Danah Boyd has a blog post entitled Facebook's little digital gift where she writes
Last week, Facebook
unveiled a gifting feature. For $1, you can purchase a gift for the person
you most adore. If you choose to make the gift public, you are credited with
that gift on the person's profile under the "gift box" region. If you choose to
make the gift private, the gift is still there but there's no notice concerning
who gave it.
...
Unlike Fred, i think that gifts make a lot more sense than identity purchases when it comes to micro-payments and social network sites. Sure, buying clothes in virtual systems makes sense, but what's the value of paying to deck out your profile if the primary purpose of it is to enable communication? I think that for those who actively try to craft a public identity through profiles (celebrities and fame junkies), paying to make a cooler profile makes sense. But most folks are quite content with the crap that they can do for free and i don't see them paying money to get more fancified backgrounds when they can copy/paste.
...
Like Fred, i too have an issue with the economic structure of Facebook Gifts, but it's not because i think that $1 is too expensive. Gifts are part of status play. As such, there are critical elements about gift giving that must be taken into consideration. For example, it's critical to know who gifted who first. You need to know this because it showcases consideration. Look closely at comments on MySpace and you'll see that timing matters; there's no timing on Facebook so you can't see who gifted who first and who reciprocated. Upon receipt of a gift, one is often required to reciprocate. To handle being second, people up the ante in reciprocating. The second person gives something that is worth more than the first. This requires having the ability to offer more; offering two of something isn't really the right answer - you want to offer something of more value. All of Facebook's gifts are $1 so they are all equal. Value, of course, doesn't have to be about money. Scarcity is quite valuable. If you gift something rare, it's far more desired than offering a cheesy gift that anyone could get. This is why the handmade gift matters in a culture where you can buy anything.
As usual I agree 100% with Danah. A few years ago Ze Frank was here at Microsoft talking to some folks in the Social Computing Group of Microsoft Research and he talked about a service that allowed users to give virtual gifts to each other which was making money hand over fist. I can't remember the name of the service but the logic for why virtual gifts were popular on the service made sense. As Danah points out, paying to pimp out your profile (i) gets old quick and (ii) is something that most people don't care much for. On the other hand gifting is an activity that a user can perform repeatedly since there are milions of people out there they can give gifts to compared to only having one avatar/profile to pimp out.
As Jamie Zawinski pointed outed out in his rant Groupware Bad,
"How will this software get my users laid" should be on the minds of anyone writing social software.
and Facebook which is primarily used by people who are still indulging in the mating rituals of early adulthood needs to keep this foremost in their minds. The gifting feature meets this need of their users quite well. A "virtual gift" is the equivalent of eye contact or a wink in a crowded bar that shows your interest in another. It makes the receiver feel special because someone thinks they are cool enough to spend money on [even if it is a micropayment] and the sender feels good because it is an almost risk-free gesture of sexual interest which doesn't cost much economically or socially. After all getting dissed by someone at a bar or dance club is a lot more damaging to the ego than someone not reciprocating your virtual gift or ignoring your friend request after you bought them a $1 "virtual rose bouquet".
I also agree with Danah that Facebook should stratify the gifts. Hot chicks would compete with each other for how many $5 gifts of "virtual bling" they had compared to $1 gifts of virtual flowers. Flirting guys trying to stand out in the crowd would throw down a $10 virtual gift of a 'cadillac escalade with spinners' to show that they were ballers. If this sounds outlandish to you, then you probably haven't looked at online dating sites like Match.com whose "browse for free but pay to message those you like" highlights the demand for this in online mating rituals. As well as the fact that "virtual gifts" are actually a staple of dating sites like such as MatchDoctor and Cheeky Flirt.
Making it easy for college kids to hook up and party is what Facebook is about and this move is a step in the right direction by facilitating a new kind of online mating ritual for many of their users. Good move on their part.