Will Facebook, Eventbrite, and PayPal Establish New Paradigm in Micropayments?

Micropayments could be huge again. I surmise this from my work with clients at BitPass where we process over 10,000 transactions a month; the key factors  they share are reflected in similarities with current market dynamics. The recent announcements by PayPal, Facebook and Eventbrite have me thinking that some serious money could soon be flowing again.

The  news forms an  equation with the following variables in the system:
a = PayPal’s general availability of micropayments
b = Facebook Credits purchasable via PayPal
c = Eventbrite ticketing on Facebook

The impact of (b) alone could be huge, but since it’s likely that Facebook credits will be purchased in large enough blocks that micropayments aren’t needed, developers still need to design in the credits to their apps, and the major implications for Zynga, Playdom, and other social gaming providers, I’ll save that discussion for a future post.

In the short term, however, (a) and (c) could have a hidden impact that could grow to be as important as the Apple App Store. The idea is simple, just as the App Store allowed for the mass proliferation of $0.99 apps, the Eventbrite ticketing on Facebook with PayPal micropayments could usher in a new era of $0.99 events. Think about that for a moment. If an event was slightly worth it, would you pay $0.99 to go? Of course, most events will still be free, but suddenly the ability to charge $0.99 for an event changes the event scheduling and ticketing game.

Events could clean up their attendee lists since only paid attendees would be coming. Companies could offer incentives to paid attendees (every attendee gets a $5 coupon for some service, etc). Marketers could be developing a higher quality of list based on those who committed enough to pay $0.99. As with regularly ticketed events, the event organizers would earn their fees as well, and possibly provide a way to cover event costs and possibly more. As with any EventBrite event, you could charge more, but I’m using $0.99 to make my point.

Before we get too caught up in this, I don’t have all the details, but I envision the best case scenario as such:

  • Eventbrite would charge their customary 3 percent
  • PayPal’s micropayment pricing would be 5 percent + $0.05
  • Facebook takes a 5 percent fee (I’m hoping Facebook doesn’t kill this by demanding too much)

For a $1 event, the fees would be $0.03 + $0.10 + $0.05, or $0.18 in fees, leaving the organizer with $0.82, and a 100 person event would yield $100 to cover a keg and some snacks. If, according to this Business Week article, the actual fees PayPal takes is less, then the return to the organizer could be even higher.

To put this into perspective, the reason that this could be a really big deal is according to Facebook, more than 3.5 million events are created each month. Are all of those events monetizeable? No, but for the sake of argument, let’s say that 1 percent are. That would be 35,000 events that could be generating revenue for Facebook, PayPal, Eventbrite, and the event organizer. Take a guess on how much money could be made for each event, multiply, and bam, you have a serious revenue stream.

Granted, I think about micropayments, alternate payments, and virtual goods/services all the time, so my numbers could be optimistic. However, when you consider the combination of no new login required, an existing social graph, a huge population already creating events, and the need for fundraising, the opportunity for serious revenue is obvious. Let’s just hope that they execute properly and aren’t writing about this missed opportunity next year.

About Duane Kuroda

Business ninja, deal hunter, Internet marketer, and technology fiddler obsessed about growing companies and launching products. Currently at Peerspin, Duane’s past lives include Vice President of Marketing roles at companies leading micropayments, Internet video, and online communities as well as research and consulting for mobile advertising. Duane has spoken at conferences including Digital Hollywood and Digital Video Expo on topics covering monetizing online content and online video, has appeared on TechNowTV and KNTV, and has been quoted in various magazines. Follow Duane on Twitter: @dkuroda.

5 Responses to Will Facebook, Eventbrite, and PayPal Establish New Paradigm in Micropayments?

  1. SMS says:

    The EventPay app on Facebook already provides the above services proposed by Eventbrite and PayPal at a fraction of the cost. EventPay also allows the event organizer to pass all fees to the attendee and keep 100% of the ticket price. See http://www.facebook.com/eventpay

    SMS

    • Duane Kuroda says:

      Other options are good, but the Facebook/Eventbrite deal does not require anyone to install/use the eventpay app from the description. The UX would therefore be smoother with fewer distractions. Facebook, because of it's position, can nullify the value of any app by simply integrating the app's functionality into the core system. As the platform controller, they can take the same steps that Apple does – see a good app? build it into their system in the name of user experience. While it may suck for the developer and take away their income, it can mean a better user experience and money for the Facebook or the platform owner.

  2. SMS says:

    Duane: You point is well taken, though, their are many alternative to embed ticketing links into FB Events. Do you disagree that establishing a deal with a single ticketing co cuts out other potential partners for FB? In other words, why would Facebook not partner with ALL the tickeing companies out there instead of just one – let the user decide who they want to use. This way, the Facebooks potential cut is increased exponetially as opposed to using one provider. With Facebook Connect, any provider including Eventpay, Ticketmaster, Ticketleap, BrownPaper Tickets, etc still have the ability to integrate their services despite any deal with one provider. Your thoughts? SMSour orestes

  3. Duane Kuroda says:

    When Facebook partners with EventBrite on event payments, there are a few major considerations: 1) popularity of the event provider, payments experience, revenue potential, and costs of integration. Even Facebook has limited resources, so if they find one or two partners who can provide the highest yield and the lowest cost, then they have have short-list for their deal-making. The cost of integration is non-trivial, however, and it multiplies with each partner due to the engineering time, testing time, and support time that needs to be allocated to the relationship. If Facebook partners with 10 apps, that's 10 apps to integrate with, coordinate engineers for, test, and support on a regular basis. The cost can become significant, so I believe that Facebook has to choose those relationships that bring in the most and cost the least (time, support, money, etc). It's a sad fact of life that big companies tend to partner with big companies for these types of reasons, while the little upstarts are left with crumbs until they become huge themselves.

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