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    Virtual Goods And How I Don’t Get Them

    I may be in the minority or maybe I just don’t have enough money to throw away or maybe I just don’t get it.

    Viximo is a purveyor of virtual goods, more commonly called gifts.  While I would not say that they are common on Facebook, Facebook is the largest platform that they exist on (to my knowledge).  To be fair, while I might not think that they are common, Facebook is counting on it for revenue and not in small amounts.  It is estimated at $30 to $40 Million a year.

    I don’t know how much Viximo is planning to make but when I first read about them over at TechCrunch I knew they would make money.  To be clear, I still don’t get it.  I know they will make money, and lots of it since their cost is fixed and it does not matter how many of a particular gift they sell, but why do people buy?

    The value of something is defined by two things – supply and demand.  There is nothing more to it.  If you had 1 ton of gold and nobody wanted it you may as well have 1 ton of gravel.  In contrast you could have that ton of gravel in a place where no quarry exists and everybody wants it and it could be worth lots.  It is all supply and demand.

    How does this relate to virtual goods?  If someone buys a virtual gift who really owns it?  If Facebook goes under – work with me here – where is your virtual gift?  Gone.  Do a google search on what happens to DRM protected music when the issuer goes under.  The sites going under will actually tell you to burn your songs to a CD and rip them back to your hard drive because you can’t transfer them or have the DRM validated after the site shuts down.  Why risk it?

    I guess my point is that I understand that it can be fun to give a gift, it doesn’t really make sense.  Just e-mail them some clip art.  The only thing that I think makes sense is the free gifts.  The gifts that are sponsored by a company.  If the company takes its time, makes it clever, and makes it interesting then it can be a great marketing tool and a fantastic way to generate some buzz around the brand.  So it makes sense to a company to pay Facebook to offer their ‘gift’ but can someone explain why I should pay for one?

    This has been a Thought From The Cake Scraps.

    8 responses to “Virtual Goods And How I Don’t Get Them”

    1. Chris says:

      I agree. It’s pretty ridiculous. This can be found in online games, too. While it might make more sense there, like customizations to make your character unique, it still seems like a waste of money to me, especially when the stuff you buy expires.

      The one exception I made was for Kingdom of Loathing, and that was because I enjoyed their free game so much that I decided to support it and donate $10 to get a rare item.

    2. Fantasy7 says:

      The purchase of virtual goods in an online game can help a character who perhaps entered the game late and would otherwise be at an impossible disadvantage compared to players who have been with a game from the beginning. I personally believe games that are designed as such are flawed, but it seems like an effective way to get people to commit huge amounts of time to games (and to make tonz of money for Romanians).

      You’re making your argument under the assumption that the games/companies could go under at any time and you would stand to lose something. Even if that were the case, however, people appreciate the short-term gains from their purchases (just as gambling doesn’t exactly make sense, but can certainly be exhilarating, even if you have nothing to show for it in the end). The temporary joy a facebook user gets from sending a $1 “gift” and the resulting joy on the receiver’s part justifies the expense, even if there is no good in play. If someone cared enough about me to spend a dollar on me, why, I suppose that would make me happy too. Granted, I’d prefer just getting the dollar, but dollars can’t be sent over the internet and we all know actually seeing people is way too much work these days…

    3. @Fantasy7 If one looks at buying a gift on Facebook as an experience or as a way to provide an experience to others I can see how it may be worth the $1. I also understand your point about a video game. Sure, you want the good stuff now. And as long as you think that it is money well spent, I can’t really argue with you.

      I will be doing a follow-up post on this topic. I think this post sets up that future post nicely – part of the reason I did it. Thanks for your thoughts!

      @Chris I do think the video games are where this makes the most sense. Get ahead in the game to save some time. If you have the money, and it is worth it to you, do it.

    4. […] movies because I don’t like to pay for something that I don’t have afterwords.  See my post on virtual goods to see if you […]

    5. […] this post I return to the topic of virtual goods. I have previously written about virtual goods and how I don’t particularly get them. Clearly there are many reasons why a person would buy such a thing, but I thought that Fantasy7 […]

    6. Frank says:

      It completely depends on how much the experience is worth to you. The Facebook gifts do seem the most worthless, especially since all that’s being done is a few database commands. But there are any hundred of “virtual goods” that we all pay for. They are just more common and worthwhile to most people. A few examples would be theater shows or movies, concerts, sporting events (viewing or playing), amusement parks, etc. I could think of a lot more. After you pay for it, nobody owns it. (Well, I guess for a show, you would be paying for a ticket) Essentially you paid for the experience. After the fact, all you own is a memory. Just how “virtual” is the virtual good you are buying?

    7. @Frank I have to admit that I am in the camp where, at my current point in life, it is difficult for me to justify to myself large expenditures on the things you listed (movies – see my Redbox post – sporting events, etc.) I think my larger issue is that when a person buys tickets to the event, they know they are buying it for the experience. I think that is a less clear distinction when buying something virtual, i.e. you buy an in game item for your character – you are buying it to experience better game play, but you will probably view it as an item (a good rather than event) you purchased for you character .

    8. […] are a hard sell for me; I need to get something not easily duplicated for my money.  After my first post Fantasy7 made the argument that people buy a Facebook gift for the experience.  They buy it for […]

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