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Facebook Pivots From 'Facebucks' To 'Cash Is King'

Before its IPO, Facebook was intent on not only generating an ecosystem exceeding the the population size of most countries (now 3rd to only India and China), but also establishing its own monetary system. With Facebook Credits as its virtual currency, CEO Mark Zuckerberg felt he could run the world's largest social network similar to a sovereign state.

However time and circumstance are proving him wrong. 'Virtual' is 'virtual' and when the rubber meets the road, how many investors are going to bank on anything but real cold cash? Facebook Credits or "Facebucks" (as one graphic novel describes them) were mainly used to buy virtual goods while playing the popular Zynga games such as "Farmville," and "Mafia Wars." Facebook took a 30 percent cut from those sales, garnering a lucrative 15 percent in total revenue last year, according to a report by Somina Sengupta in the New York Times.

Kind of reminds you of that old 80's tune by the British rock band Dire Straits… "Money for Nothing," or what was satirized in the graphic novel, Facebucks & Dumb F*cks. . . "the automation of time-wasting"

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But is Wall Street going to rely on the sale of intangibles that are tied to whim and waning interest. "Farmville," while the rage in 2009-11 seems to have run its course, only to be replaced by copy-cats and clones that offer just a little more than of same. Plus the Zynga business model was predicated on one-time purchases, not monthly subscription payments where revenues can be projected out for the future.

With Facebook shifting to real currency payments, they stand to generate more revenues while building a needed confidence with their stockholders. As a result of their initial shaky post-IPO start, it is most necessary for Zuckerberg to take an aggressive stance in showing the global marketplace that above and beyond making money for his Silicon Valley cronies, he can grind out exponential profits for the investment community at large.

The new system will allow users to enter their credit card information and store it on Facebook, just as they would with any other online merchant site. With one click, they will be able to buy whatever's offered, priced in their own currency - "a magazine subscription in euros, say, or concert tickets in dollars or games in Indian rupees," noted Sengupta.

While this model is similar to Amazon and Apple's iTunes, who both dismissed a virtual currency years ago, it's a long ways off from reaching the monetization levels of those two online giants. However, it is a important opportunity for Facebook to stock more merchandise on its shelves. In stead of selling just advertising (which Wall Streeters don't put much faith in as a long-term revenue strategy), now Facebook will be able to sell airfares, theatre tickets, streaming music, or the products and offerings from any other merchant or service-provider they can strike deals with.

In the graphic novel "Facebucks & Dumb F*cks," Zuckerberg seeks the advice from a venerable TV-celebrity who's popularity and bank account has only grown with age. Now, at 90 years old, Betty White gives some sage advice to Z-Man (aka Mark Zuckerberg), that his disregard for money needs to shift from complacency to action.

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Ron Callari
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