Facebook's Gift Shop gets down to business

The company has revamped and enhanced its virtual-goods marketplace so that a bigger variety of items, including music files, are for sale.

Caroline McCarthy Former Staff writer, CNET News
Caroline McCarthy, a CNET News staff writer, is a downtown Manhattanite happily addicted to social-media tools and restaurant blogs. Her pre-CNET resume includes interning at an IT security firm and brewing cappuccinos.
Caroline McCarthy
3 min read
The revamped Facebook gift shop. Facebook

It's not just music as rumored: Facebook announced on Wednesday a major overhaul to its "gift shop" feature, meaning that the social network just became an even bigger player in the burgeoning virtual-goods industry.

"We now are unveiling a newly stocked and redesigned Gift Shop, with new categories of gifts and additional gifts for charity, music, and sports from developers," a post on the company blog by Facebook's Will Chen read. With so many gifts available, we also introduced a new design to make it easier for you to browse and purchase gifts with different gift categories." It'll be rolling out over the next few weeks, he added.

Needless to say, this is a huge deal for the virtual-goods industry, which some estimate is now a billion-dollar business.

It also beefs up one of Facebook's few non-advertising revenue streams (though many of the virtual goods in the "gift shop" are licensed or sponsored)--even though in a talk on Wednesday at the Web 2.0 Summit in San Francisco, Chief Operating Officer Sheryl Sandberg downplayed rumors that the company would be making big moves into bringing commerce and payment transactions to its developer platform.

Music files, as rumored, will be sold through a partnership with Lala. Right now, they are only available to Facebook users in the U.S.--less than a quarter of its total membership. For one Facebook "credit" (10 cents U.S., and currently available for purchase in 15 currencies from around the world), members can buy one another songs that can be played online. For 10 credits (a dollar), they can gift downloadable MP3 files. "Other people who are able to see the music gift (in that member's profile) will only be able to play the song in full once, after which they will be able to play a 30-second clip," Chen's post added.

This is a big move on Facebook's part for another reason: iLike, which powers the extremely popular "Music" app on the social network, and which allowed members to gift songs to one another through the third-party application, was acquired by Facebook rival MySpace this summer.

Instead, it's partnered with Lala--which is also one of the partners in the music initiative that Google is slated to launch next week.

But music isn't all that's new in Facebook's revamped Gift Shop. There are also sports gifts officially licensed by teams--branded virtual goods from a number of college sports teams as well as the National Basketball Association and U.S. Major League Soccer. Also rolled in have been the non-profit gifts that Facebook first debuted this summer. In addition to existing partners like Kiva and Project Red, virtual charity gifts will also be sold by popular third-party Facebook app Causes.

And images posted to the Facebook blog show additional categories--e-cards, which are pretty self-explanatory, and "real gifts," which bundle a physical gift sent in the mail along with the virtual gift. These have all been tested in a limited scope by Facebook over the past few months.

Leaked screenshots of a document that Facebook distributed to advertisers earlier this month revealed that an upcoming design modification to Facebook's home page will make birthday alerts--which also encourage members to buy gifts for one another--more prominent.

Facebook hasn't disclosed any financials related to how much advertisers pay for sponsored gifts, or how any revenue-sharing logistics pan out.

Other social-networking services are trying to get in on the action, too. Social-site creator Ning, for one, launched a gifts platform earlier this week.

More to come...last updated at 4:01 p.m. PT.