Virtual goods: Duping the masses?
I attended the Virtual Goods Summit on Friday and walked away struggling to figure what topics might be interesting to write about. My net takeaway is that not much has changed in the year that I've been writing about social gaming and virtual goods, with the exception of two facts:
1. Virtual good providers are being lauded as the next big thing to replace advertising
2. There's something weird going on with the ads and offers that have taken over the more traditional banner advertising role
There is no question that virtual goods have become an integral part of social network revenue streams. And the mainstream media has finally started to catch on.
But, I didn't realize the oddities of the way users are being monetized until I attended the event and saw the heavy emphasis not just on monetizing users but on doing so in a way that was transparent and non-intrusive. Theoretically, it's a good idea, but in practice, many of the "offer" providers are purposely or inadvertently running Ponzi schemes.
TechCrunch's Michael Arrington arrived at my second point above and took the theory much further with data that shows many social gaming offers and advertising practices amount to little more than a complicated scam that gets people in the door for free only to take advantage of their lack of understanding of what they've technically agreed to in the various offers.
In short, these games try to get people to pay cash for in game currency so they can level up faster and have a better overall experience. Which is fine. But for users who won't pay cash, a wide variety of "offers" are available where they can get in-game currency in exchange for lead gen-type offers. Most of these offers are bad for consumers because it confusingly gets them to pay far more for in-game currency than if they just paid cash (there are notable exceptions, but the scammy stuff tends to crowd out the legitimate offers). And it's also bad for legitimate advertisers.
As an advocate of both virtual goods and social gaming, I think this is an important realization for the industry and one that absolutely must be changed in order for growth to continue. As with any other burgeoning ecosystem there will always be scams and questionable tactics.
Facebook publishes a very clear set of advertising guidelines, but that doesn't mean that advertisers will actually follow them.
The big question here is what will sites like Facebook do about the problem. Considering that Facebook users are the primary target of all of these practices, isn't the onus really on them to protect their users (whom I would argue are either too na?ve or just plain stupid to know better) from these types of things? If you want to be the meeting place and voice of the people, you have to protect the people from ne'er-do-wells.
And while I certainly don't believe that this is a giant conspiracy, take a look at this video of Offerpal CEO Anu Shukla's aggressive defense against the comments from Arrington.
Arrington's post on the event is here, and Offerpal has posted its take on its blog.
Dave Rosenberg dishes up "Software, Interrupted" with nearly 15 years of technology and marketing experience that spans from Bell Labs to multiple start-up IPOs to open-source enterprise software companies. He is co-founder of MuleSource and currently serves as the general manager of Hardy Way. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure. You can contact Dave via e-mail at softwareinterrupted@gmail.com or follow him on Twitter @daveofdoom. 
Awhile back, it was drop-easy to whomp out a throwaway email addy, join a game with that, and do all the offers w/ fake info (name, age, addy, etc) only to ignore one's throwaway email box once you're done. Now with MySpace/Facebook/etc, you have to go through the bother of making an account there first.
That said, I've still found it to be an awesome way to train heuristics/spam filters @ work, albeit without playing the game itself - make a 'sinkhole' spam trap acc't, do the 'offers' with it (keeping an eye out to prime the obvious spam-pump sites). A week later, empty the mailbox, then happily let your filters assume that everything going into it from the outside world is spam, learning from it along the way (you wait a week as a courtesy, so that legit offers don't get hung up - they stop mailing if they don't hear back from you the first time. Everyone else is fair game). I usually do two at a time - one male, one female. I then ditch the accounts about a month later and do it all over again. Takes about an hour apiece.
Note that unless you're an email admin, this is kinda worthless and would be a waste of time for you. For those of us who have to jockey SMTP as part of our jobs, it's a fun diversion that (so far) makes things more productive.
Anyrate - back to the games; I play a few at home, but overall, I've rarely bothered with the 'offers' and such. There are simply too many new games coming out, so if I get bored with one or don't seem to be moving along to my taste, then I dump it and go play another one.
You try to fight them and they will not return your money, they offer to give you 75 bucks back if you return a form again within another 10 days and the form doesn't show up for 7 days... making it almost impossible to get it accomplished in time. Their excuse was well if you bought this software then you must of wanted it, you inform them that the only reason you got it was because 6.95 is alot cheaper to get 200 godfather points in mafia wars than it is buying it outright from the company and that you could give two flips about their pos software and they do not care nor do they return any of your money. Video professor is a scam, and watch out for all offers in the games because almost all of them are scams.
- by mijazpk52 November 5, 2009 11:16 AM PST
- this is a good post thanks for this
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