The Social

At sunset, the beachfront Ritz-Carlton Laguna Niguel resort, home to this year's WebbyConnect conference.

(Credit: Caroline McCarthy/CNET News)

DANA POINT, Calif.--When the economy heads south, anything involving beaches and luxury resorts is a terrific recipe for guaranteed bad press.

That's why there was a fine line to be walked at the WebbyConnect conference, the second annual retreat-slash-ideafest organized by the directors of the annual Webby Awards. In the diverse vegetable patch of media conferences, this one is the organic arugula. The venue was the Ritz-Carlton Laguna Niguel resort, a sprawling beachfront complex and occasional filming spot for MTV's haute-reality soap Laguna Beach, just down the road from the St. Regis hotel where American International Group executives famously spent $440,000 on a spa getaway days after an $85 billion government bailout.

But even with wallets shrinking and belts tightening across technology, digital media, and advertising, the people who shelled out more than $2,000 for a WebbyConnect ticket insisted on one thing: this event, unlike so many others on the industry's calendar, is worth the price tag.

"What an amazing, diverse group of people we have gathered under this roof, and I know that's a cliche but like most cliches, it's true," Jamie Pallot, editorial director of Conde Nast's CondeNet, observed while moderating a panel on Wednesday. "We all work for a bunch of very different companies, we play wildly different roles in those companies...what brings us all together here and what we are excited about is the innovation that technology can bring, and how that can change the places where we work, and what we can do in those places."

An oceanview deck at the Ritz-Carlton that hosted a WebbyConnect reception on Tuesday night.

(Credit: Caroline McCarthy/CNET News)

Getting to the intimate, 200-person conference from the entrance to the Ritz involved winding through groves of palm trees and ponds of bright orange and white koi, past stunning ocean vistas dotted with surfers and pools surrounded by the resort's usual clientele, wealthy retirees in town for Orange County's famed golfing. The three half-days worth of conference panels featured a slew of digital media's glitterati, from The Huffington Post CEO Betsy Morgan to The New York Times publisher Arthur Sulzberger, Jr., to Aaron Koblin, the Google Creative Labs designer who worked on the video for Radiohead's "House of Cards."

In the afternoon, the attendees--mostly from media and digital advertising companies, or "digital strategies" types from entertainment and fashion--were encouraged to network, mingle, and spend time at the beach before the conference reconvened for evening activities. Those included cocktail receptions, dinners, or on Thursday, a heated geek-culture trivia competition. (Sample questions: name the five noble gases, name Pitchfork Media's top band of the 1990s, name the most-viewed video on YouTube.)

People at WebbyConnect were not oblivious to the image issues. "I feel like we'll be seen as the next Camp Cyprus," said one conference-goer, who works for a digital marketing agency in New York. He was referring to the recent gathering of spry young dot-commers (many of whom work at Facebook) on vacation in Turkish Cyprus, who demonstrated an extraordinary amount of pluck but a mild case of bad timing when they posted to the Web a video of them dancing and lip-synching to Journey's "Don't Stop Believin'" as the global financial markets were in crisis mode. The media gossip press went ballistic.

But the same attendee who brought up "Camp Cyprus" insisted that under the surface, the only similarities between WebbyConnect and the goofball geek vacation were the ocean views and the after-hours parties (which, truth be told, did get fairly Spring Break-worthy among a few of WebbyConnect's younger attendees, who caroused into the early morning hours in Webby President Rodger Berman's deluxe suite.) Though WebbyConnect is only in its second year, people who go have already come to expect an exciting conversation, fresh ideas, and a chance to connect with smart people--on the beach.

"When I go to conferences I just can't do a whole day of panels," Webby Awards executive director and conference organizer David-Michel Davies said in an interview with CNET News, sitting in a beach chair and watching the dozens of surfers in the water. He added that WebbyConnect, planned months before the financial crisis took root, did not see cancellations or cutbacks after Wall Street's woes began to hit the media and tech industries.

WebbyConnect is consciously highbrow, carefully avoiding anything too corporate. At a pre-dinner reception at the resort's Dana Point Lawn, as bartenders poured California wine and waiters passed around canapes like truffled chicken on endive lettuce, a Webbys representative explained to me that the conference was designed as a civilized alternative to the brashness of large-scale tech and media expositions, where business cards are passed around like currency and the magic word is invariably "monetize." That, she said, gets in the way of ideas and discussion. "Every panel's discreetly about making money," the Webbys employee told me, "but we purposely don't use the word 'monetize' or anything like it."

Anecdotally, there were signs that the retreat-y vibe of WebbyConnect was working. On the beach on Wednesday afternoon, a marketing director for an online video production company giddily announced to one of her colleagues that she'd met some of the digital-strategies representatives from big fashion brands and that they were interested in hearing about sponsorship and advertising possibilities. A few yards away, two start-up founders in sunglasses and swim trunks were debating whether it was more cost-effective to hire an external public relations firm or to employ someone in-house.

It was impossible to find anyone at WebbyConnect who didn't sing the event's praises. "This was the most productive conference I went to last year. I met more people and sold more work than at any other conference," said Rick Webb, co-founder of Internet marketing firm The Barbarian Group, which sponsored this year's WebbyConnect. "I'm coming for life, man."

At traditional conferences, "the speakers come, they talk, they promote their thing, they leave," David-Michel Davies said. "Coming here, people don't want to leave. It's a much deeper sort of conversation than you would have otherwise."

Davies continued: "I'd rather have the room be really full, and have people really interested, than have people just getting conference fatigue." His logic: in tough times, people will be more likely to pay $2,000 for a high-quality experience than $750 or $1,000 for a crowded expo that will be more hit-or-miss.

The tough question is whether by this time next year the recession will mean they choose not to pay for either, or whether a lack of sponsorship dollars will preempt or tone down many industry conferences in the first place.

"I think some conferences will disappear, and some conferences will totally thrive," said Betsy Morgan, CEO of liberal news site Huffington Post and one of the WebbyConnect speakers, "and you're going to be much more discriminating as an executive or manager who decides who in your company goes to conferences."

But Morgan said that for an industry like digital media, gathering and sharing ideas is particularly crucial. "I think the medium is still hugely evolving and we're still trying, whether you're a start-up company or a big media company, you're still trying to figure out how it's all going to work, and so actually gathering people to talk through that process, and see other businesses, and see how other people are doing it, is enormously valuable," she explained. "I just feel like it would be too depressing to go into 2009 saying the sky is falling on all fronts."

Sunset over the Pacific on Thursday night.

(Credit: Caroline McCarthy/CNET News)

Some people, however, would say that it is. Outside the stucco walls of the Ritz-Carlton, tech and media companies were laying off dozens of employees in order to get costs down, and stay in the business, and big tech companies like Yahoo, eBay and Xerox were announcing major layoffs.

So where does that leave the conference? This year's WebbyConnect was put together and paid for before Wall Street started to collapse, which won't be the case for next year's conference, or for the next Webby Awards early next summer for that matter. In 2003 and 2004, with the deep pockets that fund the lavish Webby Awards crippled by shrapnel from the dot-com bubble, the ceremony was canceled and replaced with an online awards presentation.

"Organizationally, I think we're much smarter and more professional than we used to be," said Davies, who was not in charge of the Webbys until 2005. But he wouldn't speculate too much about an uncertain future.

"We want to be reflective of what's going on," he mused, looking out at the ocean and a few WebbyConnect attendees who were trying to surf, their heads bobbing above waves that quickly flipped them back underwater. "We'll see where we are at that time."

LONDON-- Britain's normally gray capital was unusually sunny this week. So were the attitudes of Web developers gathered here for a conference while, across the pond, Wall Street was in full panic mode.

A bright-eyed pack of several hundred aspiring Web visionaries descended upon London's Excel conference center for the semi-annual Future of Web Apps (FOWA) conference. Eager developers trawled the show floor's booths for stickers that they promptly stamped onto their (overwhelmingly Apple-manufactured) laptops. One pack of young men strolled around in straw sombreros. Another trio passed some time in between lectures by tossing around a Frisbee with the Yahoo Developers Network logo on it.

There was only off-hand talk about the global economic crisis that was also unfolding, in part, just a few train stops away in London's financial district. But people walking these halls all share a fervent belief in the power of their own ideas: Innovation cannot and will not stop, financial crisis be damned.

"A lot of people have asked (whether) the recession will impact certain things. I think the answer is probably that a major recession will impact everyone in some way, but traditionally I think some of the best companies have been built in down economic times," Facebook founder and entrepreneurial icon Mark Zuckerberg said in his keynote address on Friday evening. "If what you're providing is value to the end users...that lasts."

This wasn't some cloistered retreat of idealists. While FOWA is a small conference compared to bigger confabs like the Web 2.0 Expo or Demo, it pulls in big tech sponsors: AOL, Microsoft, Facebook, MySpace, Adobe, Sun Microsystems, all of whom want to reach FOWA's audience of young Web developers. Last year, the tech world went wild over Web platforms--packages of code released to companies and developers so that they could build their own widgets and applications to run on social networks like Facebook and MySpace. Now the industry has seen the platform craze extend to mobile phone software, like the iPhone, and new development platforms for downloadable desktop software, like Adobe Air and Microsoft Silverlight.

If you looked at the conference's array of sponsor booths, you'd think the tech economy was booming like it was in 2006. AOL was handing out pamphlets about developing on properties like social network Bebo and widget-maker Goowy; Sun Microsystems advertised its "Startup Essentials" program with, somewhat incongruously, a mechanical surfboard. Perhaps the biggest piece of showmanship came from MySpace, which hawked its U.K. developer program with one of London's iconic double-decker buses parked on the show floor, covered in MySpace regalia and playing nightclub-worthy electronica from a set of D.J.-style turntables inside.

That's not to say reality wasn't an uninvited guest to the festivities.

None of the big companies on the FOWA show floor seemed to be looking to actually hire new developer talent. A representative at Microsoft's booth, speaking to me over the din of the Guitar Hero stations that the company had set up, said he doubted anyone was hiring and estimated that the market for developer talent in London had probably dropped by five or six percent. A representative at AOL's booth wasn't sure if the company was hiring or not, but said they were really only there to drum up interest in properties like Goowy and Truveo among the developer community.

Entrepreneur or employee?
But it's unlikely that developers were concerned by the lack of employment opportunities; a job at AOL or Microsoft, or even Google, isn't what today's Web kids want anyway. That's not surprising, considering most of them belong to a digital generation that has been characterized by entrepreneurial self-promotion.

Inspired by people like Zuckerberg and Digg founder Kevin Rose, who also spoke at FOWA, and encouraged by how inexpensive it is to build on the Web these days, they see the recent wave of Web innovation as self-propelled. If you can't found a company because the venture capitalists are getting picky, at least build an iPhone app. Who cares if Adobe's not hiring?

Kevin Rose: "A lot of the advice going out there to start-ups right now is to pare back a little bit and get into a mode that you can survive in."

(Credit: Caroline McCarthy/CNET News)

But then, there's that pesky "reality" thing again. Many of the developers, as well as designers and consultants also present at the show, spent the Web 2.0 boom swimming in lucrative freelance contracts, and a few admitted that they're now doing the unthinkable and searching for full-time employment. "From the freelance perspective, things are tough," said Suw Charman-Anderson, a London-based consultant who has been a freelancer for ten years. "If someone offered me a job, I'd have to think seriously about it...It's been a very quiet summer for me, and the (client) interest I'm getting now, I'm getting interest from India. Their economy seems to be a bit more robust."

A few companies with executives at FOWA were interested in hiring developer talent. Those companies tended to be independent but established companies that had either a stable revenue stream or a healthy cushion of venture capital to last through difficult times--and often, they are run by the very same people who subscribe to the idea that innovation can live through, and even thrive in financial disaster.

"Companies are seeing that they really need a Web presence and so many have embranced blogs for that," said David Recordon, head of open platforms at Six Apart. "I don't think that's something that businesses will neccessarily cut if money's becoming tight."

Digg's Rose proudly announced in his address to FOWA's attendees on Thursday morning that his company is hiring new engineering talent. But in an interview with CNET News later that day, Rose said everything is tougher now, from finding investors to easily affording company expenses.

"Start-ups that don't have traction and don't have that kind of hockey-stick-like growth on Alexa or Compete or whatever are going to have a really difficult time raising an additional round of funding," Rose said in the interview. "I think that a lot of the advice going out there to start-ups right now is to pare back a little bit and get into a mode that you can survive in." Frugality has always been crucial to Digg, said Rose, who had worked at several start-ups during the dot-com boom.

Survival of the fittest
Recordon and Rose, in their belief that sound business practices and useful services will survive, sum up the general of the freewheeling, free-thinking world of Web developers, where there's a heavy temptation to put a positive spin on the financial crisis. Their reasoning? Starting a business and making it last is always hard, and when a bull market flush with venture cash makes it easy, that's not a good thing. Many at FOWA argued that even in the best of times, the culture of Web 2.0 development should be a sort of Darwinism, albeit a very happy Darwinism covered in stickers with the logos of Bay Area geek brands like Flickr, Digg, and Laughing Squid.

"Starting a company is hard. Period. Exclamation point," said Michael Galpert, founder of a New York-based image-editing start-up called Aviary, in a talk about how to build a company outside Silicon Valley.

Mark Zuckerberg (right): "Some of the best companies have been built in down economic times."

(Credit: Caroline McCarthy/CNET News)

He's right. It's a risky industry. In a city like London or New York, especially, many of these bright young developers and engineers likely turned down then-lucrative jobs in the financial sector in order to pursue the more volatile path of entrepreneurship or freelancing. They are already living lifestyles that many of their peers would deem excruciatingly difficult.

"I don't believe in good work, I believe in excellent work at a start-up company," Mahalo founder Jason Calacanis said in a talk about "entrepreneurial insanity" on Friday. "Start-ups are like the Tour de France or the Olympics, but in any team sport if somebody's not pulling their weight, they pull the whole team down."

Conference host and consultant Simon Wardley reminded the audience at a talk about innovation that this industry is never easy and that uncertainty is a perpetual hallmark. When you come up with a novel idea, it won't be novel for long.

"By the time we have all the information necessary to make a perfect decision, that decision is generally worthless," Wardley said. "Opportunities need to be seized."

And entrepreneur-turned-investor Julie Meyer of Ariadne evoked a quotation from Sir John Templeton that says to "invest at the point of maximum pessimism." Encouraging entrepreneurs to get venture rounds completed and to use the cash wisely, Meyer said, "Entrepreneurs are always investing at the point of maximum pessimism. That's what they know how to do best."

This is where the Darwin effect comes into play, as some entrepreneurs readily compare the current financial crisis to the original dot-com bust in a good way--that it might have a positive effect on the industry by separating quality start-ups and ideas from a long, candy-colored, vowel-free parade of Web 2.0 silliness. Being part of the business had become almost too easy, a fact easily illustrated by the loads of goofy widgets that flooded Facebook's developer platform and soon generated a vocal backlash.

Google engineer Kevin Marks, who helped build the OpenSocial platform, pointed out that the lean years of 2001-2002 brought forth many of the start-ups that have proven to be both innovators and powerful market forces in the past half-decade. "If you look at when the dot-com bubble burst, a lot of the companies that are speaking (at the conference) today grew out of that," Marks said. "What you tend to get in the quieter times is people coming up with these things...Flickr is a great example."

But here's the problem with this crisis-be-damned idealism: it will not always play out as well as every optimistic developer hopes. Many of the ambitious young techies who are convinced that they have the wherewithal to make it through the financial crisis are going to be in for a nasty surprise. That VC pitch spree might come up fruitless. That social-advertising-based business model might not turn a profit.

"There is not and cannot be a simple method (to innovation)," Simon Wardley said in his talk. Nor is steering a company, or even a great idea, through the worst economic conditions since the Great Depression.

Click here for ongoing coverage from CNET News, 'Tough times for tech'

The financial crisis strikes again: Successful New York-based blog network Gawker Media will be laying off 19 of its 133 editorial staffers, according to an internal e-mail from publisher Nick Denton. The company will be additionally suspending its bonus payments to writers and editors, but will be increasing their base pay and making some strategic hires at the company's most successful blogs.

"With the savings, we are increasing base pay and hiring 10 new people on the most commercially successful Gawker sites," Denton wrote in the e-mail. "But I know that's scant consolation for the colleagues we're losing and for those of you who have been enjoying the bonus windfalls from breakout stories."

The bonus system at Gawker, a network of snarky and witty gossip- and culture-focused blogs that Denton founded in 2002, has provoked controversy and banter throughout the new-media world: the company pays most writers at a base rate but then adds a bonus for every thousand page views a single post pulls in. The bonuses will continue to the end of 2008, but have been suspended for the first quarter of 2009 at the least.

Equally controversial has been some of the blogs' own content, which countless pundits have criticized for being puerile, mean, and occasionally invasive. But in New York, where Gawker Media has been arguably the most successful new-media start-up story of the past decade, the layoffs can only be described as unfortunate and sad: its writers and business staff are valued members of the blogging community and Gawker Media's downtown offices have become a popular hangout and party space.

Gawker Media is still, for all intents and purposes, doing well. Advertising revenue and traffic are both up. Laying off staffers is a preventive measure, Denton said. "The credit crisis is clearly going to affect every sector of the economy," he wrote. "Advertising buys typically plunge after the Christmas shopping season, and 2009 is obviously going to be exceptionally difficult. We have to prepare for the worst, now, rather than when the worst comes upon us."

The cuts have hit the Gawker-owned Silicon Valley gossip blog Valleywag hard: editor Owen Thomas wrote that he has laid off 60 percent of his editorial staff, bringing its total number of bloggers down to only two.

The new hires will flesh out the teams at some of the company's more profitable blogs--feminist-focused Jezebel, sports blog Deadspin, gaming title Kotaku, and the most recent addition to the company's network, sci-fi blog io9. And former W magazine staffer Gabriel Snyder will take the helm at flagship title Gawker, which Denton himself has been editing since a handful of resignations last year.

Denton has been notoriously frugal with his blog network, this spring selling off three of the company's less profitable blogs; in 2006, Gawker Media went as far as shutting down two blogs that had not lived up to expectations.

This post was last updated at 11:21 a.m. PDT.

NEW YORK--The crowds at the Web 2.0 Expo seem to have one clear consensus on what they think of this week's Wall Street meltdown: things are bad, but it's no time to panic.

Of course, they're all pretty relieved that the tech industry can't be blamed for this economic meltdown.

"This is a very good time to start up a company," investor David Rose of the New York Angels firm said in a panel called Starting Up in Silicon Alley. "Despite the calamities that are going on outside, the world is not coming to an end."

The current financial crisis is less than a week old, after all, so the outcome is less than certain. Most of the conference crowd chose to be cautiously optimistic.

The Jacob Javits Convention Center is only a few blocks from Wall Street. Yet at the Web 2.0 Expo, it was mostly business as usual: marketing, monetization, branding, social advertising, and a Microsoft-sponsored party on Wednesday night where the centerpiece was an ice sculpture that dispensed vodka shots.

Standing at his company's booth on Thursday afternoon, one representative of a Web-based nonprofit organization shook his head with disapproval. "Not enough people are talking about it," he said. We all know what "it" is.

In fairness, it's a stretch to say everyone was twittering while Wall Street burned. The underlying attitude at the Web 2.0 Expo was one of sober acceptance, realizing that conducting business in 2008 is more difficult than it was in 2006.

I'm very worried," said Majid Abai, CEO of the community software start-up Pringo. "When the economy is down, investment in technology is down."

There's reason to be concerned: financial-services companies are often cutting-edge technology buyers, and the mess on Wall Street makes it unlikely that big brokerage houses (at least the ones still standing) will be spending on anything nonessential anytime soon.

NEW YORK--"We are not an alley."

So said venture capitalist Fred Wilson of at the Web 2.0 Expo here in his keynote entitled "New York's Web Industry From 1995 to 2008: From Nascent to Ascendent." A longtime leader in Gotham's culture of digital innovation, Wilson, of Union Square Ventures, gave a short "history lesson" to the hordes of conference attendees, many of whom had come from hundreds of miles away.

And the term "Silicon Alley," he said, is one that the city should shake off. "We are one of the largest cities in the world," Wilson said. "We are one of the largest Internet development communities in the world. Let's bury the name Silicon Alley."

Fred Wilson, with Union Square Ventures, gave a keynote address at the Web 2.0 Expo.

(Credit: Union Square Ventures)

New York's technology community is still considered an afterthought in comparison to the Bay Area, and Wilson, though he has invested in companies like Delicious and Twitter over the years and runs one of the Web's most influential venture capital blogs, isn't yet in the league of true Valley legends like John Doerr.

But the numbers, Wilson said, show a very different trend. In 1995, 230 early-stage companies in the Bay Area received venture backing, and only 30 did in New York. By the end of the year, 2008's numbers should be 360 in the Bay Area and nearly 120 in New York. "We have grown here in New York by four times in 14 to 15 years, and Silicon Valley has grown by 1.5 times," Wilson said. "We've gone from being one-eighth of the activity of Silicon Valley to one-third. In my mind that's very significant."

The keynote took the audience back, in fact, to 1979, when New York University's Interactive Telecommunications Program was first formed. "It started in an art school, the Tisch School of the Arts at NYU," Wilson said. "I think that still to this day defines a distinguishing characteristic of the New York Internet community."

The timeline went on: the rise of interactive ad agencies in 1995, along with the debut of The New York Times Web site, which first launched in conjunction with the visit of Pope John Paul II to New York; the debut in the mid-1990s of digital businesses like iVillage, The Knot, and Star Media; the sale of Total New York to AOL, and the IPO of DoubleClick in 1997--New York's first tech company to go public.

Blame the mounting economic pressures, or too many chubby engineers: Google has decided to stop offering free dinner, afternoon snacks, and its "tea trolley" to employees, according to an unconfirmed rumor floated on Valleywag.

A Google representative did not immediately return my request for comment, so this one is still hanging around in the gossip-sphere. But Valleywag reported that the changes are slated to be announced Monday, which would mean that either a confirmation or debunking should be available within hours.

A chef prepares Google food, back in 2004.

(Credit: Google)

Google has become renowned for its employee perks: massages, game rooms, gyms, laundry facilities, and free food three times a day. Google co-founders Larry Page and Sergey Brin went out on a limb in creating the free-food strategy, which they said was a worthwhile investment to make employees healthier, happier, and more efficient. The food's even good enough for Google's original head chef to have penned a cookbook.

Cutting perks always results in bad PR, something that Google learned the hard way when it shot the cost of day care for employees' kids into the stratosphere, for example. But cutting back on free food, one of Google's most visible and unique perks, may be over the top for some workers.

Critics of the perks have suggested, in addition to questioning the economic efficiency, that offering so much free food is really just a way to make Googlers spend more time at the office. Then there's the internal joke about the "Google 15" (or "Google 20" depending on who you ask), the rumored weight gain that happens after getting hired at Google and being surrounded by so much gratis grub.

Coincidentally, the gossip comes soon after the heavy blogging of a two-month-old Flickr photo that revealed Google's New York cafeteria serving bacon cheeseburgers on Krispy Kreme donuts as a novelty food. Hey, Googlers, maybe the rumored change is for your own good.

Still, this has not been confirmed, which means that it could easily turn out to be false, or perhaps overhyped (restricted to Google satellite offices, for example). But given the marketwide economic belt-tightening, it's not too hard to believe the rumor.

Citing economic troubles, Ziff Davis Media has canceled this year's DigitalLife Expo, a trade show held each fall at New York's Jacob Javits Convention Center.

"The poor economic conditions have created a very different and difficult dynamic for us this year, and we weren't confident that we could present a show experience that was consistent with the successes of prior years," DigitalLife Vice President Paul O'Reilly said in an e-mailed statement. "Hopefully, a bigger and stronger DigitalLife will return in 2009. We will make additional announcements about the future of the show when details are available."

Besides the economic issues, DigitalLife had additional problems. Namely, last year's expo just wasn't very good. It couldn't define itself as a worthwhile alternative to the Consumer Electronics Show, it was short on new product debuts (with the exception of some cool new iRobot toys), and the show floor's highlights were an awkward mishmash of electronics, Web start-ups, and products with which most geeks were already very familiar. It was a noticeable downturn from the more happening DigitalLife 2006.

Until the cancellation, the beleaguered Ziff Davis' apparent strategy was to put more of a focus on gaming for the 2008 edition.

Furthermore, this spring a blow was struck to the city-sanctioned "Digital Technology Week" that had surrounded the expo for the past few years: Mayor Michael Bloomberg ordained the first annual "Internet Week New York" in early June, leaving Digital Technology Week to languish in the Department of Redundancy.

Do virtual shopping damage with real cash--it all starts here.

(Credit: Zwinky)

Teen-oriented virtual world Zwinky has expanded its e-commerce operations so that members can use real-world cash to pay for virtual goods. Starting Monday, credit cards and PayPal accounts can be used to purchase the in-game "ZBucks" currency, which members could heretofore only earn by visiting certain in-world locations and winning games. The cash will then go on new "ZCard" shopping cards which members will be able to use at the in-world retail hub, the--wait for it--Zwinchester Mall, which contains stores like the Z-Loft trendy furniture outlet and "Like Dat," a boutique branded with the identity of the rapper 50 Cent.

For an idea of the exchange rate, 5,000 "ZBucks" will cost you $19.99.

Real-to-virtual economies are not uncommon in virtual worlds like Eve Online and Second Life. But Zwinky, which is owned by InterActiveCorp (IAC) and has a head count of more than 9 million members (that's accounts, not active users) who have already assembled more than 10 million virtual outfits through trips to the in-world mall, has not actually created a currency exchange--it does not appear that there are any plans to allow members to switch ZBucks back into real dollars. In that respect it's more like the Disney-owned kiddie space Club Penguin, but considering Zwinky's older youth demographic, it'll more likely be the teens than the parents who are doing the buying.

I'm guessing that reactions to the "ZCard" will either go in one of two directions--it'll ultimately be held up as a smart strategy to help young people learn about being economical, or as yet another factor in the material corruption of digital-age youth. Which one, I'm still not sure.