Paid apps coming to Facebook

May 10, 2012

Paid apps coming to FacebookTo date the app business on Facebook has been on the hard drugs model: the first few hits are free and then you have to pay to feed your addiction. Now the site is to allow developers to charge for applications straight off the bat.

It’s part of the upcoming launch of the App Center, which is a page on Facebook that works in exactly the same way as the app stores available for smartphones and tablets. Instead of getting Facebook apps when you see a friend mention them (or when you are tricked into installing them in order to see a video), you’ll now be able to search directly or browse by category.

Unlike mobile app stores, not all applications available on Facebook will be listed. There’s a set of quality guidelines which a site must meet. Entry is also dependent on getting a certain level of good user ratings and on getting a good enough level of engagement, meaning if people install your app, use it once and then abandon it, you won’t make the cut.

The App Center will also be available when browsing Facebook on a mobile device. However, here it will list external mobile applications that hook-up with Facebook in some way. If you click to get one, you are redirected straight to the relevant download on the iTunes App Store or Google Play store.

The big change is that developers of apps that run in Facebook itself can now charge a purchase fee rather than rely on in-app payments. There’s no confirmation yet on whether Facebook will take the same 30 percent cut, or the logistics of making payments (for example, whether they’ll be limited to the existing Facebook Credits system.)

On paper, it looks like a huge opportunity for Facebook to cash in. The site has something like eight to ten times as many users as can access iOS apps, so even with a much smaller conversion rate, revenues could be huge.

That smaller conversion rate seems inevitable however: Facebook users are much more likely to be suspicious of paying for applications; paying for something to work “inside Facebook” seems less natural than a standalone phone app; and having to set up a new payment system for the first time is more of a barrier compared to smartphone purchases which are simply a one-click affair.

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