Facebook Chat reached a major milestone this week, topping more than one billion messages sent per day. Chat has only been around for a little more than a year, but it’s already proving itself very popular with Facebook users.

According to Facebook, usage has more than tripled in the last 4 months alone. Facebook has done its best to make Chat as appealing as possible, with friend lists, group chatting, and even flirting with idea of video chat. Recent improvements in the way Chat allocates memory are set to make it even more stable, according to Facebook engineers.

Updated version of Facebook for a number of mobile carriers has also included Chat, and companies like Meebo have used Facebook Connect to integrate Chat with other messaging tools. Facebook application developers have also been taking advantage of a new Chat invitation viral channel that was released a couple of months ago.

Such a large number of sent messages per day means that users are spending more and more time stuck on Facebook. This is great for businesses working inside Facebook, as longer sessions lead to extended exposure to ads and more content sharing with friends.

As we continue our in depth look at leaders the Facebook Platform monetization ecosystem, today we turn our attention to Offerpal Media, one of the largest players in the space. After raising $15 million earlier this year from D. E. Shaw Ventures, InterWest Partners, and North Bridge Venture Partners, the company has been expanding its efforts to help developers monetize their social apps and games through the company’s offer network and virtual currency platform.

Offerpal works with many Facebook app developers, and is led by Anu Shukla, Founder and CEO, Mitch Liu, Co-founder and Vice President, Naghi Prasad, VP Engineering and Operations, and Bill Lonergan, CFO. We recently spoke with Shukla about recent developments in the Facebook payments space and the company’s approach to monetization.

Inside Facebook: Anu, what is Offerpal’s role in the virtual economy?

Anu Shukla: Offerpal is a monetization platform for applications and websites with virtual currencies, digital goods, or subscription-based services. We launched in October of 2007 and entered the space because we initially built an app for Facebook and MySpace and integrated virtual currency, but then focused on building out a monetization platform.

How would you compare user behavior between social networks and standalone sites?

We focus half of our efforts on social networking based apps and half on standalone games and websites. On social networks, we’ve seen a big influx of new users – whereas on standalone sites, it’s the same user base again and again. On social networks, new apps are being launched all the time, and the old ones die. Apps grow virally, but users also lose interest faster.

What trends are you seeing around users and their payment method choices?

It depends on what type of app you’re dealing with, whether users are younger or older, female or male, and how much time they have on their hands. Users who don’t have much time tend to use cash payment methods. In Europe, mobile payments are more popular. Incentivized offers are used less, proportionally speaking. For example, 30 percent of revenue may come from cash payments, and 70 percent from other payment methods, such as offers – but this breakdown changes depending on the population at hand.

As an optimization platform, how does Offerpal optimize the experience for the different players you work with?

We have 3,000 offers in our system and add 100 new ones every day. We optimize our offers based on individual preferences and target the exact type of user, which optimizes revenue for our publishers. The publisher wants to maximize earnings and provide a good customer experience; the consumer wants to do something that s/he is interested in. We have a scalable rule-based optimization engine that’s based on the inclusion/exclusion of particular audiences, proprietary algorithms, and collaborative filtering at the individual consumer level.

From our perspective, all relationships are really important and make our business model work. The advertiser pays; consumers buy; and publishers attract consumers. The right match between the three ensures that the advertiser is seeing quality results, the publisher is maximizing revenue, and the consumer is finding offers relevant. We work extensively with advertisers, as well as publishers who can then turn their attention to the games themselves while we focus on monetization efforts and customer service.

And, what about your transaction model?

When a user completes a transaction, the advertiser pays us, and we share that amount with the publisher. Revenue share is negotiated on a case-by-case basis.

How is your partnership with IMVU going?

IMVU is a premier avatar-based site, and its tight integration with Offerpal has been quite successful. IMVU is one of our premier clients, and we hope to continue the partnership for many years to come. IMVU has done a great integration, as well as Real World and Mobsters. We have a team in house that helps publishers find the right integration.

The virtual economy in international markets in Asia, for example, is exploding. Are we seeing signs in the U.S. in that direction?

Yes, we’re seeing all the signs of that. Social networks are rushing to add virtual currency; and games and virtual worlds are being developed/created to generate income/revenue from virtual currencies. Virtual currency is here to stay.

Now that Facebook has launched its alpha “Pay with Facebook” test, what’s your reaction?

I think it’s going to open up the number of people who will participate in transactions. The net effect will be that more people are willing to buy virtual goods, subscription services, and digital goods on Facebook because they are familiar with the brand. This will add more people to the mix. The user base will expand, which is great for publishers and for us.

How is Offerpal doing financially?

Financially, we’re bucking the trends, which is not surprising. In a recession, the industry that expands the most is entertainment, and we’re seeing the effects of that. Combined with the fact that engagement on and growth of social networks are both increasing, we’re riding on these positive trends, and are on an upswing.

Can you share any statistics with us on the percentage breakdown of your revenues across certain regions?

Sure – here is what we’re seeing:

70% North America
17% Europe
7% Asia
2% Middle East
2% South America
1% Africa1% Central America

Thanks Anu! Do you have any last comments you’d like to share with our readers?

There’s no reason why micro-transactions won’t be as pervasive as evidenced in Korea and China. China’s Tencent QQ almost got regulated by the Bank of China because its virtual currency was so liquid!  And also, we’ve seen the positive benefits of businesses that are initiating loyalty points programs such as frequent flier miles. Virtual currency is the equivalent of that for gaming and social networking worlds.

When we were selecting the 12 winning campaigns and organizations for our just-released Best & Worst of Facebook Marketing 2009 report, we came across dozens of Facebook Pages that made us think: “These guys should have more fans on Facebook.”

Below, we’ve collected 30 brands and organizations that should be highly engaging to the Facebook audience – like REI, Gillette, and Pabst -  and that have taken a solid first step in establishing their Facebook presence, but have yet to reach the upper echelons of Facebook Page reach.

How can Facebook marketers be getting the most out of their Facebook Pages? For starters, check out 10 Things All Businesses Should Do to Market More Effectively on Facebook. For those ready to take the Facebook marketing efforts to the next level, check out the following resources from Inside Facebook:

• The Facebook Marketing Bible
  • (available in English, French, Spanish, Italian, or Paperback)
    
• The Facebook Global Monitor
• Facebook Marketing Bible – Agency and Brand Edition

Here are the top 30 Facebook Pages that are off to a good start but we think have the potential to engage many more users on Facebook:

Are there more Facebook Pages you thought would have more fans too?

[image credit]

Learn more about building your brand and growing your audience with our comprehensive guide to marketing on Facebook. The Facebook Marketing Bible is available at FacebookMarketingBible.com

Tonight, Facebook has started testing a major revamp to Facebook search that promises to bring what many users and marketers have been clamoring for for a long time: live search of the News Feed and the public timeline.

Unlike the current Facebook search, which is pretty clunky in the way it organizes results, the new Facebook search is all about searching recently posted updates and content. Now, when you search on Facebook, you’ll get two sets of results:

1. Most recent posts by your friends
2. Most recent posts by all users who have made their profile open to everyone (including public profiles)

For example, here’s what a search on “Iran” would look like tonight:

If that looks very similar to Twitter Search, that’s because it is. However, the new Facebook search differs from Twitter in 2 important ways:

1. Updates from your friends come before updates from everyone.
2. All updates contain rich content in-line, from videos to music to thumbnails of shared links.

It’s important to note that updates from friends are usually private, and not on the public timeline. Although Facebook is making public timeline search available for the first time ever, it is still prioritizing communicating with friends above searching the public timeline in this iteration of Facebook search. Facebook CEO Mark Zuckerberg told Inside Facebook earlier this year that the future of Facebook lies in a hybrid public/private sharing model.

Nevertheless, this marks a major step forward in the evolution of Facebook’s search services. Now, marketers and analysts will have another tool to monitor conversations on Facebook in addition to Facebook’s Lexicon tool, which only shows trends at a very high level. Facebook started allowing users to open up their profiles to everyone in March, in an attempt to better serve users who want to share their updates more openly as opposed to using Facebook’s robust privacy controls.

Facebook also has a search partnership with Microsoft, who also owns a 1.6% stake in Facebook, but we’re still awaiting word on whether Microsoft is contributing any search technology to the new Facebook search.

Facebook says the new version of search is open to only a “fraction of a percent of the people on Facebook” as it tests out the new features. We’ll keep tabs on how testing goes and let you know as Facebook rolls out its new search service more broadly.

Online dating service Zoosk has just closed an additional $6 million in funding from existing investor Canaan Partners. The third round of funding will give the most popular dating application on Facebook the means to expand its offerings for users looking for someone special.

Zoosk is a free service, but makes money from premium memberships and the sale of Zoosk Coins, which allow users to purchase virtual gifts to attach to messages. Users fill out dating cards which other users use to match common interests and spark conversations and connections.

The company has nearly doubled its registered user base in the last six months, with numbers increasing from 16.5 million to 30 million users since January. As you can see below, Zoosk’s monthly active users on Facebook have ranged from 6 to 9 million in recent months. The service runs across number of social networking sites, including Facebook, MySpace, Hi5, Bebo and Friendster.

“We are thrilled to continue our partnership with Canaan Partners,” said Alex Mehr, co-founder of co-CEO of Zoosk. “This new round of financing enables us to aggressively expand our marketing efforts to introduce social dating to singles everywhere.”

Recent updates, including integrating Last.fm playlists and Netflix accounts, are giving potential daters added information about each other. This has added a new level of socialization to something as simple as selecting a movie, and shows the creativity the company is using to bring couples together through social networking.

AppData for Zoosk

As we continue our in depth look at leaders the Facebook Platform payments ecosystem, today we turn our attention to Super Rewards, a virtual currency monetization platform for social apps and games. We did one of the first public profiles of the company last summer, when word was first getting out about Mob Wars revenues.

Most recently, the company announced the hiring of Julie Craft as VP of Marketing, who joins CEO Jason Bailey and President Adam Caplan on the Super Rewards exectuive team. Craft has recently worked as Vice President of Advertising and Publisher Sales at Simply Hired, followed by a business development role at rival monetization firm Offerpal Media.

We recently spoke with Bailey about the current state of the market and trends the company is seeing heading into the second half of 2009:

Inside Facebook: Jason, thanks for your time. Can you briefly describe the Super Rewards solution?

Jason Bailey: Super Rewards has been around since December 2007 and is a virtual currency monetization platform. We’re a simple cut-and-paste solution that allows game services to monetize their virtual currencies through a series of payment options via PayPal, credit card, cash, direct deposit, prepaid gamer cards, etc. At our core is an ad-based solution. We work with 3,000 different advertisers that give us money, for example, when users sign up for a service. This money then gets passed on to game publishers.

What’s the most important interaction in your value chain?

The interaction between end users and advertisers: If users want to sign up for Netflix, it’s important for them to find value in offers, so we work with advertisers to push high quality ads out. This increases the likelihood that users will return in the future. Advertisers want more users. A user who signs up for Netflix and unsubscribes doesn’t generate a lot of value to advertisers. In the middle are Super Rewards and game publishers. We facilitate the interaction between advertisers and developers. We make life easier for developers.

What are trends are you seeing so far this year, and what do you see ahead for the space over the next year or two?

Mobile payments are becoming more popular and commonly accepted. As carriers are providing services and costs are coming down, there will be more competition in the space. PayPal and credit card payments make up the largest portion of direct payments. In international markets, most people don’t have credit cards, so there are direct deposit options that take funds directly out of bank accounts. This hasn’t caught on in North America yet.

Overall, the space will continue to grow, and we’ll see a couple of major things happen: First, the bar will rise. The quality of games and applications has been getting higher and will continue to do so. The days of small developers who create apps in dorm rooms are kind of gone, but not completely. Second, we’ll see an aggregation in the space as far as who the key players are.

As we’ve all seen, Facebook’s payment service is now live in a few applications. What are your thoughts on Facebook’s payment system?

I really think it’s just another payment solution. I’m not too concerned about it and don’t think it’s Facebook’s gift to the world in terms of microtransactions. Facebook is late to game and not necessarily providing anything of additional value that can’t be gotten anywhere else. Social Gold and Spare Change have been offering the same solution for a long time. That said, there’s definitely the trust factor with Facebook.

It remains to see what margins Facebook will take. I’d say Facebook will capture a relatively small amount of third-party app revenue for 2009 unless it runs margins so slim that there’s no value for other companies or makes it so that everyone has to use Facebook’s payment method like Apple’s platform. With the former, the company would be at fraud risk; with the latter, there would literally be a riot.

Moving on to stats – how are your revenues currently breaking down across platform and geographies?

80% of our revenue comes from the four major English speaking countries. US, UK, Canada, and Australia.

Facebook and MySpace are fairly even in terms of total revenue. But MySpace does it on fewer users. This is because it is more heavily skewed to US users, whereas Facebook is more more international, but has more people playing more apps.

How do your ARPUs break down across countries?

ARPUs vary greatly. The top four being the best. However, often heavily overlooked are Norway, Spain, Greece, Denmark, Switzerland, Saudi Arabia, and Italy.

Turkey, Indonesia, Mexico, Malaysia, and Brazil should be avoided as their revenue is low on a per user basis. There are plenty of users, but the ARPU is low.

What are common mistakes developers make when it comes to setting conversion rates?

They are either giving away too many points or too little. In the first case, say the conversion rate is $10 dollars for 10 million coins: users have so many points that there’s no need to buy again. In the second case, say the conversion rate is too low – $10 dollars for five points: users would much rather go to other places in the game where they can click and earn.

How’s the acquisition of Frozen Bear going for Super Rewards?

Back in December we acquired Frozen Bear, a small company with only a few people mainly for its talent. The team at Frozen Bear has done a tremendous amount of work to bring Super Rewards to the next level with a robust, scalable product.

Thanks Jason. Finally, what unique value does Super Rewards bring to the monetization space?

The smaller players in the payment industry try to have you believe that offer inventory is the same, but I assure you there are offers in our platform that you absolutely will not find elsewhere. We work with a whole lot more networks than most of our competitors because of preexisting relationships with performance marketing companies. And it’s not just about the offers or volume, but which offers you present to users and which times. We serve 100 million unique eyeballs a month, and this breadth of demographic data allows us to see a new user, make an assumption, and present the right offer at the right time. As a result, we are the largest revenue generator for many advertisers and get slightly higher rates on most offers.

Now that school is out, what’s growing on the Facebook Platform?

Here’s a look at this week’s Top 20 fastest growing applications on Facebook from AppData amongst applications between 1 million and 10 million monthly active users.

		Name	MAU	Gain	Gain, %	Developer
1.		Likeness	3,305,337	+1,154,621	+53.7	RockYou!
2.		My Polls	3,038,017	+776,361	+34.3	It’s complicated
3.		Farm Town	9,197,631	+715,502	+8.4	Slashkey
4.		Barn Buddy	1,948,971	+664,385	+51.7	TheBroth, Inc.
5.		Restaurant City	5,211,060	+626,901	+13.7	Playfish
6.		All About Me	1,222,298	+625,892	+104.9	Lih Chen
7.		When will you DIE?	1,398,828	+606,714	+76.6	Kyrah Abad
8.		MindJolt Games	7,652,207	+600,276	+8.5	MindJolt
9.		CourseFeed	5,284,093	+561,607	+11.9	ClassTop
10.		Do you really know me?	1,138,921	+507,349	+80.3	How well do you know me
11.		YoVille	8,081,702	+473,329	+6.2	Zynga
12.		Pillow Fight	2,242,228	+450,520	+25.1	Shikha
13.		Mobile	6,210,021	+448,974	+7.8	Facebook
14.		Bejeweled Blitz	4,120,033	+438,207	+11.9	Popcap Games
15.		Biotronic	2,831,529	+360,761	+14.6	Metrogames
16.		Mon Coeurs	1,198,052	+360,653	+43.1	Coeurs
17.		Cities I’ve Visited	1,917,483	+355,744	+22.8	TripAdvisor
18.		what are you born to do?	2,612,943	+346,967	+15.3	Born
19.		What is the theme song of ur life???	2,485,688	+341,637	+15.9	—
20.		Daily Horoscope	3,725,878	+328,981	+9.7	6 waves

Coming in #1 is Likeness, an app developed by RockYou! that allows users to compare themselves with friends and celebrities to see who they are most like. In the Top 5, three of the apps are new social games that center around building deep in-game engagement with your friends: Farm Town fom Slashkey at #3, Barn Buddy from TheBroth at #4, and Restaurant City from Playfish in #5.

Likeness, Barn Buddy, All About Me, When will you DIE?, and Do you really know me? have all grown by over 50% this week alone. All About Me’s weekly growth has been particularly noticeable – going from virtually no users to over 1.2 million monthly users in the last eight days. Developed by Lih Chen, the app is one of the many simple quiz apps that we’ve seen take off in recent weeks.

All About Me’s growth in the last month:

Other apps in this week’s Top 20 include those in education (CourseFeed), travel (Cities I’ve Visited), and virtual worlds (YoVille). With the first batch of 120 verified apps, it’s an exciting time for apps to observe how increased visibility could affect rankings on the audience leaderboards.

In an effort to boost registrations and attract new readers, The Washington Post has implemented Facebook Connect on its website. By clicking on the blue “Connect with Facebook” badge on the Post’s sign-in page, users can log onto the site with their Facebook ID to peruse the paper’s content and share articles they read with friends.

The Washington Post, which has won 47 Pulitzer prices, is the most prestigious newspaper (and perhaps the most decorated news organization in general) to embrace Connect thus far. Connect could help the paper’s online efforts, which, like most of its competitors, have struggled. In the first quarter, the Washington Post Company said its online revenue totaled $22 million, a decrease of eight percent from the same time last year.

Online revenues similarly dropped across the industry in the final three quarters of 2008, the 2009 State of the News Media report revealed. “Of the $38 billion in advertising that the industry was estimated to have drawn in 2008, only $3 billion came from online,” the report added.

A big problem rests in newspapers’ inability to identify their audiences online, which prevents them from serving up relevant advertisements. Currently, newspaper websites create high barriers to entry for registration. Basic information (often coveted by marketers) such as date of birth and geographic location can be hard to obtain amidst people’s busy days. By adding Connect, newspapers could garner this important information quickly and with little user effort.

In addition, the comments left for articles on the newspaper sites could sport people’s real names and faces, as imported from Facebook, rather than faceless usernames with a bunch of random characters. With Connect, the action could be published on their Facebook News Feeds, increasing the chance their Facebook friends will click through to the newspaper’s website and read the article.

For now, the Post’s Connect implementation allows you to log in with your Facebook ID and share a story you read with your Facebook friends. The Post still relies on its previous commenting system for stories, however, a problem they will hopefully rectify soon.

Another issue: For me, connecting with my Facebook ID didn’t automatically import my data into my Washington Post profile. This should be a high priority for the Post if they want to leverage Facebook user data to help monetize the website. In a statement announcing the integration, the company sounds open to expanding the use of Connect on the site.

“Our long-term strategy is to move towards creating an increasingly personalized experience for our users, allowing them to carry their social network onto our site,” Goli Sheikholeslami, General Manager & Vice President of Washington Post Digital, said.

Another important benefit for newspapers could be attracting new readers. While Facebook touts people over 30 as its fastest growing age demographic, it remains a bastion for younger consumers of content, a group that hasn’t made newspapers part of its daily content diet. According to the State of the News Media report, only 31 percent of people aged 18-24 “picked up a newspaper yesterday.”

With Connect, hopefully readers of all ages will share articles, videos, and slideshows one-by-one. It might not save all newspapers and their websites, but it’s worth a try.

Boku, a mobile payments startup that has been operating in stealth mode for the past four months, is making two major announcements this morning: It has raised $13 million from venture capital firms Benchmark Capital, Index Ventures, and Khosla Ventures, and has acquired Mobillcash and Paymo, two of the leading global mobile payments companies.

This is big news in the mobile payments space. Through its acquisitions of Mobillcash and Paymo – two companies active in monetizing Facebook applications and social games – Boku instantly becomes one of the largest players in the space, with 170 carriers on board at launch across 53 countries reaching a potential 1.6 billion customers.

With Boku’s new global mobile payments service, consumers can purchase virtual goods and virtual currency via their mobile phones. Here’s a demo of how the service looks and works:

Based in San Francisco and with offices in Europe, Asia, and Latin America, the company is being led by CEO Mark Britto, who brings 20 years of experience at Amazon, Ingenio, and FirstUSA, and a management team that includes VP of General Counsel Javier Martell, VP of Engineering Erich Ringewald, VP of Business Development Kurt Davis, Senior Director of Risk Management Martine Niejadlik, VP of Product & Marketing Ron Hirson, and General Manger James Patmore, who together come from companies like AT&T Interactive, PayPal, Apple, FICO, Google, O2, Bank of America, and eBay.

Paying via Boku will be available on partner gaming site Puzzle Pirates, as well as other merchants:

We spent some time talking with VP of Product & Marketing Ron Hirson about the future of the mobile payments space, and he walked us through some notable statistics. Hirson says the future of online payments via mobile is being driven by 1) worldwide growth of social networks, virtual goods and games, 2) the popularity of mobile apps, and 3) the large number of unbanked consumers who have mobile phones but not credit cards or bank accounts. The holy grail for mobile payments, according to Hirson? Global coverage.

Other leading companies in the space, including Zong, Daopay, and Netsize, are also racing to establish presence in the largest markets around the world. Zong, who we spoke with in depth recently, says it is focused on building direct relationships with all major carriers in developed markets first and foremost, before moving into developing markets where mobile payment companies often work with many aggregators.

Related Stories:

• Payment Industry Perspectives: Q&A with Paymo CEO Paul McGuire
• Payment Industry Perspectives: Q&A with Zong CEO David Marcus

As we continue our in depth look at leaders the Facebook Platform payments ecosystem, today we turn our attention to Social Gold, a virtual currency monetization, payment, and analytics service for social apps and games from Jambool.

We recently spoke with Jambool co-founder Vikas Gupta (formerly of the core Amazon Payments team, along with several Jambool colleagues) about the opportunities he sees inside Facebook apps and games, and the approach Jambool is taking to help developers monetize.

Inside Facebook: Vikas, what does Social Gold do in a sentence or two?

Vikas Gupta: Social Gold is a virtual economy platform that provides developers with an API to create their own virtual currency, and monetize it with our in-game payments platform. The virtual currency that developers create runs on our back end infrastructure that provides detailed virtual economy analytics for free. We also recently released our Subscriptions API to a few partners and will be opening it up to others shortly. It enables developers to sign up users for recurring billing through the same Social Gold in-app payments experience.

In terms of analytics and helping developers manage their virtual economies, what are signs of a healthy virtual economy?

As with all economies, we measure transaction volume to understand the health of an economy. To that end, we balance sources (creating money) and sinks (spending money). When sources are greater than sinks, inflation happens. In this situation, this means that users aren’t given enough ways to spend virtual currency, so the game must inject ways of spending into the system via free currency, offers, etc.

The virtual economy is most popular in the gaming context, but to what extent can it be applied elsewhere?

It’s not just games that are looking at virtual currency: organizations have had loyalty programs for a while now – frequent flier miles for example – and many are seeing virtual currency as an extension of that and introducing game mechanics into their programs. In the case of frequent flier miles, a source occurs when passengers take fights and thus earn miles; a sink occurs when they then redeem those miles. And when sinks happen, the cost the airline incurs is much lower than the perceived value of those miles for the user. Switching back to gaming, the gap between the real cost of virtual goods and the perceived value is even wider.

How are your revenues currently breaking down across platform and geographies?

By platform, we do more than 95% of our business on Facebook and MySpace, and more than 75% on Facebook alone. By country, our top countries with paying users are the US, UK, Canada, France, Germany, and Australia. The US accounts for about 70% of revenues, followed by about 10% from the UK.

How do your ARPUs break down across countries?

We can’t break it down by country right now, but at a high level our average user monthly spend tends to be about $30, with some users spending over $1000 a month. This average is across paying users, not all users. Almost all of the users with large payments come from US or western Europe.

Some people still find it hard to believe that so many people are willing to spend real money on virtual goods. How would you respond to them?

Two points: 1) If you take a step back, when you step inside an arcade, you must first buy tokens. It’s the same concept in a virtual world where users pay $10 dollars for 10 points. They are really getting five hours, let’s say, of playtime. It’s basic entertainment. If consumers are willing to watch a movie, why should I not be willing to pay for an online game? Virtual currency isn’t a new way to pay for stuff – it’s a way to entertain yourself. 2) In the real world, why do we collect postcards? Younger generations may not understand why we do so. When I add virtual books to my virtual bookshelf, the emotion that goes into them are the same that I put into real books. Ten years ago, we listened to CDs; now we buy songs online. People have always wanted to share, but up until recently, the technology wasn’t there to enable it.

Would you like to share any thoughts or impressions on Facebook’s early payment system tests?

We see Facebook Credits as a virtual currency/prepaid value system. It’s a good development because it will familiarize a large user base with the concept of virtual currency and cause users to feel more in tune with the virtual economy.

As the economy is lagging, companies based on gaming and virtual transactions are seeing promising growth. How about Social Gold?

Social Gold launched in September 2007, and monthly volume is up more than 10 times since October 2008. Month-to-month growth has been around 20 to 30 percent, with both the number of paying users and repeat users growing.

What are some inefficiencies that you’re seeing in the virtual goods economy? Where will we go from here?

A) There are a lot of players in the virtual goods space, but also a lot of noise in the market. What will happen over the next year is that some noise will get sorted out. B) By default, gaming draws a diverse audience – both in terms of international reach and age (from teenagers to 60 year olds) – and right now, players in the space aren’t necessarily focused on any specific segment. C) How users pay for games will also change. Subscriptions are another form of payment that could become more prevalent; and in general, more payment tools need to become available.

Thanks for your time Vikas!