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Most of Facebook’s revenue today comes from advertising, but the company is sitting on another huge opportunity: selling virtual and real-world goods through its payment platform.Today, Facebook submitted a third update to its IPO filing. Most of the new info related to legal matters, like the Yahoo patent suit.
But there was one interesting business tidbit in there:
Payments and other fees revenue increased to $557 million in 2011 due to the adoption of Facebook Payments, which has been gradually adopted by our Platform developers and began generating significant revenue in the fourth quarter of 2010. We estimate that approximately 5 million and 15 million users purchased virtual or digital goods using Facebook Payments during the years ended December 31, 2010 and 2011, respectively. [Emphasis ours.]
15 million is a surprisingly small number. Facebook has more than 800 million monthly users.
If Facebook can get just 10 per cent of its users to buy something using its payment platform, that’s 80 million people.
Assuming that spend-per-user remains constant, that’s almost $3 billion in revenue.
So when everybody thinks of Facebook as an advertising company, they may be missing a big part of the picture.