Social Network Apps To Finally Monetize Within The Next Year

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Today at OpenSocial’s first birthday event, a group of press, developers, and members of the OpenSocial team convened to discuss the future of the platform. Of the many topics discussed during the roundtable, perhaps the most pressing was the issue of monetization – many developers are simply unable to convert their users to a steady stream of revenue. And while OpenSocial’s Director of Engineering David Glazer admitted that he didn’t know the answer, he predicted that within the next year we’ll see a standardized payment platform integrated into OpenSocial. And with that, we may start to see more of these applications transition into viable businesses.

Since the launch of Facebook Platform (and the subsequent launch of OpenSocial on MySpace, Hi5, and many other social networks), application developers have struggled to convert their userbases into steady revenue streams. Advertising has seen some success (spawning companies like SocialMedia), but very few apps have been able to successfully implement any kind of transaction or micropayment system.

Much of the problem can be attributed to the fact that there is no consistency between payment platforms – users typically have to reenter their credit card information for every app, which is both a hassle and also increases potential security risks. What we need is a unified system, where users enter their information once and use it across any application. Facebook (which is not on the OpenSocial platform) annouced plans to roll out a micro-payment platform back in March, but it still hasn’t materialized.

Now it sounds like OpenSocial will have its own system – one that could potentially work across every social network that supports that platform, including MySpace, Hi5, and Orkut. Glazer explained that he suspected someone would figure out how to effectively implement a monetization system into the standard, allowing developers to call on standardized hooks to securely deal with financial information. Having a ubiquitous microtransaction system would significantly lower the barrier associated with spending money on these apps, which would likely be a boon for developers. Many developers will still struggle with establishing user bases in the first place, but those that can will no longer have to rely exclusively on banner ads to pay the bills.

Of course, this assumes that every participating social network would fully implement the monetization standard, which is by no means guaranteed. But if it did happen, the scenario would leave Facebook as the odd man out – one of the only major social networks to use its own proprietary payment system (if it ever releases one at all). Don’t be surprised if Facebook rushes to be first out the gate, which would make it look like an innovator rather than the holdout.

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