Apple and Facebook have come to an agreement and have made digital iTunes gift cards available via the social network’s Gifts platform.
They system will run as such: select the desired iTunes digital Gift Card and Facebook will charge your credit card on file for the amount. Then, you can send it to any Facebook friend you want. The gifts will come in increments of 10, 15, 25 and 50 dollars.
Facebook announced the news via a media release:
Starting today with Facebook Gifts, you can instantly gift your friends iTunes digital gifts and recommend albums, movies, games, apps, and more available on the iTunes Store.
It is interesting that Apple would be willing to give up a share of the $2 billion business to Facebook with a deal like this. But they must have thought it worthwhile to tap into Facebook’s massive (over 1 billion) user base and get another place of access.
Mike Isaac of AllThingsD did the math to figure out approximately what that means in hard numbers.
Industry sources say that more than $2 billion of that revenue comes directly from iTunes gift cards. Sources also tell us that existing retailers who sell iTunes gift cards (like Best Buy, Target and the like) usually keep around 13 percent of each gift-card dollar sold.
Which for Facebook means approximately:
So that adds up to around, say, a $260 million-dollar market size for physical iTunes cards split among participating retailers, of which Facebook will now be an active participant.