Widget Money

Following up on yesterday’s post about widgets which wondered why anyone would try to build a business on a pure-play widget strategy, comes this interesting little nugget from VC Fred Wilson:

I have to be careful because I am in possession of confidential data from our portfolio companies. But I can assure you that these companies are making a lot of money on these apps

Do tell! Could they be using Fred’s favorite web business model to make money? Or maybe they’re using one of the other models on this list that Fred posted.

I don’t think these guys are using the “free+premium” strategy. Slide and Rock You appear to be advertising-only. Can you find any premium services to pay for?

Zynga is a bit more interesting. There’s this tidbit from Valleywag a few days ago:

[Mark Pincus] claims he hasn’t touched his $10 million in VC funding because he’s in the lucrative business of selling application referrals within Zynga’s Facebook games — a pyramid scheme if there ever was one.

We know web advertising can work. So maybe that’s the secret sauce behind these Facebook widget companies. But throwing eyeball-acquisition dollars around? That doesn’t make much sense to me.

Tell me where I’m making the mistake.

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