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1/26/2011
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Facebook Credits Policy Raises Developers' Hackles

The social network addresses concerns that the 30% cut it takes when game players use Credits will damage developers' cash flow.

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Some developers are unhappy about Facebook's new policy mandating that they use Facebook Credits -- and nothing else -- for payment on the social media site.

With Credits, Facebook automatically receives a 30% cut whenever consumers make a purchase with the currency. This has raised fears among some smaller developers about the viability of their businesses' future.

During a presentation at the Inside Social Apps InFocus 2011 conference in San Francisco on Tuesday, moderator Eric Eldon asked Deb Liu, a platform marketing manager at Facebook, to address these concerns.

"Every single day we know developers get to choose between our platforms and another platform," she said, a response that generated laughter and jeers from the audience, which was well-aware of Facebook's overwhelming dominance in the social media arena.

Added Liu, "We want to make Facebook the most attractive place to invest, and keep users with credits in their pockets."

There is a plus side to Facebook's recent move, said Rick Thompson, co-founder of Playdom, a social media games developer acquired by Disney in 2010. Speaking on a panel at the Inside Social Apps conference, Thompson said the decision shows Facebook is "addicted" to social media gaming and will keep investing in this area of its business.

Once the Credits program goes into effect on July 1, developers will be prohibited from accepting PayPal or other payment tools, she said. Of course, game makers can use other options outside Facebook, but the company plans to monitor them to ensure developers are not undercutting Credits by providing additional discounts on other platforms and then letting users transfer these savings to the Facebook version of the game, she told the audience.

In addition to sharing the stick-end of Facebook's new Credit policy, she offered more details of the carrot-side of the program.

Facebook's new Buy with Friends feature lets developers set up a button so users can share their purchases with friends, allowing them to buy items at a discount, she said. Facebook also will promote those games that exclusively use Credits for payment, and the company expects users to benefit since they will not be forced to register multiple times in order to pay for items from different game developers.

This should encourage more people to play games, and current game players to expand the number of games they play, said Liu.

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