Source: techcrunch.com

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.

Marketplace functionality is still being built, but Wallop says they will have the ability for sellers to create auction sales for one of a kind items, limited edition sales, etc. in the near future.

Invited users will be given five invitations each that can be used to invite others into Wallop. More invitations will be given to users based on how active they are in the service. Look for the service to leave beta and open to the general public in early 2007.

Wallop is based in San Francisco and has 27 employees. They’ve raised a total of $13 million in venture capital over two rounds, from Bay Partners , Consor Capital and Norwest Venture Partners.

Wallop is different from other social networks in two important ways. First, it’s all based on Flash (another reason it could never be a Microsoft product). That is both a blessing and a curse. Like Flash-based desktop suites Desktop two and Glide Effortless, it’s beautiful. Pages look great, and the interface is much more inviting and interactive than on other HTML-based sites. There are some really gorgeous features, like a "radar" scope of your friends that brings the people you interact with the most closest to the center, while mere acquaintances are further away, and people you communicate with who are outside your network are farther still.

On the other hand, Wallop’s Flash-based UI doesn’t exactly follow standard interface protocols. It’s not hard to use, but it’s very different from other sites. It also doesn’t work on cell phones. And forget about having a good experience if you have a slow network connection, like the one at the Demo hotel, where I’m writing this. Ouch.

The other big difference is the business model behind Wallop: If you can program in Flash or ActionScript, you can create widgets, or "mods," and sell them to other users; Wallop takes a cut of these transactions. For example, if somebody has a gizmo that automatically displays airfares to your hometown, you can’t just pop it onto your Wallop page without buying it. You also can’t use the growing library of HTML-based widgets like you can on a typical social net such as Myspace.

Will people pay for code to spruce up their Wallop pages? Certainly Jacobs is right that more people are expressing themselves through their online sites. He points to the growing ringtone market as proof that people will buy little bits of code to express themselves. And to the developing economies in virtual worlds like Second Life 

Wallop will have to be a lot better than other social networks before it becomes a place where people will pay to tart up their pages.

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