Fools Rush In ... to new Social Media Sites

Virtual goods offerings continue to garner more momentum in the marketplace. Why do consumers want to spend their money on items that only exist in a virtual context? Is it even appropriate to make a distinction between what motivates people to invest in virtual goods as opposed to real-world goods? Join us for a conversation about what motivates people to invest their own time and money in digital goods and why virtual goods matter.

» Craig Sherman, Gaia Online
» Daniel James, 3 Rings
» Amy Jo Kim, Shufflebrain
» Byron Reeves, Stanford University
» Nabeel Hyatt, Conduit Labs (moderator)

Reeves: What are the different ways that people can use virtual goods, that might not be traditional? If you are running an internal prediction market, rewarding friends - there are a lot of possibilities for using virtual goods where money is not necessary.

Kim: In gaming worlds, functional goods have more power. In a gaming environment, power-up and others that make sense for gaming have more value. In social networks, it's about social meaning that are attached to purely decorative items. Even though there is no "power" with those goods, there is a value of those goods within the social networks themselves. It's not coincidence that we are seeing virtual worlds grab hold of teenage users. It's a time of life issue, where teens are trying to identify themselves. These goods can be viewed as part of that social network and growing up, part of the identification.

Sherman: We have had rare goods be sold on eBay - we had a rare halo sell on eBay for $6000, which can be used on Gaia Online. We do create products and goods that are for a limited time only - available for one month only - and smart users learn to invest in those goods and flip for more gold. It's not an obvious or easy way to do it, but we do have that form of economy. The decorative items are very powerful in the virtual world.

James: We do both fucntional and decorative goods - the functional revenue comes from badges, which give you priviledges. The social puzzle does come into the functional goods - you have to have other sailors, even if you have the biggest boat that you bought. You can buy that boat, but you have to have others work with you. There is that balance of finding the right price. Companies in Korea have found that secret to tweaking prices for the right amount to get the best sales.

Kim: The social maps can be affected by functional goods - what do you want to promote in your world? Then you introduce functional goods, where people work together. There is that balance that does not wreck the social balance. What game are people playing - whether real or social. If it is going to affect where people come in and want to spend time on your site, you got the right mix.

Kim: Some groups have it where the content is created by staff, while other worlds have content created by its users. We have seen some places where the audience cared more about the goods created by other users, and ignored the "brand" virtual goods. But, there were also community members that wanted the brand name goods (that were never released in the real world).

Sherman: There are quality goods versus regular user created content. It's about high-quality, and while there is the long tail, it is about quality.

(I had to leave for a phone call, so I apologize for missing the last 20 minutes.)

Tags: public relations, PR, marketing, advertising, marcom, marketing communications, communications, virtual goods, virtual goods summit, vgsummit2007, Craig Sherman, Gaia Online, Daniel James, 3 Rings, Amy Jo Kim, Shufflebrain, Byron Reeves, Stanford University, Nabeel Hyatt, Conduit Labs