Virtual currency and goods have been a recurring theme here on the MJ. Here's an update:
Last year, as the physical economy withered, Second Life's economy blossomed, with user-to-user transactions topping $567 million in actual U.S. currency, a 65 percent jump over 2008. About 770,000 unique users made repeat visits to Second Life in December, and the users, known as residents, cashed out $55 million of their Second Life earnings last year, transferring that money to PayPal accounts.
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More than 50 businesses in the virtual world made more than $100,000 each last year.
Second Life's owner, Linden Lab, makes money by selling land plots and islands. An island runs about $1,000, a high barrier of entry for most Second Life users. But to open a strip mall, dance club or office tower, or to build a home, avatars need land. Some Second Life users have taken on Donald Trump-like personas, buying land from Second Life and then leasing plots to small-business owners or would-be homeowners, or flipping their properties as speculators.
As in physical reality, these land barons are few in number but generate a big chunk of the world's gross domestic product. The top 25 Second Life earners are mostly land barons, making a combined $12 million.
ABC News on virtual gifts
Americans are expected to spend $1.6 billion on virtual goods this year,
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Some companies make a handsome profit selling virtual gifts. In most online settings, gifts can be bought and sold using virtual credits, but these always have to be bought with real cash from the parent company. On Facebook, for example, a $1 gift will cost you 10 credits.
Cary Rosenzweig, CEO of a booming online community called IMVU, says his company sells $3 million of credits each month that customers use to dress avatars or build homes, with almost $1 million a month spent on gifts.
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Zynga, the company behind Facebook's immensely popular "FarmVille" and "Mafia Wars," made an estimated $200 million last year simply by enticing players to buy and sell virtual seeds and chickens, according to Inside Network's Smith. In fact, some of FarmVille's vital goods, such as chickens, can only be gifted.
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And while in the past virtual goods were mostly bought by teens and young men with X-Box consoles, women have started making a big dent in the virtual economy.