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
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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