vanity URLs would be good for Facebook’s own SEO efforts, too. However, Facebook has to be careful how they roll out the program, because URL changes are hard to undo in the SEO world. Facebook pages with vanity URLs are especially valuable to businesses, many of whom would likely be willing to pay significant chunks of money for the rights to a good vanity URL. Such a program could be a nice secondary revenue stream for Facebook.

As of yet, Facebook has not officially stated how it decides who gets vanity URLs, or what its future roadmap for vanity URLs will be. A Facebook spokesperson recently told Inside Facebook:

“We don’t offer specifics on which parties may have received ‘vanity’ URLs, but it’s something we’ve experimented with and have only offered on a very limited basis. We’re looking at how we might roll this functionality out to all of our users, but we don’t have anything to announce at this time.”

In other words, Facebook is still evaluating different ways of rolling out vanity URLs to balance SEO and direct sales opportunities. Personally, I’d open up the bidding to businesses first before giving away vanity URLs to users.

Check out the top headlines and insights this week from Inside Social Games – tracking all the latest developments at the intersection of games and social platforms.

Monday, May 25

• Industry Perspectives: Trends in Social Gaming Platforms with Playfish COO Sebastien de Halleux
• The Call to Action is a Simple Way to Increase Engagement in Social Games

Tuesday, May 26

• Minsh Layering an Undersea Virtual World on top of Twitter
• Tencent Virtual Goods Revenues Continue to Grow in Q1 2009

Wednesday, May 27

• Farm Town – Part YoVille, Part myFarm
• Medialets is a New Ad Network for the iPhone

Thursday, May 28

• Tweet140 – Insanity or Genius?
• Microsoft Xbox Lead Defects to Apple

Friday, May 29

• Gameyola Socializes Games With Flash API

Facebook has just launched the first live integration of its payment service for applications, a first step toward what could become a major new source of revenue for the company.

The payment system, called “Pay with Facebook” to consumers, is now live in fbFund-winning application GroupCard. Inside the app, users are able to purchase premium items for anywhere from $3 to $25, which can then paid for with any major credit card or Facebook credits. Facebook credits are the first payment option listed in the user interface.

When users click the “Pay with Facebook” button, a new popup appears showing the total price in Facebook credits and offering Facebook credit purchase options. Facebook bills the credits to a credit card you have on file, or you can enter a new credit card in the popup window. Full screenshots are below.

Now that Facebook is starting to roll out its virtual currency payment service to platform applications, demand for Facebook credits should increase dramatically – which would mean substantial revenue increases for Facebook. With the Facebook Platform economy estimated to be potentially as high as $500 million in total transaction values this year, Facebook could potentially add several million dollars to the bottom line simply by capturing a small piece of the overall market.

How much revenue might Facebook’s payment service generate? Back in December 2008, we estimated the following:

Let’s take a look at the current state of the transaction economy on the Facebook Platform. I’m not going to speculate on numbers here, but for the sake of argument, let’s consider the three widely varying cases that 2008 Platform transactions totaled a) $50 million, b) $150 million, and c) $250 million. Without going into too much detail, let’s quickly approximate that Facebook could net 5% of sales through an integrated payments solution.

At the end of the day, those fees might have added around a) $2.5 million, b) $7.5 million, or c) $12.5 million to Facebook’s top line, not accounting for the lift in transactions that would likely have arisen from a more frictionless payment option. Based on popular estimates of between $250-$300 million in Facebook’s 2008 revenues, a platform payment system could have reasonably boosted total revenues by 3-5+% this year.

For the sake of argument, let’s say the Platform does $500 million in total transactions this year (that’s on the high end of estimates in the $300-$500 million range we’ve heard from leaders at companies in the space). If Facebook processes 5%, 15%, or 25% of overall transactions this year, that could mean $2.5 million, $7.5 million, or $12.5 million in incremental 2009 revenues respectively (assuming Facebook charges a 10% transaction fee – we don’t know what the actual fee is or will be yet). In other words, still only a small percentage of Facebook’s overall bottom line.

We don’t espouse political philosophy here on Inside Facebook, though we are in favor of encouraging constructive political debate. That’s why we were surprised to hear at last night’s Startup2Startup event from Randi Zuckerberg, Facebook’s manager of political and social change initiatives, that despite her team’s best efforts during last year’s election season, the Republican Party generally wasn’t very enthusiastic about making Facebook a strategic part of its campaigns.

Zuckerberg, speaking alongside Chris Sacca (Twitter investor, surrogate speaker for the Obama campaign during the election, and former Googler) and Steve Grove (YouTube’s news and political director), said at Startup2Startup’s “Government 2.0″ event last night (full video below) that Facebook made every election season idea and political program equally available to all candidates, but Republicans just pursued those ideas less. Even when the Obama campaign would come to Facebook with new ideas, Facebook shared them with the McCain campaign, she said.

“We made very sure to offer the same thing to both sides. There were even times when the Obama campaign would come to us with incredible ideas, and we told them that even though this was their idea, just by telling us about it, we were going to have to offer it to the McCain campaign also. However, the McCain campaign did not usually take us up on the ideas,” Zuckerberg said.

In addition to its Facebook Pages, Platform applications, and advertising campaigns, the Obama campaign was also first to implement Facebook Connect. Chris Hughes, a co-founder of Facebook, led many of Obama’s social media efforts.

“The Obama campaign was really run like a technology company. They were really quick to adopt a lot of things. They actually came to us with more ideas than we brought to them. We were really focused on building scalable tools for any politicians to use, local or national, and the Obama campaign had really tremendous ideas for how to leverage the viral spread of information,” Zuckerberg added.

To illustrate the general difference between the ways the two parties were interested in working with Facebook during the campaign season,  Zuckerberg told the story that while Facebook was overwhelmed with organizers interested in meeting with them during the Democratic National Convention – even being whisked away to VIP parties and the like – Facebook’s political team had a harder time finding people interested in meeting during the Republican National Convention the following week.

“I was begging people to meet with us,” Zuckerberg said.

The results, which have been well documented, speak for themselves. The Obama campaign schooled the rest of the world on how social media is done.

Since the US Presidential elections, Zuckerberg said Facebook has received an outpouring of interest from candidates around the world interested in “doing an Obama.” Political parties around the globe are considering how to apply lessons learned from the United States in 2008 to their upcoming elections. That makes sense, as 70% of Facebook’s user base lives outside the US.

In fact, just today, the Conservative Party in the UK launched a new Facebook application encouraging constituents to “donate their status” ahead of the European elections next week.

“This use of social media by the Conservatives is reminiscent of the Obama campaign’s deployment of similar tactics during the race for the White House last autumn,” Emma Barnett of the London Telegraph wrote earlier today.

By this point, the Republican Party (and every party) has surely realized the ways social media and Facebook have changed politics. 60 million Americans from 13 to 65 are getting their news from their friends on Facebook each month, and the persuasive power of social recommendations is much stronger than any TV, radio, or newspaper ad can ever be.

As Steve Grove said last night, political dynamics map very well to the social web. Any political candidate who doesn’t do their very best to understand and use Facebook and other social tools to the best of their potential does so to their own detriment.

Update: Matt Burns, director of communications for the 2008 Republican National Convention who commented below, issued the following follow-up comment to Inside Facebook:

“I LOVE Facebook as much as the next person.  I can’t speak for the McCain campaign because I wasn’t working on its new media efforts, but the convention itself made unprecedented efforts to incorporate new media into our campaign.   Over the course of our convention, we attracted 1.7 million unique visitors, and strategically partnered with Google/YouTube and Ustream.TV to draw an additional 7 million unique viewers to our content.  And the GOP convention had more Facebook “friends” than the Democratic National Convention.  We had about 10,000, while the Dem Convention had about 3,300.”

Google dominated the business and technology press yesterday after it revealed the existence of Wave, a web-based application built upon email that enables users to share notes, pictures, blogs, videos and other bits of dynamic content in real-time. If successful, Wave would make Google’s core products and the web in general inherently more social, which begs the question: What does that mean for Facebook?

Overall, it might be too early to tell, but Facebook should keep an eye on where the technology is headed for a few reasons.

One is the design similarities. As an application, Wave embraces the “stream” design that Facebook has already implemented for its 200 million users. Apps focused on streams of shared content are based on the idea that information should flow to you. The Facebook News Feed and home page have been restructured to work in this format, representing a departure from past iterations of the site’s design that relied more heavily on users visiting their friends’ profiles. Under Facebook’s stream design, the content your friends share on Facebook flows to your fingertips.

Wave will do this, too. But it won’t just be your Facebook friends — it can be everyone in your address book, making it potentially very powerful.

But since Wave won’t be available until later this year, Facebook will enjoy even more time to have their users adjust to this way of consuming content on its platform. One of Facebook’s most powerful assets is that users have already uploaded years of pictures, notes and videos. This trove of content has made Facebook not only their primary communications mechanism, but their digital scrapbook as well. It’s unlikely that, overnight, they would move to their Gmail (or Wave) account to control all that information.

But Facebook shouldn’t dismiss Wave as hype, either. It appears to have immediate upsides for both developers and consumers. For developers, Wave is very open. They can add functionality to it, integrating it with other websites and applications. For consumers, Wave seems to marry social features (like an event invitation) with the robust messaging capabilities that you’d see in Gmail or instant messaging clients.

It also doesn’t require that users be loyal to one particular web tool or service for their content creation; they could use many of them. This, of course, could make Facebook look more “closed off,” since many of Facebook’s core applications (i.e. photos, notes, videos) are proprietary.

Conclusion

Rather than be adversarial, Facebook might examine how its site could work alongside Wave rather than compete with it. To date, Facebook’s large user-base remains loyal. They might conclude that Facebook and Google serve different purposes in their daily Web diets, as they currently do today.

It may be hard to believe, but it’s already been two years since the Facebook Platform launched in May 2007. Since then, we’ve seen over 50,000 applications published (and tens of thousands more not published in the directory), significant changes to the way successful applications are designed, and a number of twists and turns – not to mention a lot of social and cultural change as people increasingly share more information with their friends.

Now, the Facebook Platform economy is estimated to be doing close to $500 million annually, and a robust ecosystem of developers, ad networks, and virtual currency monetization and payment services has developed to service the hundreds of millions of cumulative monthly active users on the Platform each month.

When the third annual f8 developers conference rolls around this year, developers will primarily be interested in learning how to build a sustainable business that leverages the distribution potential and social context of the Facebook Platform and Facebook Connect, instead of simply optimizing for short term virality. The next two years are going to be even more interesting than the first two!

Check out Facebook’s 2nd anniversary video:

On Tuesday of last week, Apple launched its official iTunes Facebook Page, and fans have already interacted with the page around 1 million times.

The official iTunes page marks Apple’s second official public profile on Facebook, the first being the Apple Students page. The Apple Students page was launched a few years ago when Facebook was largely a college-centered platform (originally as a sponsored group, a concept now replaced by pages). The page naturally became the default Apple Facebook page that publishes a wide variety of content, including iTunes-related news. Now, however, iTunes stories will have their own home at the new iTunes page. The Apple Students page will continue to exist and be managed by the education team, with a relaunch due around August.

It’s been a little over a week since the iTunes page launched, and the response has been great. The page already has over 1 million fans – a combination of the fact that fans were merged from relevant existing unofficial pages and daily growth has been strong. According to PageData, in the past week, new fans per day has gone from numbers in the thousands to figures in the tens and almost hundreds of thousands. In the Technology Product/Service category, the iTunes page ranks #2 among official Facebook Pages after (can you guess?) Facebook.

But beyond these reach numbers, engagement metrics are looking solid too. The iTunes team at Apple shared with us that the first week saw almost 1 million page interactions with fans actively clicking on and posting to the page.

The most popular content is in the Featured tab, where fans can find features such as iTunes Top Charts, Search and Share, iTunes U, as well as exclusive offers, tutorials, and podcasts. With the Search and Share feature, fans can search for favorite songs, movies, shows, etc.  and share them on their Walls and the News Feed.

The iTunes Facebook Page, managed by social marketing company Vitrue, is on the right track. So far the page is an excellent example of how brands can provide compelling features that excite fans enough to want to share content. At the same time, Apple is also getting good value out of the page by driving traffic to the iTunes Store and increasing its own bottom line. If iTunes’s first week on Facebook is telling of anything, this is a page to watch.

When former Facebook CTO and VP of Engineering Adam D’Angelo left the company last May, it wasn’t clear what he would do next. Now, D’Angelo and Charlie Cheever, the former head of engineering for Facebook Platform and Facebook Connect, who also recently left the company, have founded a new startup called Alma Networks. The company is based in Palo Alto and has raised a round of seed financing.

While the two aren’t ready to talk much about what they’re doing publicly, a recent job listing from the company describes it as “a community-generated database of the trusted information that interests people most.” It goes on to say:

Some of the challenges are highly algorithmic, such as coming up with ways to organize and categorize the information effectively so that users can efficiently find what they need; others are very technical, such as working to make a web application that is complex while still being very fast; and many of the challenges are in product design, such as figuring out a way to set up and grow a healthy community and constructing intuitive interfaces for users.

D’Angelo and Cheever aren’t the only former Facebook exec-lead engineer pair to go into business together in recent months. Last October, Facebook co-founder Dustin Moskovitz and lead engineer Justin Rosenstein left to start an enterprise productivity software company that’s still operating quietly.

Back in January, Facebook CEO Mark Zuckerberg announced leadership changes on the Facebook Platform team that included Mike Vernal taking over for Cheever as head of Facebook Platform and Connect engineering. At the time, Zuckerberg said Cheever would be moving over to work on “more new initiatives.” Vernal was a core member of the team that built and launched Facebook Connect last year.

Facebook has just announced the winners of the 2009 fbFund competition – 18 startups and two non-profits – who will also be invited to participate in the fbFund REV 2009 summer incubator program at Facebook’s offices in Palo Alto.

While Facebook has not yet announced specific details on equity investments, Cat Lee of the Facebook Platform team says in total winners will receive over US $500,000 in funding (excluding the two non-profits, who cannot receive funding under current fbFund rules). But without further ado, here are the winners:

18 Startups

• Frintro: Find friends of friends to date…or play matchmaker! If you’re single, you can search your friends’ friends and ask for intros. If you’re taken, you can set friends up. Friends of friends are the best people to date. It’s social dating via friendly intros.
• Funji: Funji is an avatar-based social networking app for the iPhone and iPod touch, satisfying users’ desire to express themselves and communicate with others in a fun, creative way. The team has over five years of experience in the mobile market in both South Korea and the US.
• Gameyola: Gameyola is a distribution and monetization platform for casual Flash games. Flash games currently monetize poorly, but Gameyola solves this problem by providing Flash developers tools to sell virtual goods and to acquire users through social channels.
• Life360 (private beta): From keeping track of your kids, to protecting your identity and getting back your lost stuff, Life360 is the place you go to keep your family safe, secure, and prepared for daily life.
• MyChurch.org: Churches create their own social networks on MyChurch.org. They extend their community between Sundays with tools to connect and engage their members. Over 30,000 church congregations are represented on MyChurch.org.
• Navify: Navify is a visual encyclopedia that combines Wikipedia articles with images, videos, and comments. It is the only general encyclopedia that allows you to listen to music videos, watch movie trailers, and browse news and celebrity photo galleries.
• Nutshell Mail: Simplify the way you manage Facebook and other social networks. NutshellMail consolidates activity from all your accounts into a single email digest delivered on your schedule. Don’t let email alerts clutter your inbox. Get informed, not interrupted. Get the Nut!
• Networked Blogs: Bring your blog to Facebook, and Facebook to your blog. Pull your feed to your profile and business pages, add widgets to promote your network, and read the news from blogs you follow on the largest community of bloggers and blog lovers on Facebook.
• Paradise Paintball 3D: Paradise Paintball is the first game developed on Cmune’s next-generation social gaming platform. It is the first casual 3D multiplayer FPS game on Facebook, Apple Dashboard and Mac & PC. Play with up to 8 friends and buy virtual items to enhance the gameplay.
• Photos I Like: Photos I Like is a digital media sharing and discovery site emphasizing lightweight social content, self-expression, and communities.
• RentMineOnline: Combines the success of resident referral programs with the power of social networks. Residents refer their community to friends through social networks like Facebook, and email to earn rewards and live with friends.’
• RunMyErrand: RUNmyERRAND is a social networking inspired web and mobile marketplace that provides people and businesses an easy and trusted way to get everyday tasks done in their own hyperlocal community.
  
• RunThere: RunThere is a social-networking service for runners and cyclists. Users can map and measure their favorite routes (no GPS required), keep a running/biking log, and find athletes and routes nearby.
• Sortuv: Sortuv lets you start with something you like, and discover more. Instead of searching for a “great restaurant” just say what you mean: “Find me a place sortuv like Spago in Seattle”. Check us out on the Web, on the iPhone, and on Facebook.
• TravelBrain/GeckoGo: Travel Brain by GeckoGo helps you track (and show off!) your travels, share experiences with others, and discover new places to visit. Learn from the knowledge of over 600,000 travelers, and get expert guide info from our Bradt Travel Guides partnership.
• Weardrobe (private beta): Weardrobe is a fashion-focused community for discovering different ways to wear clothing. Weardrobe provides a platform for people to share reviews of their own clothing, post photos of their looks, catalog their closet and search for style inspiration.
• Workstir: Workstir is a community that connects users with trustworthy local service providers. Anyone can post a job and choose a provider with confidence by browsing their past reviews. For businesses, Workstir provides a wealth of jobs in their area of expertise.
• Worldly Developments (private beta): Worldly Developments is building online services that will help you connect with the people, places and events in your local community. Its first product makes it a snap to plan, promote, and communicate around group activities.

2 Non-profits

• Samasource: Sama is Sanskrit for “equal” – Samasource finds and trains reliable QA professionals to test Facebook apps with a user-friendly interface that lives on the Platform. With Samasource, developers lower costs, reduce poverty, and improve their applications.
• Vittana: Vittana enables you to lend directly to students in the developing world, $25 at a time. Our mission is to bring student loans to the developing world through the power of person-to-person microlending.

Summer Incubator Program in Palo Alto

fbFund’s 2009 REV incubator program, which is being organized by Dave McClure, will offer winners the chance to come together in Palo Alto and work under the mentorship of advisors from the fbFund Developer Advisory Council and Facebook.

“Already planned are sessions with speakers from our fbFund Advisory Council, business luminaries, and our Facebook Platform team focused on everything from operating lean startups and metrics for success to marketing and monetization. The days will be packed with opportunities to get together, learn from one another, brainstorm and iterate on applications and business models,” Lee says.

Because the investments this round are in the seed range, participants will be encouraged to explore further financing opportunities at the end of the summer. All of the startups will get the chance to pitch to angel investors and VCs as the incubator program winds down in late August. In addition, Facebook says it is dropping the right of first refusal on further financing from the fbFund terms.

Over 400 applications were submitted for fbFund financing in this round. Facebook invited over 20 of the fbFund council advisors and investors to help review, rate, and select the finalists.

As a member of the developer advisory council, I was really impressed by all of the innovative applications and websites being built. Congrats to all the fbFund 2009 winners!

As we continue our in depth look at leaders the Facebook Platform payments ecosystem, today we turn our attention to Gambit, a new virtual currency monetization and payment service for social apps and games that went public for the first time here on Inside Facebook back in March.

We recently spoke with Gambit co-founder Noah Kagan (formerly of Facebook) about the opportunities he sees inside Facebook apps and games, and the approach Gambit is taking to help developers monetize.

Inside Facebook: When did you realize the business opportunity in providing payment services to online gaming communities?

Noah Kagan: We’ve been building applications for the past year and a half. Through that process, we developed our own payment tools. We wanted more transparency, analytics, and customization. These values maximized profit for our own games, and we found that we were doing better than our competitors. To see if it was a fluke, we let other game developers experiment with our payment tools. The results were consistent, and so we closed down our games and focused on providing payment solutions to online gaming communities.

Gambit is a payment solution for online games, and our services vary based on what clients need. We help clients find the best way to implement a virtual economy, structure price points, and use analytics to maximize ARPU.

What geographic markets is Gambit in?

We focus on the U.S., U.K., Australia, and most of Western Europe. We are the leader in these countries for monetization and competitive in South American and Southeast Asia. We are powering the #1 app on MySpace, #1 app on Facebook, and many other small and large properties. The U.S. is five years behind in virtual monetization, but a lot of consumers are willing to pay for virtual goods. I don’t spend much on anything, but I care for game consoles. The market is only going to grow: the question is, how do you make it easy for people to pay?

Discuss the value chain of your business model: Who are the key players, and how is value created for each one?

From the developer’s standpoint, the tradeoff is between focusing your time and energy on game development or monetization, which includes aspects such as customer support, fraud, callbacks, tech, API, etc. Developers can spend a small percentage of their budgets on PayPal, or a little bit more on us and take advantage of more services. It’s a cost benefit analysis. Gambit provides developers with a buffet of payment options that empower them to make decisions based on statistics that show how much revenue they get from advertisers. We value transparency. Other providers give you numbers, but with no certainty.

Users get phone and email support with us – no one else does this. Then there are advertisers that are making offers, as well as payment companies. Our advertising relationships are pretty well developed.

In terms of competition in the payment space, how would you distinguish your products?

We’ve innovated with our behavioral ad targeting, complete payments customization, fraud reduction technology, and our transparent analytics. Our business is built on what developers want and how to make more money for them: if they want certain metrics, we will make them available if possible. Because we come from a developer background, we know how our clients feel, whereas other companies are coming from a sales and marketing perspective. We emphasize results and performance, and how to build better products and code.

Across the board, all developers have problems with customer support that they are not aware of. This is a huge challenge long-term that most people discount. The common problems are that users aren’t getting their credits or didn’t complete all the requirements, and technical problems. We have a full time staff, direct phone support and provide a CRM solution for our clients to see what their users are saying.

What’s your reaction to Facebook’s virtual currency test?

Competition breeds innovation. Facebook has a lot of inherent value to bring, but how will they provide value specifically to game developers? I’m curious what additional value Facebook can produce that we can’t.

How is your company doing from a financial perspective?

Gambit has been profitable since December. We’ve raised some funding in 2007. Since we have not fund-raised large amounts like our competitors, and we do not have unrealistic growth expectations from a venture capital firm – so that’s an advantage.

What kinds of developers are most attracted to your products, and what kinds of virtual goods have been most successful for them?

We are serving over 20 million users across our hundreds of clients a month. Social networking applications, online communities, RPG and flash-based MMO games do very well with us.

Where is the virtual goods economy headed in the future?

There will be an increase in online virtual goods spending in the Western world. Regarding online offers, they need to be more relevant and user friendly: for example, a girl who likes frozen yogurt can signup for free frozen yogurt and get credits at the same time. Right now, some users have a bad experience with offers. We will move toward using more social information – age, gender, geography, and a few other factors in improving offer relevancy. In general, the payment solution that will win is one that helps converts users to paying customers as easy as possible.

Thanks, Noah. Anything else you’d like to share with our readers?

We’d love to chat with anyone interested in optimizing or growing their online economy. Check out more on our blog.