How does Facebook make money?
Lots of people asked this question when the company announced its IPO earlier in June. According to Facebook, most of its revenue (82 percent) comes from advertising. But now the company, and developers, have a new revenue stream: app subscriptions. Facebook announced Tuesday that developers will be able to offer subscriptions to premium apps starting in July, with Facebook itself taking a 30 percent cut of the revenue.
Plenty of apps now have ways to monetize their content. If you're playing "Draw Something," for example, you might use real-world money to buy coins in the app, then spend those coins on new words or other features. But those are single transactions, and they use the virtual currency of the app in question.
Now, developers will instead be able to offer a monthly subscription, billed in local currency. (Facebook Credits have been around since 2009, but since most games use their own currencies for in-app purchases anyway, it makes sense to offer pricing in dollars or yen rather than Credits.) Facebook is already testing the subscription model with developers like Kixeye and Zynga. The former's popular "Backyard Monsters" game, for example, will start offering exclusive items and abilities for $9.95 per month.
This is just the latest announcement in a busy month for Facebook: last week Apple announced that its upcoming iOS 6 would have tighter Facebook integration, including the ability to share photos directly from the Camera, post a location right from Maps, and update other information directly from the relevant apps. The social network is integrated elsewhere, too – Facebook events will automatically show up in the iOS Calendar app, and friends' profile information will be used to populate their Contacts field (if someone gets a new phone number, for example, their Contact will automatically update itself). For its part, Facebook is hard at work on an update to its Software Developers Kit that will allow third-party iOS developers to offer similar features in their apps.
Earlier this month, Facebook also began rolling out its App Center for Android, iOS, and the web. The Center is an attempt to ensure app quality by allowing highly-rated apps to rise to the surface while barring shady ones. Only apps that meet a "quality guidelines," Facebook says, will be allowed into the App Center. The Center currently features about 600 apps, although Facebook says that number will rise -- especially once users and developers outside the US gain access to the service.
Readers, what do you think about Facebook's latest developments? Would you pay a monthly fee for a premium app? Share your thoughts in the comments section below.
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