Facebook launches paid apps in revenue push

Facebook App Centre

Facebook is allowing developers to charge for apps on its platform for the first time as it attempts to diversify its revenues and lessen its reliance on advertising. Facebook is also launching its own store, App Centre, on both the web and mobile where users can buy these apps using Facebook Credits. The move means that Facebook will take a 30% cut on any purchases as it attempts to boost revenues from payments within its network. The firm is yet to announce any companies that will be launching paid apps on its service.

Facebook’s App Centre will also operate as a discovery service, highlighting apps built for its own social network as well as those on external platforms such as Apple’s iOS and Google’s Android. The social network is using data from its social network to compile rankings of third-party apps that use its social graph, such as Pinterest and Flixster. Users will be able to browse these apps but, contrary to previous rumours, Facebook will not enable users to download these apps from its store. Instead, the firm will re-direct users to native app marketplaces such as Apple’s App Store to download the apps without taking a cut of the price. Facebook is marketing the App Centre to developers as valuable exposure to its 900 million-strong audience, as it attempts to boost its relationships with developers and flesh out its app ecosystem.

Facebook is coming under pressure to diversify its revenue streams after reporting its first ad revenue drop in two years in the first quarter. Currently depending on ads for around 80% of its revenues, the firm is now attempting to prove the stability of its business model in the run up to its long-awaited IPO. The firm has already warned that it may not be able to make impressive ad revenues from its apps on smartphones and tablets, and is again listing mobile as a ‘risk factor’ in its latest filing with the SEC.

Growth in use of Facebook through our mobile products, where our ability to monetise is unproven, as a substitute for use on personal computers, may negatively affect our revenue and financial results,” says the filing.

 

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