Ning Users Set Up Shop

Recognizing the nascent value of virtual goods, social network provider Ning on Wednesday is expected to begin offering its users a customizable virtual gifts service.

Billed as a built-in revenue-generator, the Ning Virtual Gifts feature gives network creators the ability to create custom virtual gifts, select their gift store inventory, and participate in a revenue share on the sale of virtual gifts on their Ning Network.

"This is a first step in Ning building upon the inherent context in each Ning Network to drive new revenue opportunities for our network creators," said Jason Rosenthal, SVP of business operations at Ning.

In addition to creating virtual gifts, network creators will have the option to mix and match hundreds of pre-populated gifts. Transactions will be processed directly to Ning Network Creators via PayPal, while revenue will be split equally between network creator and Ning after PayPal's transaction fees. At launch, virtual gifts across all Ning Networks will be priced at 75 credits or $1.50 per gift.



Ning presently derives revenue from targeted advertising via Google AdSense, as well as subscription-based services. But while it does not disclose financial information, the startup is no doubt having a very good year.

In June, Julie Supan, who helped make YouTube a household name as its senior director of marketing, joined Ning as its vice president of marketing.

Then in July, the company raised $15 million in a financing round that valued it at a whopping $750 million, The startup's prior funding round of $60 million a little more than a year ago valued it at $500 million.

Chairman Marc Andreessen and CEO Gina Bianchini founded Ning in 2004. Other investors in the company include LinkedIn Chairman Reid Hoffman, Legg Mason and Allen & Co. The $15 million round, which the firm claims to be not actively seeking, brought the total funds raised by the company to $119 million.

Today, Ning claims over 1.6 million networks created, which are made up of roughly 36 million registered users.

The virtual goods and currency market will reach an estimated $1.8 billion this year as 12% of Americans report having bought a virtual item at some point over the last 12 months, according to a recent study by analyst firm Frank N. Magid Associates and commissioned by virtual currency provider PlaySpan.

Demographically, the market is more balanced than one might assume, as 15% of males ages 12-24 reported purchasing virtual goods, while 15% of women between the ages of 35 and 44 did so, too.

Demonstrating the value of virtual goods, IMVU earlier this month said it had achieved profitability, and doubled its revenue to $25 million year-over-year. Founded in 2004, the avatar-based virtual world said it grew revenue primarily by increasing the sale of virtual currency, which members use to purchase virtual goods like clothing, detailed facial features, and furniture.

At launch, Ning networks participating in the virtual goods program include Lost Zombies, New Kids on the Block, Brooklyn Art Project, and Pinup Lifestyle.


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