For San Francisco based nonprofit organization Samasource, applications are “social” in both the sharing and the social responsibility senses of the term.
In the organization’s own words, “Samasource is a 501c3 non-profit that partners with small, talented, tech companies in poor and rural communities to find them clients. Samasource partners must meet stringent social impact criteria, and they specialize in services ranging from data entry to advanced software and website development.”
In addition, in an announcement earlier this week, Samasource was selected as one of the first 25 finalists to advance in this year’s fbFund competition. The company is matching Facebook application developers with Q/A testers in the developing world.
Combining Social Responsibility and Social App Development
In Kenya, rural India, and Nepal, unemployment rates among the college-educated youth are high: around 60 percent of college graduates in Nairobi are unemployed. In Kenya, where families have valued education and tried hard to send their oldest kids to college, the job market hasn’t caught up to the supply of talent that these 20-something individuals bring. Without skilled jobs, these college graduates resort to returning to their farms to figure out how to repay their college loans in some other way.
For almost a year now, Samasource has addressed this problem by identifying small local technology companies in the developing world to join their exclusive network of providers, supporting them with training and project management tools. Samasource then matches its providers with US-based organizations (its clients) that are considering socially responsible outsourcing. Among the list of services offered is application testing.
Starting at $1 dollar per app per week, Samasource providers can test Facebook applications (e.g., sign-up process, cross platform functionality, and links and other actions) for developers who may find it valuable to outsource back-end development. The idea is that matching the business needs of US clients with the services that providers offer will generate job creation in Samasource’s areas of operation – giving work, not aid to the educated unemployed population. To date, Samasource has produced $150,000 dollars worth of contracts, allowing it to be financially self-sustaining for now.
As the worlds of social networking and social responsibility converge, it will be fascinating to watch how players at the intersection of the two spaces complement and amplify each other’s work. If developers are indeed working social responsibility practices into their agendas, and organizations like Samasource can deliver the results required in the fast-paced market of application development, then Samasource might be onto something.
Inside Facebook is excited to be hosting the first Facebook Marketing Breakfast, a half-day invite-only event in San Francisco on Thursday, June 18th, 2009, focused on the landscape and realities of marketing in Facebook for large brands and advertisers.
The Facebook Marketing Breakfast will bring together Facebook’s brand solutions team, leading experts from the space, and successful clients to share information on what’s worked and best practices. The breakfast is being held at the San Francisco offices of Razorfish, host sponsor for the event.
At the Facebook Marketing Breakfast, attendees will gain a deeper understanding of products and opportunities in the Facebook ecosystem, including brand, performance, and application solutions, engage with companies that have successfully seen growth in customer awareness and bottom-line sales, and learn what tactics to avoid along the way.
Betsy Burkett, Senior Manager of Digital Media at Mattel, and Karl Long, Social Media Strategist at Nokia, have been added to an outstanding lineup of presenters. So far, confirmed speakers and panelists for the event include:
Betsy Burkett, Senior Manager, Digital Media, Mattel
Currently, all of Facebook’s monetization efforts happen on Facebook.com, whether engagement ads sold directly to large clients, performance ads sold through Facebook’s self-serve tools, or Facebook credits sold directly to users.
With Facebook Connect, Facebook has opened the door for possible future monetization efforts through advertising, virtual currency transactions, or other forms of social commerce. However, now that Facebook has opened up the stream API for developers to create new kinds of applications that can run outside any Facebook-operated websites or interface altogether, how might Facebook be planning to one day monetize that engagement?
For now, Facebook isn’t prioritizing monetization of the stream API. Rather, it simply wants to get stream-based applications developed and distributed as quickly as possible so as to permeate the variety of platforms and devices on which consumers are increasingly monitoring real-time information.
However, while for the time being Facebook’s ad sales team may not be getting new inventory it can sell directly, here are a few ways Facebook might make money off the stream API in the future:
1. Selling targeting data. Much like has been imagined with Facebook Connect, Facebook could provide user profile or behavioral data which developers and publishers could then use for their own ad targeting purposes. Developers and publishers would then be able to provide the most compelling advertising experience according to their particular product, and Facebook could be paid either a flat fee or on a revenue sharing basis. While there are privacy questions that would need to be addressed, the basic model has worked well before.
2. In-stream virtual currency transactions. While Facebook is still only experimenting with virtual currency gifting, it shows that the company is actively engaged in thinking about ways to enable currency transactions directly in the stream. Were Facebook to expand on this kind of functionality, it could enable developers to build new kinds of games and applications that could drive high volumes of currency exchange in the stream, no matter where the stream is being consumed.
3. Selling tools and reports. Twitter’s Biz Stone claimed recently that the company wasn’t even planning on pursuing advertising sales for now, but rather is focused on providing premium analytics and tools to marketers. If Facebook is able to achieve significant distribution of its stream through the Open Stream API, that could create similar opportunities for Facebook as well.
It’s possible that Facebook won’t actively pursue any of these options for a while. However, there will come a time when Facebook needs to figure out how to monetize all of the engagement that will happen off properties it runs, and any of these three models could be tenable starts in that direction.
Mafia Wars and Texas Hold’em may be two of the most popular applications on the Facebook Platform, and their Facebook Pages are also getting a lot of traffic, too.
In fact, Mafia Wars has over 1.6 million fans and Texas Hold’em Poker has 1.2 million, according to PageData. Not surprisingly, the total number of fans is steadily increasing for the two social gaming Pages, as each are adding about 150,000 fans per week.
Both Mafia Wars and Texas Hold’Em are gaming applications built by social gaming company Zynga. In Mafia Wars, players run a Mafia family with their friends and work their way to the top by engaging in criminal activity. In Texas Hold’Em, players join a virtual table and enjoy casual poker with friends or strangers. Both games incorporate virtual currency into the experience, inviting users to display their competitive energies in the context of a social experience.
Promoting social gaming applications may not be the first thing you think of when seeing how Facebook Pages are most often used. While most Facebook Pages are used by advertisers to market their brands, the main purpose of public profiles like Mafia Wars’s and Texas Hold’Em’s is to drive traffic to gaming applications. (App developers can also publish updates from their application’s about page in the upcoming redesign of the Facebook application directory.) Compare this to advertisers whose goal may be to drive traffic away from Facebook to their own websites.
Another point of interest is that out of the 10 leading Pages in the gaming category, eight were unofficially created and are being maintained by fans – a sure sign that there’s a gap between what gamers need and what social gaming companies are providing.
But this phenomenon may not be all that bad. As fans take the intiative to generate their own content and administer Pages in their own ways, when gaming companies are ready to own their own Page, they will have a head start in terms of knowing how their fans think.
Leading Facebook dating application Zoosk is now the 13th largest Facebook application overall by total reach, according to AppData. Zoosk is reaching nearly 9 million users per month with its free service, and is fighting to crack paid dating on Facebook as well though a “freemium” model. Zoosk’s premium membership plans range from $12 to $25 per month, and the company also sells virtual currency that users can redeem for virtual gifts to attach to messages they send to others.
Zoosk has almost doubled its user base since January, going from 16.5 million users to 30 million in the last four months, the company says. The service integrates across a number of social networking sites, so a Facebook user can connect with anyone using Zoosk on MySpace, Hi5, or Bebo.
In addition, Zoosk added Last.fm and Netflix account integration this week. Now, potential suitors will have another way of finding common ground and starting conversations based on similar interests.
“Now, you can listen to a new playlist on your way to work or add a movie to your Netflix queue and meet someone on Zoosk later that day who noticed your update and shares your taste in music or films,” says Zoosk CEO Shayan Zadeh.
Users with Last.fm or Netflix accounts simply link them to their Zoosk Date Card, where their latest music and movie choices will appear for other Zooskers to see. Updates are made in real time, so Zoosk users can make comments or find connections as soon as a favorite song is played or a new movie selected.
Last year, the company raised $4.1 million from Canaan Partners and included ATA Ventures. ATA Ventures was also an early investor in Zoosk along with Amidzad Partners.
As we continue our look at the Facebook payments ecosystem, today we turn our attention to mobile payments provider Zong. Zong, originally a division of Echovox, allows consumers to purchase virtual currency, virtual gifts, and other in-application features or items through mobile phones. Unlike other mobile payment companies, Zong has focused its efforts primarily on North American and Western European markets.
We recently spoke with Zong CEO David Marcus about his thoughts on the mobile payment space, and Zong’s role in it.
Inside Facebook: How did Zong evolve from a business idea to the global mobile payments company that it is today?
David Marcus: Zong has been around for almost nine years, under Echovox. We began by helping media companies monetize their TV audience through mobile entertainment applications. To do that, we built connectivity to about 100 mobile carriers. Two years ago, we realized that leveraging that infrastructure to build a mobile payments product for gaming and social networking was a smart thing to do. It took a over two years to build the payment layer on top of our infrastructure, and we launched Zong in its current incarnation in September 2008.
What value does Zong bring to the Facebook Platform economy?
Zong offers a seamless payment system. It removes the friction associated with traditional payment methods like credit cards with service that’s easier and faster. If you’re in a virtual world and want to buy a collar for your virtual pet with a credit card, you would go to your purse, get your credit card out of your wallet, and type in your credit card number, expiration date, and billing address. In most cases, halfway through, you’ll start asking yourself, “What am I doing?” and abandon your purchase. By contrast, your cell phone is always next to you: you know your number by heart, and it takes five seconds to complete a payment.
Zong’s conversion rate is now close to 70 percent, meaning seven out of ten users who get on our payment IFrame, successfully make a payment. Credit cards have a conversion rate that’s lower than 5 percent on average.
How do you ensure that conversion rates stay high?
We’re present in 16 countries in North America and Western Europe and add one to two countries per month. We’re now focused on developing our Asian and Latin American footprint. One thing to put in perspective is that there are other players in the market that claim they have coverage in a country when they have only one carrier. Zong has more than 95 percent wireless subscriber coverage in each of our countries. Not having complete or close to complete coverage in a country contradicts the promise of high conversion rates that mobile payments claim to bring. In the US, Zong has over 97 percent wireless subscriber coverage, and 100 percent in Canada and Europe. 80 percent of the time, we’re directly connected to our 94 carriers. There’s no additional intermediary, whereas all the other players in the market go through aggregators, which charge more transaction fees.
The toughest part of the business is managing relationships with carriers. Zong has a team of 10 in Europe and three in the US for this purpose. We’ve made a lot of money for our carriers. They know that they can trust us.
What are some of the dynamics at work in your value chain?
Mobile carriers take a substantial piece of the transaction revenue, so mobile payments are one of most expensive transactions out there. In Europe and the US, carriers take between 30 to 45 percent of a transaction. Zong fees are very small, and they depend on volume. Selling physical goods with high cost of goods doesn’t work with mobile payments; however, it’s really the best solution out there for a virtual economy where goods have a 100 percent gross margin.
Some developers adjust the exchange rate between what they’re netting and the amount of virtual currency they’re issuing, so there are cases where customers get less virtual currency than they would with credit cards; however, ultimately, even developers who absorb the transaction costs make more money thanks to the unmatched conversion rate of Zong.
From the consumer perspective, the way it works is that you choose a payment method, and then you see what packages of virtual currency you can get at what price. Zong enables users to make payments they otherwise wouldn’t make, either because they don’t have a credit card or bank account or because there’s too much friction involved with completing a payment. In over 90 percent of the cases in games, it’s an impulse buy, and we realized that in most cases users had little price elasticity. Users were more or less indifferent between spending $2 or $4 dollars because the payment process is so seamless (no checkout experience).
What will it take to bring mobile carrier fees down?
Zong is having very interesting discussions with all of our mobile carriers. First of all, the mentality of carriers is one of mobile content, not of payments. This needs to change. If carriers reduce the cost of transaction, their addressable market will become much larger. Currently you can’t use mobile payments for goods or services that have a gross margin below 60 to 70 percent. Mobile payments are for high margin digital goods and services. We’re hopeful as we have very constructive discussions going on, but it’s hard to tell how long it will take for these transaction costs to decrease substantially. It’s getting better though: carriers used to keep 70 percent of the transaction.
What’s your process for screening applications that are interested in integrating with Zong?
Mobile carriers don’t want anything to do with adult content or gambling, so we need to make sure that the application isn’t falling into any one of those categories. Applications like Zynga’s Texas Hold’Em are casual pseudo gambling and not considered real gambling because you can never get money back. It would, however, be problematic if you could put money on table and get more out.
How’s your coverage in developing-country markets?
We’re working hard on expanding our global coverage and we’re adding about 2 countries each month. But, while the developing world is interesting for some application developers, you have to consider the GDP factor. In some of these countries, the disposable income level is very low. The price points that users would gladly use in the US don’t in these countries. A $9 dollar transaction in the US may translate to five cents in Latin America. And since, most developers don’t index virtual currency to GDP, transactions don’t happen. Even five cents for a virtual cowboy hat may be a lot to ask for if people don’t have enough to put food on the table. It’s harder for people in developing countries to pay for something that will not materially improve their lives. Even in Portugal, a country where Zong is live in, and that has a substantially higher GDP than developing world countries, the average transaction is almost divided by 10 compared to the US.
How is Zong unique from other mobile payment companies?
No other mobile payment company offers a 97 percent wireless subscriber coverage in the US or in Europe. For some of them it’s below 50 percent, which means that half of the users who try to make a mobile payment can’t pay because their carriers aren’t connected! Also, none of the other players has a single direct carrier connection – they use aggregators. Downfalls to working with aggregators include: One, they take an additional fee of an already very expensive transaction; and two, there’s a huge credit risk. Financially, most aggregators are fragile because they’re in a thin margin business with high operational costs. It’s financially dangerous for a large company to trust millions of dollars in a payment system that relies solely on aggregators.
For application developers, having a unified payment method that’s fast, easy and converts better is definitely a must. From the end users perspective, it’s great: they’re more likely to execute a transaction that has the Facebook brand attached to it. Allowing users to use Facebook “credits” across applications is also very interesting. Some bloggers estimate that the virtual economy on Facebook has reached $500 million dollars a year, so if Facebook executes its currency system well, the number of transactions could easily double quickly, and we’d be talking serious money here. This could be a pretty good business model for everyone involved.
How much transparency does Zong provide application developers on transaction details?
We have live reporting on the API. Developers who want to build on analytics can do so through the API. On top of that, Zong provides different dashboards, one of which is dedicated to consumer support. Developers can track transactions by reference number, phone number, user ID, etc.
What’s the most frequent customer support issue you have?
The most frequent problem we’ve seen is that a user successfully buys virtually currency or a virtual good, but the application doesn’t credit the points due to some technical problem on the developer’s end. In this case, we inform the developer so that the user can be credited. Zong offers users a localized end user experience. If you log into Facebook in France or Norway, for example, you’ll see content and hotline services are in local languages.
What’s your favorite Facebook application that has integrated with Zong?
One of my favorite applications is a virtual paintball game based on flash called Paradise Paintball. In the game, if you want to buy a bulletproof vest, you can do so while as you play. It’s one of best integrations we’ve seen. Another favorite is SmallWorlds, which is a virtual 3D world. They were innovative in how they drove traffic to payments: they designed a Zong ATM available at different spots in the game.
What are the user demographics of the gaming applications you’ve interacted with?
Mob Wars, Mafia Wars, and their clones are all very successful among male users because they appeal to male competitiveness, whereas virtual pets applications, such as Fluff Friends and Pet Society, are popular among women. Based on surveys, the gaming population on Facebook isn’t that young. For example, Texas Hold’Em appeals to a much older demographic.
What does the future hold for mobile payments?
We’ve just touched the surface of what we can do with mobile payments. First, applications didn’t monetize at all. They thought they could monetize with advertising. Then, applications began adding a virtual economy on top of what they already had. Now, applications are built solely with the goal of monetization in mind. That’s a huge difference. The first monetized applications included Texas Hold’Em, Mob Wars, and Friends for Sale. A new stream of applications is being made by real game developers in Flash, like SmallWorlds. They’ve thought about monetization from day one and integrated it into game play.
Last month, Facebook announced that users would soon be able to login to the site via OpenID. Today, Facebook has officially become an OpenID relying party: users can now register for Facebook using their Gmail accounts and any OpenID provider that supports automatic login. As such, Facebook has become the largest OpenID relying party on the web.
Now, once users link their Facebook account to a Gmail address (or OpenID URL), they’ll be automatically logged in when they go to Facebook after having logged into that service. Facebook says that in its user testing so far, users who register through OpenID actually get engaged with Facebook more quickly than others.
“In tests we’ve run, we’ve noticed that first-time users who register on the site with OpenID are more likely to become active Facebook users. They get up and running after registering even faster than before, find their friends easily, and quickly engage on the site. We’ll continue to integrate more OpenID providers into our registration and account linking flows as they support automatic login,” Facebook says.
To link an existing account with a Google or OpenID account, users can go to their Account Settings page and choose an account in the Linked Accounts section. Yahoo and MySpace are also listed here, but a Facebook prompt says “Note that your accounts from Myspace and Yahoo do not allow for automatic login.”
We recently spoke with Facebook engineer Luke Shepard, who represents Facebook on the OpenID Foundation board, to get his perspective on Facebook’s OpenID integration.
Inside Facebook: Luke, why is Facebook integrating OpenID support?
Luke Shepard: The primary motivation for us is to accept OpenID for new users registering for Facebook. For now, that means through Gmail, though more providers will be coming soon. Google released their address book API a few months ago through OpenID, and we’re using that. The response has been pretty positive so far in our user testing.
In addition, for existing users, we’re offering a feature for you to login automatically if you have an account with an OpenID provider. For example, I have a Gmail account. Every day, I open up my browser and go to Gmail and Facebook, and now you can be automatically logged into Facebook after logging into Gmail.
Which other companies have support coming soon?
Yahoo has been an OpenID provider for over a year and is on the verge of supporting automatic login. Microsoft hasn’t launched as a provider yet, but will sometime. The big three will be covered pretty soon.
What steps did Facebook take to overcome some of the user experience challenges that have hindered OpenID?
One thing we did was we skipped some of the hard part. Probably the most difficult open question in the OpenID community is how do you get a user to register with an OpenID for the first time. We’re skipping that for existing users right now to make sure we get the underlying system working. We’re working on a lot of ideas for how we can present that to the user after we launch – like how to do OpenID login in a popup and keeping users on the page versus sending them off to another site.
We’re a major identity provider with the Facebook Platform and Facebook Connect. We’ve been trying to do a good job on this for apps, and this is a good chance for us to eat our own dogfood with identity and learn what we can do better for apps in the future.
There are very few sites that support the background automatic login in OpenID, but this is a core part of the Facebook Connect experience. Others haven’t done this yet because it’s pretty difficult technically. When designing our OpenID implementation, I was drawing on several Facebook engineers here to learn from how we did various things with Connect. It’s also still rapidly evolving.
Other relying parties will get the cookies, but they’ll usually redirect you to the provider and then you’ll be directed back, but there are a lot of risks with that approach because when you’re a site like us where we’re bigger than almost all the providers were going to be using, it’s important for us not to send them off to a site and have a bad experience.
What other designs have you seen that have worked well?
Currently the best approach out there is what Chris Messina has caleld the “NASCAR” approach (putting a bunch of buttons up for the user to choose). Currently we’re trying to avoid that approach with a couple sidesteps:
For new users who we know have a Gmail account, we can show them one big Gmail button, and we’d like to expand that to other providers.
We’re also letting existing accounts link.
Can users login to sites with Facebook Connect through Gmail and OpenID as well, or just Facebook.com?
Only facebook.com. Right now, we’re trying to get something out to users and figure out what is the smallest set of functionality that we can roll out, because it involves laying a lot of the groundwork from a security perspective. Now that we’ve laid the groundwork there’s a bunch of iterations we can do.
Why have you been such a big internal advocate of OpenID at Facebook?
The company is really big into open standards and open source already from the highest level – Mike Schroepfer came from Mozilla. Basically everything here is open source, like Thrift. It’s not like I’m fighting a battle, I’ve just found that my role is to learn what’s going on in the community and educate what’s going on inside the company.
In the long run, i think we’ll see that open standards are ultimately what win. Part of what we’re trying to figure out is how do we get there and how does our product work with open standards. Using the popup and doing the background approach aren’t things that the OpenID commuinity hasn’t really pushed yet, but they’re core to the Facebook Connect product. We want to try to help incorporate these back into the OpenID community.
Is the OpenID movement good for Facebook?
I think it’s good for Facebook in two ways. First, registration rates: OpenID clearly makes registration easier for users, which is good for growth. Our growth team tries everything, so I think this will increase our growth rate.
Second, if we participate in open standards and help define them and work to have our innovations contributed, it’s ultimately going to lead to a better product than trying to fight them.
What’s your relationship with Google been like working on this?
We’ve been talking with them to make sure it works well, but we were able to get it working with the public API documentation.
Thanks Luke – any final thoughts?
This is still an early version, and not yet a finished product. There should be more iterations soon.
Since the fbFund application deadline process passed in late April, the fbFund team has been hard at work whittling down the over 400 submissions to a group of 50 finalists spanning Facebook Connect sites, Facebook Platform apps, and iPhone apps with Facebook Connect. This time around, Facebook also invited more than 20 advisors and investors from the fbFund Developer Advisory Council to help review, rate, and select the finalists. I’m a member of the Developer Advisory Council and am excited by the variety of innovative sites and apps that developers are building.
Facebook is announcing the first 25 finalists today, and the next 25 will be announced soon. Then, fbFund will announce the winning apps and sites that will be invited to participate in the fbFund incubator program in downtown Palo Alto this summer managed by Founders Fund angel investor Dave McClure. Winners will be offered up to $100,000 in seed investments (not grants like previous fbFund rounds) and will receive mentorship from Facebook and the advisory council throughout the summer.
Here are the first 25 finalists, arranged by type: Facebook Connect sites, Facebook Platform applications, and iPhone apps with Facebook Connect.
Facebook Connect Sites
Frintro – Play matchmaker and help single friends find friends of friends to date
GovIt – Organize their Facebook friends to petition government officials
RunMyErrand – Provides a means for people to make money doing small jobs for others
RentMineOnline – Residents make referrals to friends through Facebook to earn rewards
MyChurch.org – Platform for churches to make their own social networks
GreetBeatz – Commission an independent artist to produce an original song to deliver as a virtual gift on Facebook
Workstir – Connects local service providers to individuals in need
NutshellMail – Sends consolidated notifications from social networks to your inbox
RunThere – Tool for runners to map their routes and meet local runners
DropPlay – Tool for sharing your favorite music with Facebook friends
Magellan (private beta) – Helping people connect locally
Life360 (private beta) – Connecting families in cases of emergency
Vittanna (private beta) – Bringing student loans to the developing world through micro-loans
Facebook Platform Apps
Travel Brain – Choose your favorite travel spots on Facebook, then search reviews on their website
Networked Blogs – Tool for promoting your blog and discovering other blogs on Facebook
Gameyola – Platform that helps Flash game developers monetize and distribute games on social networks
Photos I Like – Tool for photo sharing and content discovery
This week, Inside Facebook is taking a deeper look at the key players in the Facebook payments ecosystem. Over the course of the past two years, user-pay has become a popular model for successfully monetizing applications and games, and a variety of companies have developed solutions enabling developers to more frictionlessly accept payments from Facebook’s increasingly global audience. As you can read on our Q1 report on the state of the Facebook payments ecosystem, this market has been growing at a healthy pace despite common negative sentiment on social monetization.
To kick off our series, today Inside Facebook speaks with Paul McGuire, CEO of mobile payments company Paymo. Paymo is one of a growing class of companies that allows consumers to purchase in-game items, subscriptions, and other digital goods through mobile phones. Users authorize payment through a PIN sent to their phones, and the charge is applied to their phone bills. We spoke with Paul recently about his company and his thoughts on the future of the mobile payment space.
Inside Facebook: At what point in time did you realize the business opportunity in providing a mobile payment solution on Facebook and other social networking platforms?
Paul McGuire: We have a background in mobile solutions and saw that they weren’t merchant friendly. It was hard for online and application developers to use premium Short Message Service (SMS) to reach customers. Four billion people have a cell phone, so the technology was there, but there was no global payment platform. As some social networks go international and target the youth demographic, the cell phone is the perfect device.
Who are the key players in your value chain?
We thought hard about how to build the business in a way that scales and benefits all players in the chain. Look at the way MasterCard and Visa built their businesses using the four party model (consumer, mobile carrier, payment reseller, merchant). The reason why they use this model is because it’s far more scalable compared to American Express’s model of directly acquiring merchants. We’re following the highly scalable model.
What’s your transaction model?
A large percentage of costs is imposed by the mobile carrier. This percentage can be as low as 10 percent in Japan and the UK, and as high as 60 or 70 percent in other markets. The merchant typically gets 50 percent of a transaction.
The cell phone is being used as an authentication and billing device. This transaction is more secure than a credit card transaction because the consumer 1) submits his/her cell phone number, 2) receives a text message to validate payment intent, and 3) sends a text message back to confirm. The carrier then charges the cell phone bill and deducts credit.
What kinds of companies would you consider to be your strategic partners?
Today, our primary partners are online companies, including online games and social networks, that sell digital goods at a low marginal cost, so it’s not a big deal if they make only 50 percent of the consumer price. Our partners include hi5, Social Gold, Playfish, Super Rewards, and Offerpal Media.
How do you distinguish your mobile payment system from competitors’?
The obvious difference is that we have international reach. Second, we have better and unique technologies that make a huge difference for merchants. It’s the early days of the mobile payment space, so we made investments in our technology platform. Third, we’re careful about complying with mobile carrier guidelines and take them very seriously. Fourth, we deliver high conversion rates. Paymo is quick, easy, and frictionless. Using Paymo, conversion rates are four to five times greater than usual, and chargebacks are few because of the dual factor authentication (verification of the cell phone number plus positive confirmation for the transaction from the consumer via text).
What’s your reaction to Facebook’s entry into the virtual goods ecosystem?
We think it will be good for the market as a whole. What it will do is increase user demand. We see ourselves as an enabler of transactions. We’re a payment network, so we’re an ideal solution in the US and other countries for virtual currency and micropayments. We’re excited about what’s happening in the social networking and gaming space.
With mobile carrier rates significantly higher in the US, please compare the mobile payment space in the US versus abroad.
We’re seeing high transaction volumes in the US, South America, Europe, and Asia. With most technologies, the US leads Europe and Asia, but not with cell phones. The US is behind, but is catching up fast. Mobile carriers are getting their arms around this challenge. In the next few years as processes become more efficient, carriers will figure out that lower fees will drive up volume. Pure economics and regulatory pressure will push down carrier charges – this will happen, but not quickly.
In this economy, how is your company doing?
In this recession, we’re seeing positive growth as people spend more time on social networks. From the user’s point of view, a small purchase for a virtual good doesn’t feel like a huge cost. People can have fun without hurting their wallets. In terms of financial performance, we’re doing well. We raised $5 million dollars last year. Monthly growth is at about 20 percent or more.
What are best practices among application developers who have integrated with Paymo?
The challenge for merchants is to have compelling content and offer services that consumers want to buy. There’s no good in having a mobile payment option if consumers don’t want to buy. A lot of merchants are adding a mobile payment option, but haven’t figured out the content or how to deliver value at a price point that the consumer is willing to pay.
How will the payment space evolve in the next several years?
Today is kind of like the end of a beginning. Mobile payments will become a mainstream payment method. Costs will fall as mobile carriers see the economics of charging lower transaction fees. In the short-term, mobile payments need to be scalable, reliable, and trustworthy.
Are there any other comments you’d like to share with Inside Facebook readers?
As a general principle, mobile payments are an extremely exciting opportunity. It’s important to realize that having clear and understandable content is a prerequisite to adding payment methods. Don’t be scared of implementing mobile payments: the cost structure shouldn’t deter application developers from implementing mobile payments because having mobile payment solutions provide access to a new set of customers.
Earlier this week, Facebook brought application publisher functionality to Facebook Pages. The “Publisher,” which sits at the top of user profile pages, is what allows users to share what’s on their minds in the form of links, photos, videos, etc. With this new update, application Publisher integrations that used to work on profile pages alone now also work on Facebook Pages.
Now, Page admins can publish richer application content directly to users’ streams, and users can publish application content to Pages’ Walls. As Facebook suggests, this could be used in a number of ways:
Promote philanthropy, coupons, or sweepstakes. A Page admin can solicit a charitable donation, publish a coupon, or announce a sweepstakes, and the resulting post appears in the streams of its fans, driving traffic to an appropriate tab on the Page or an external site.
Gauge fan interest. Polling applications are a good way for a band or brand to gather information from its fans.
Encourage fan interaction. The many artistic applications out there can give fans the ability to create works of art directly on a Page to show their appreciation.
Host live events. Bands, brands, and public figures all want to interact with their fans and supporters in real time. Use the Publisher to announce a live event and drive traffic to the event.
The addition of the Publisher feature to Facebook Pages is an opportunity for brands that advertise on Pages to present their fans with more compelling calls to action. Pages are a place for communication between brands and their fans, but as the developer community works with the advertising community to implement Publisher functionality on Pages, that communication is likely to become more viral. Pages will become a more efficient outreach tool, and users will experience a more seamless integration between their Pages and applications.
For San Francisco based nonprofit organization Samasource, applications are “social” in both the sharing and the social responsibility senses of the term.
For almost a year now, Samasource has addressed this problem by identifying small local technology companies in the developing world to join their exclusive network of providers, supporting them with training and project management tools. Samasource then matches its providers with US-based organizations (its clients) that are considering socially responsible outsourcing. Among the list of services offered is application testing.
Leading Facebook dating application 
As we continue our look at the 
David Marcus: Zong has been around for almost nine years, under Echovox. We began by helping media companies monetize their TV audience through mobile entertainment applications. To do that, we built connectivity to about 100 mobile carriers. Two years ago, we realized that leveraging that infrastructure to build a mobile payments product for gaming and social networking was a smart thing to do. It took a over two years to build the payment layer on top of our infrastructure, and we launched Zong in its current incarnation in September 2008.
Zong offers a seamless payment system. It removes the friction associated with traditional payment methods like credit cards with service that’s easier and faster. If you’re in a virtual world and want to buy a collar for your virtual pet with a credit card, you would go to your purse, get your credit card out of your wallet, and type in your credit card number, expiration date, and billing address. In most cases, halfway through, you’ll start asking yourself, “What am I doing?” and abandon your purchase. By contrast, your cell phone is always next to you: you know your number by heart, and it takes five seconds to complete a payment.
Last month, Facebook 
Since the 
Earlier this week, Facebook 
