Facebook announced late last week that they’ve officially been granted a U.S. patent for their ‘news feed’ technology. This announcement follows just one week after the company announced that they’d partnered with PayPal as a payment provider within the massive social network system. The latter announcement officially puts to bed any rumors about Facebook developing any type of internal microtransactions payment platform that has been a source of speculation for quite some time.
The News Feed patent now shores up Facebook’s main content delivery mechanism to be free from copycats. In the official filing, Facebook’s patent includes, “a method for displaying a news feed in a social network environment.” The documentation goes on to also cite, “new items regarding activities associated with a user of a social network environment and attaching an informational link associated with at least one of the activities, to at least one of the news items, as well as limiting access to the news items to a predetermined set of viewers and assigning an order to the news items.” If any of this sounds remotely familiar, think Twitter, i.e. network activity and attaching informational links, etc. However, when viewed under the microscope, the patent does not use specific wording such as ‘timeline’ (i.e. twitter’s nomenclature). Facebook reps comment only that they are “please with being awarded the patent,” but failed to comment on how the patent may effect how other social networks use a similar method to display user information.
This patent also brings up other related social networking patents. You’ll remember that former U.S. based social network Friendster (now owned by Malaysia’s MOL Global) owns 5 social networking based patents including: “compatibility scoring of users in a social network”, “how people are connected on a social network”, “the process of friends encouraging each other to upload content”, and “ways for users to manage social network friendships.” Obviously, there’s a high cross over in the social networking arena, and Friendster has yet to exercise these patents, but Facebook could very well take a different route, but probably won’t. It’s a score for Facebook to win the patent, but actually enforcing it could prove to be a PR disaster for the company.
On the microtransactions front, Facebook reports that there are now over half a million applications available to it’s users (in comparison, back in November, wired reported that Apple’s iPhone had over 100,000 downloadable apps available). Facebook put it’s ‘credits’ system in to play back in May, but hasn’t really pushed the product. However, with this many apps available, the monetization potential is clearly too big to ignore. Facebook comments that its, “early testing has show that users pay with Facebook Credits are significantly more likely to complete a purchase than the average Facebook user,” in reference to those that pay with an RMT. This data has clearly prompted Facebook to start looking at it’s ‘Credits’ system a bit more seriously, presumably one of the reasons behind the PayPal announcement.
To this end, along with their patent announcement, Facebook has officially announced that it will now make integrating its credits system much easier for application developers. Backing this up, the company also says that they will invest in research to “improve the program and increase conversion and net revenue for developers.”
As with most online application revenue generators (think Apple iTunes store), Facebook wants a cut of the revenue, as they provide the exposure and platform for said applications. Facebook plans on taking a 30 percent cut on all sales, the remaining 70 percent going to apps developers.
Tags: Facebook, friendster, microtransactions, patent, paypal, social networking
