Mike Arrington has a blog post entitled Microsoft Spinoff Wallop Launches where he writes

Wallop, previously a semi-forgotton Microsoft Research “sandbox” social network and photo sharing project, was spun off into a new, independent, venture backed business earlier this year (details here). Tonight at 9 pm California time, Wallop is launching a semi-public beta.

Wallop is a Flash based social network that will compete with Myspace, Facebook and others that I mentioned in a post yesterday. It includes free unlimited storage for people to upload photos, videos and music.

Unlike the other social networks, Wallop CEO Karl Jacob says he has no plans to ever put advertising on the site. It just lessens the user experience, he says. Instead, Wallop wants a piece of the $3 trillion per year U.S. market for self expression items (clothes, furniture, beauty supplies, etc.). As sites like Cyworld have shown, people are willing to spend money for online expression items, too (Cyworld brings in a reported $300,000 per day in microtransactions to its users).

So Wallop has created a marketplace for “self expression” items on the site. Flash developers can create items and sell them to users. Music clips, animated widgets, artwork, avatars, clothing for avatars, etc. will all be for sale. Wallop handles payments and DRM, and takes 30% of the sale price. The rest goes to the seller.

This is an interesting business model and one I remember being mentioned by Ze Frank a few years ago in a presentation he gave to the Wallop team when the site was still part of Lili Cheng's Social Computing Group at Microsoft Research. This business model has been shown to work for various online services including QQ, Cyworld and Second Life. I also wonder what would have happened if MySpace had started off charging for "personal expression" content. Imagine if it cost a $0.50 to add a widget to your MySpace page or $0.25 to change your theme? It sounds ridiculous but so does the cell-phone ringtone market turning into a multibillion dollar industry. The only problem is figuring out how to deal with microtransactions...perhaps if it is tied to to a prepaid card instead? Anyway, enough speculation.

I do find the quote "$3 trillion per year self expression market" an amusing stretch though. It's like starting a taco stand and caling it an attempt to grab a piece of the trillion dollar food service industry. Anyway, I'm glad to see that Wallop is going to continue, it was a very innovative Social Network service even two years ago and it looks like it is in good hands now. 

PS: Is it me or did TechCrunch just switch to partial feeds? That sucks.