Bad Economy Good For Virtual Economy?

It’s sometimes difficult to imagine the money-making potential of businesses that thrive on the web–they’re so intangible, based on virtual social interaction and can be difficult to measure from an end-user standpoint. But the potential of virtual goods is increasing in attractiveness, not only for marketers and entrepreneurs, but for individuals as well. Perhaps its the current economy that’s driving more people to virtual businesses, but that may have been just the kick in the rear that we needed.

Turn Your Hobby into a Hustle

An article today on CNN highlights a piano teacher that brings in an extra $10,000 per year by performing virtual concerts in Second Life. It seems odd to bring up Second Life’s money-making prowess, as it’s an economy that’s empowered its users for several years now. But thanks to our economic downturn, the virtual worlds are becoming viable places in which to earn supplemental income. In essence, turn your hobby into a hustle. That’s the advice many financial advisors are giving now, and it’s a move that many individuals are taking as they find themselves without a job or are just taking a preemptive strike in the event that they lose their job in the future.
Turning to virtual goods is something that many web-based companies are doing as well, in order to supplement their income too. Instead of relying on display ads or even referrals, virtual goods are more direct and give publishers and site owners more control over their streams of revenue. They’re also quite nice because they don’t require any major changes in a site owner’s services provided to end users, though they offer added features to users that can be purchased for a variety of purposes. Gifting, for instance, is huge on sites like Facebook, and buying things like weapons or clothes for avatars in social video games are great alternatives to direct advertising as well.

Benefits for Who?

The benefits of such virtual goods are that they lower costs for end users, when compared to more involved video games such as those that need to be purchased in-store or downloaded at higher prices. Virtual goods can also be branded, and some of these brands users will be willing to pay for, even if they’re only digital representations of the real thing. This is a concept I’ve been pushing for years, and it’s finally gaining more traction now that more platforms support a virtual goods economy and more brands are seeing potential in socially-driven campaigns that involve virtual goods.
So perhaps it is the economy that’s encouraging advertisers to turn to more integrated applications that push brands forward in the virtual sense, with brands themselves seeing the benefit of a digital economy by which their goods are easily replicated and even more easily shared across millions of people. And the need for added revenue is driving the development of platforms from gaming venues and social networks alike.

Empowering End Users with a Virtual Economy

But it’s the end users I’m really interested in for this whole equation. Empowering them is the next huge step forward, and this requires more than cooperation from social networks’ platforms, brands and marketers. I requires a full-on marketplace where a self-regulated economy can thrive easily for all types of users. This would create needs for developers that can create applications for non-programing end users, while broadening the potential for different types of marketing and branding campaigns as well.
The money-making potential of such a marketplace could really create a virtual “middle class” of a proportioned economic scale, with real implications in the physical realm of business. Even though we’re seeing small steps towards this, I have yet to see a platform with mass appeal in the interest of providing such empowerment. Who will make the first move?
Image from Venturebeat.