A new social networking service that has come out of Microsoft Research called Wallop raises the bar with a potentially new way of monetizing outside of the traditional ad-model.

The Wallop model is simple and pure genius. People create accounts on the site and setup their own pages using pre-built copy ‘n drag Flash components. Should they wish to personalize their pages further, they can buy Flash mods from a virtual market-place in a sort of micro-payment fashion. Flash developers from around the world are free to contribute to the market-place and split the profits 70/30 with Wallop, keeping the site ad-free.

This model has been very successful for multiplayer online games where developers create mods and add-ons for games such as World of Warcraft and Second Life and it will be extremely interesting to see if it’s embraced by a social networking user-community. My bet is that it will, especially as people begin to tire of MySpace’s crap and inflexible templates and advertising-chocked pages.

Although the service is in an ‘invitation only’ phase at present, Wallop has the potential to tap into an increasingly lucrative market and put smiles on the faces of many Flash developers who might be wondering why they went to tech for 2 years. It could also start to spin-off into other areas and rejuvenate the old-fashioned concept of paying for content online.