MyYearbook Making Millions With Virtual Currency Sales

MyYearbook co-founder Catherine Cook has confirmed both that the classmate-oriented social network is earning annual revenue in the eight-figure range and that one-third of that revenue is being generated by direct sales of the Lunch Money virtual currency to users, as reported by Venture Beat. This means that even if MyYearbook is monetizing in the low eight-figures, the company is still making millions of dollars from direct sales of virtual currency.

This is an impressive figure given that MyYearbook only began selling virtual currency about six months ago. It suggests that, given a full year for the site to monetize through virtual currency as well as other means, the total percentage of annual revenue generated by direct virtual currency sales could easily be much higher than one-third. Users can also earn Lunch Money by performing various activities on the site, but clearly a significant number of users are willing to convert and pay directly to obtain it.

It's worth noting that Lunch Money serves a more limited role in MyYearbook than the virtual currencies currently in use at Hi5 and in testing at Facebook do. MyYearbook doesn't have Hi5's gaming focus or a massive open platform full of apps using virtual currencies like Facebook. Instead, users can spend Lunch Money exclusively on virtual gifts for other users and donations to charities participating in the MyYearbook Causes program. Cook claims that donations of Lunch Money have saved 3 million square miles of rain forest and sent 22,000 books to Africa.

MyYearbook was the only social network besides Facebook to post a net gain of users in the past year. It currently claims about 10 million users and was founded four years ago. Cook confirmed that the site was generating positive cash flow as of April, with revenue coming exclusively from advertising and the new virtual currency sales. The company has taken $17.1 million in venture funding in the past with no word of whether or not it will take more rounds in the future.

In any case, MyYearbook is definitely a company to keep an eye on as we go into the year. It was one of OnHollywood's Top 100 for 2009 and Hi5 representatives were willing to single out its successful virtual currency model as an imitation of theirs. Specialty social networks in general appear to be a category that's really started taking off over the past year: consider recent stories spotlighting other niche social networks like TeeBeeDee, Dogster, and Scrapblog.

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