News, research and discussion on virtual goods, currencies and economies globally.

Legitimizing virtual consumption

A Japanese lunch box imitating a virtual mushroom

Greg Lastowka over at Terra Nova writes about the way Sulake limits the amount of money users can spend on virtual goods in Habbo. I’ve written a little bit about the topic in a paper that has been in review for a long time. Basically what interests me in it as a researcher of consumption is how a certain type of spending is legitimized and becomes socially acceptable. Lots of products from jazz music to microwave meals were initially “improper” consumption, not something a respectable person would buy. Gradually, in a process were advertising played no small part, people accepted those goods and started to consume them. At the same time, they left behind some of their earlier ways of consumption.

As for virtual consumerism, most people probably currently consider spending money on virtual goods irrational or at least a bit silly. Buying virtual trinkets does not reflect well on a person. But because this form of consumption currently takes place largely in the privacy of one’s home or office and is shared with other likeminded individuals only, virtual consumers have not really had to engage in much debate.

Habbo is different, however, because it targets teenagers. Young teens are still accountable to their parents over their money use. In the eyes of many parents, spending money on virtual goods is not a really proper form of consumption. Hence calls to the consumer ombudsman and letters to the editor. Sulake has responded quite cleverly by comparing their offering to cinema tickets. Neither involves a tangible product, but the latter is a socially acceptable way for kids to spend money (was not always so, though!).

In my view, this public debate is part of the process of legitimization. In Finland, it looks like that process is going forward: last week, the biggest daily had a full page in the consumer affairs section devoted to virtual consumption. One parent was quoted as saying that he somewhat prefers to have his kids buying virtual stuff as opposed to plastic toys, since the latter are shipped from a distant country and soon turn into trash. But then he was the CEO co-founder (see comments below) of Apaja Online Entertainment. In Korea, the process has gone furthest, while in North America some companies are currently putting all their might into driving it forward (one company to keep an eye on is Virtual Greats).

Is this a good thing or a bad thing? Are jazz music (replaced classical music) and microwave meals (replaced dinners cooked by housewives) a good thing or a bad thing? Depends on what you measure. In today’s world, environmental impact might be a decent yardstick.

To finish off, here is a snippet of text from my paper:

In popular media, the phenomenon has been welcomed with a sort of bemused wonder, at times also with great controversy. From the point of view of parents of young players, it may seem as if the previously innocuous digital hangouts are suddenly enticing gullible children, not yet able to distinguish between real and make-believe, into giving away their money for nothing. In Finland and Sweden, consumer protection authorities have been called on more than once. For authorities and regulators, there is a distinct lack of understanding on how to categorise, deal with or even approach the phenomenon.


How do we address the charge leveled from the ‘production of consumption’ perspective: that Habbo Hotel and similar services are deceiving consumers into spending money on an illusion? One strategy is to note that everywhere in our economy, goods have a social life beyond their physical qualities. Even the consumption of food and drink is far removed from simple fulfilment of physical needs, in terms of quality, quantity, form and ritual. Positional goods are frequently made artificially scarce to enhance their value as markers (Leiss 1983). Thus it is not so much a question of Habbo luring the consumer from ‘real’ to ‘illusionary’ consumption, but from one arena of socially oriented consumption to another. We have seen that virtual commodities are able to fulfil the same kinds of aesthetic and social roles as material commodities in their respective subcultures (c.f. Thornton 1996). When we label them ‘virtual’, we do not mean to imply that they are less ‘real’ – only that they are computer mediated. If there is an unreal air to how intangible objects can be worth lots of money, it is an observation regarding the nature of our consumer culture in general, of which virtual consumerism is only a naked example. In this sense, all consumption is virtual.

Great Post

Vili — I’d love to see the paper if you can send it along. This is really a great post.

One tiny correction

Good post, Vili. One tiny correction: I’m not the CEO of Apaja nowadays – I’m still working in the company, but I was the CEO from 2001 (when I co-founded the company) until the end of 2005.

Situation in South Korea

Actually, even in South Korea (henceforth Korea), the debate you dealt with is still going on. Many groups of parental movement and consumerism have been blaming game publishers/developers for abandoning proper mechanisms against might-be side effects. One big difference in Korea is that purchasing virtual items is a reality. Asides from side effects happen from time to time, people see the act of purchasing as a natural one.
What makes this situation? My answers are absolutely hypothetical and got from my personal experience. Also, I would preclude the characteristics of contents. First of all, RMT culture that predated micro-transaction may prepare more receptive attitude towards purchasing virtual items. Next, Korean publishers tried really hard to make easier paying systems from scratch. It was not a coincidence that popularization of micro-transaction began with setting up easy-to-use payment systems by cell phone.

Turning aside the main argument, the strategies that publisher/developers choose can make big effects on the pattern and the profitability of purchasing virtual items. As you already knew very well, purchasing virtual items cannot be severed from the community that the items can be used. For last 3 years, the Cyworld, one of the most famous and the largest Korean virtual worlds, stagnated very sharply. In last year, finally, the SK Comm., the company behind Cyworld, turned into red. A mistaking move of the SK Comm. was banning all of spontaneous local-level flea markets of the ‘clubs’ (communities made by each interests of users) in Cyworld. This measure was taken for promoting their newly launching official market in Cyworld at that time. But, this took a negative effect by making people visit Cyworld less frequently. The inactivity of Cyworld, in turn, reduced its revenue from selling Dotori, the virtual money that can be exchanged for virtual items of Cyworld. The company expected more revenue from its centralized market, but the reality was a sore one.

Ad Asmo: thanks for the

Ad Asmo: thanks for the correction! I didn’t have the paper at hand when I wrote the story.

Ad Jun-Sok: thanks for the update, very interesting to hear about Cyworld’s woes! Related to legitimization, I remember reading several years ago about some poll in Korea that found that most respondents (apparently “normal people” as opposed to gamers) were aware of RMT and VAS. Awareness is a necessary prerequisite of social acceptance I guess. I wonder what the “awareness rate” is in Finland or U.S.

Post new comment

The content of this field is kept private and will not be shown publicly.
  • Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd>
  • Lines and paragraphs break automatically.

More information about formatting options