Virtual Economy Research Network

Yesterday's seminar was a great success, thanks to all who participated. A video recording of the presentations is now available through here.

One of the themes was what creates demand for virtual property. For MMORPGs, Professor Sang-Min Whang showed us data from Lineage that linked property value with time required to obtain it. In the social virtual world Habbo Hotel, Sulka Haro told us how Sulake time-limits the supply of certain items to create valuable rares. Sulake does not profit from this directly, as they sell the to-be rares at a mere 4 euros when they are available. However, it makes Habbo's "economic game" of barter exchange more interesting and raises prices in the budding secondary market.

We also heard some fascinating stuff about demand for virtual items in a service that is nothing like a virtual world, but a "flat" community site, similar to MySpace. Taneli Tikka, CEO of Dynamoid, spoke about IRC-Galleria, the most popular community site in Finland. This February, Dynamoid launched a service where IRC-Galleria users can buy "trinkets" that they can attach to pictures on their personal site. The two-dimensional trinkets range from text bubbles to rubber boots and have a limited lifetime. According to Tikka, advertising now amounts to less than half of their revenues, the rest coming from trinket sales and services such as VIP memberships. Trinket prices range from a few eurocents to 12 € and VIP memberships cost 10 € per year. Together they amount to sales of around 200 000 euros per month and an average revenue per user of 55 cents per month.

According to Tikka, the most popular category of trinkets in IRC-Galleria are celebrity-related. Together with advertisers, Dynamoid has launched trinkets that bear names, faces and symbols of famous characters, actors and musicians, advertising upcoming movies and albums. Some of the trinkets have been distributed for free, and users keep messaging the advertisers months afterwards, begging for more trinkets. Tikka attributes this zeal to the fact that fans want to have a way to display their "fanship" to others.

To me, this seems like a textbook example of contemporary consumerism: the users' behaviour can be explained as e.g. willingness to seek and/or signal membership in a specific group; an attempt to differentiate onesself from some others; or as an attempt to build and/or communicate identity through pre-established symbols. Discussions on authenticity are also relevant. Anyone could have copied the trinket graphics and pasted them onto their photos, but I suspect that trinket look-alikes obtained this way would not be perceived as legitimate (and thus valuable) by peers.

These are the some of the same reasons why consumers pay a premium for brands. Currently, brand owners use services like IRC-Galleria as advertising channels for physical products. The next step is to forget the physical product and sell the brand value only.

Other strong purchase motivations that Tikka identified were gift-giving and seasonal decorations. During the FIFA football championships, national flags and shirts were in great demand. After school final exams, a 50-cent text bubble saying "I flunked maths" proved popular.