Virtual Paris Hilton sells for $10m

I’ve been thinking about virtual goods for sometime in parallel the emergence of the gaming industry as the most significant form of entertainment in the 21st Century.

Whether you’re a Wii bastard or a Second Lifer (no parole) you can not fail to recognise how virtual trading has become a business to be reckoned with, from sending a virtual bunch of daffs in HotorNot to hurling a pixelated spare rib in Facebook or buying a Level 60 Warlock in World of Warcraft.

Susan Wu wrote a fantastic article for Techcrunch in the summer about this trend and with 80 lengthy comments it is certainly a contentious subject. Some choice quotes from her piece:

‘People spend over $1.5 billion on virtual items every year. Pets, coins, avatars, and bling: these virtual objects are nothing more than a series of digital 1s and 0s stored on a remote database somewhere in the ether.’

‘Virtual objects aren’t really objects - they are graphical metaphors for packaging up behaviors that people are already engaging in. As James Hong from HotorNot tells it, his virtual flower service has 3 components: there’s the object itself represented by a graphical flower icon, there’s the gesture of someone sending the flower to their online crush, and finally, there’s the trophy effect of everyone else being able to see that you got a flower. People on HotorNot are paying $10 to send the object of their affection a virtual flower - which is a staggering 3-4x what you might pay for a real flower! Of the 3 components, the two that James says are most important to his users are the trophy effect and the meaning of the gesture itself. As the barriers between peoples’ online and offline selves continue to erode, this market for virtual goods is going to explode. People are going to continue to seek out ways to show real emotional engagement online. Virtual gifts are a particularly compelling way to package your attention.’

‘Probably the most powerful way that virtual objects create real value is through self expression. RockYou is now serving 150 million+ widgets a day - widgets that people put on their Facebook profiles to differentiate themselves - much as they do in the real world with accessories and bling. The US retail market for apparel is ~$300 billion - there’s good reason to believe that people’s strong drive to personalize and differentiate in the real world will proliferate online as well. Widgets are a form of virtual good - though most widget companies are ad supported today, I see widgets fueling a massively distributed microtransaction economy in the not too distant future.’

Toys, books, art, apparel all of these artefacts that I pay for and consume are increasingly losing out in my attention span to the online world. I’m not a gamer, I dabbled in Second Life, but last time I saw my suede jerkin, blue faced, asexual avatar he was asking a virtual prostitute about her motivations (purely for research purposes) in virtual Amsterdam. The application crashed. I did some research into gold farming and was amazed at the number of retailers selling virtual bullion, it’s an entire unregulated and thriving market. Just type ‘virtual gold’ into Google and see for yourself.

As our identity and our social definition moves increasingly online, so our need to consume within that environment will also evolve. The online world has an immediacy, we hit a link, we are taken to a site. Our attention span is short, laggy site, we move on, poor navigation, we move on… we are impatient. In the real world the same interactions take place over much longer periods, to ‘move on’ is an action defined by time and distance, by real world physics. Part of the appeal of the virtual environment is that all that constrains us in the real world, doesn’t apply. We can fly, change colour, build houses, have sex and probably grow pale from lack of exposure to the sun.

In the real world few of us are promiscuous junkie chameleons.

The warping of time impacts upon perceived consumption. We demand our goods immediately, the digital artefact is instantaneously transferable, that we are now starting to apportion real economic value to it is a logical next step.

Is it only a matter of time before we see on ebay a Virtual Paris Hilton available for sale? Strictly limited edition.

What price do we put upon our virtual selves?

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