What Web 2.0 needs to make some money: a 99-cent store

By Michael V. Copeland

I was having lunch with Flixster CEO Joe Greenstein the other day when we came to the topic of how to monetize all these widgets that are cropping up like poppies in a Silicon Valley spring.

Flixster, for those of you who are not Web geeks or film-buffs, is an online community of more than 1 million people focused on movie recommendations and reviews. While it has its own Flixster.com site, where it has really grown over the last six months is as a Facebook application — so much so, that Barry Diller’s InterActive Corp. (IAC) was rumored to be interested in buying Flixster in a deal estimated to be worth $150 million.

Greenstein spends his waking hours thinking about ways not just to grow that user base, but also how to make money from it, and he’s got a novel idea.

One way his service — and vast numbers of other widgets out there — could monetize more easily, Greenstein says, is if there were a button embedded on a site to make small purchases. “If you want to charge for a virtual teddy bear, there’s the button, you charge 99 cents for it, and that’s it,” Greenstein says. “PayPal is too cumbersome for something like this, it needs to be really simple.”

If that 99-cent button did exist, all those Facebook and MySpace applications that now depend on online advertising would suddenly have another way of making money: by charging small amounts for small items.

Those items might be virtual goods — a digital photo of a favorite band, a simple game. The point is that it could enable an economy that has been mostly missing from the widget world. If you think charging 99 cents doesn’t add up to much, remember that the ringtone business grew to a multibillion dollar industry worldwide by charging similar amounts.

So who is best suited to introduce a simple, secure 99-cent button?

In many ways Facebook is the logical choice, and one of the worst-kept secrets in the Valley is that Mark Zuckerberg and crew are working on a Facebook “wallet.” It makes perfect sense that a next step for the Facebook platform would be to introduce a simple, universal payment scheme. Facebook has already collected credit card information on some portion of its users, so it wouldn’t take much to turn something like the 99-cent button on.

I’ll bet almost a buck on Facebook doing it, and soon. The larger question is whether Facebook’s wallet becomes the standard for the rest of the Web, or if some other, more enterprising gang swoops in with a better version of PayPal for the widget world.

What are you waiting for? Get on it.