Facebook makes as much as $42 million off pointless "Gifts"
After too much math, Jeremy Liew of Lightspeed Venture Partners estimates that Facebook earns between $28 million and $42 million allowing its users to buy icons as gifts for each other. Lightspeed came up with the revenue numbers by watching how much users spent on the icons for a week and then multiplying that number by 73.3. Uh, why not 52? Because Facebook Gift sales go up during the holidays, just like real useless merchandise. We'll let Liew explain the rest of his math, below. Bring your coffee:
Facebook creates a certain fixed number of each type of gift. When the number remaining for any particular gift drops below 100,000, Facebook displays the number left. (The most common size runs are 100,000 and 1,000,000 but they range as high as 10,000,000 and as low as 15,000.). For those items where less than 100,000 remain, we can track how many gifts had been sold in the preceding week by subtracting the number remaining from the number remaining the previous week.