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More than a handful of people in my inner circle asked me to explain spending real money on virtual items, so I thought that, today, I would share some articles (excerpts shown below – follow links for full articles) that address the subject. Credit goes to my more tech-savvy sister who first explained the concept to me about a year ago…

For starters, three terms (acronyms) that may help…

Freemium: a business model whereby a product or service is provided free, while advanced features must be purchased.

WoW: World of Warcraft

MMORPG: Massively Multiplayer Online Role Playing Game (or MMO, for short)

Virtual Gold Farming Compared to Factory Work (Discovery News)

Revelations that Chinese prisoners may have been forced to play online games to earn tokens that are sold for real money — a practice known as “gold farming” — has focused new attention on the growing number of workers who toil in a virtual economy.

FarmVille user runs up £900 debt (The Guardian-UK)

The woman, who prefers to remain anonymous, discovered last month that her son had spent more than £900 on FarmVille. He had emptied his own savings account of £288 and had used her credit card to the tune of £625 to pay the bills.

Outspark Grows Coaxing Users to Pay Real Cash for Virtual Goods (Bloomberg)

Zynga, which is also based in San Francisco, leads the market for social-networking games. It may record more than $450 million in revenue this year selling virtual objects, ranging from tractors for “FarmVille” to machine guns for “Mafia Wars,” according to people familiar with the company.

Virtual goods spending topped $2 billion in U.S. in 2011 (USA Today) 

Reasons for buying virtual goods

— To be able to do more — 59%
— To get a better experience playing — 49%
— To reach an advanced level or state — 35%
— To decorate or develop my avatar or to express myself — 32%
–To improve my skills — 27%
— To beat my friends — 17%
— To continue progressing or have more fun — 16%
— To achieve a common goal with a friend — 14%
— To show off a brand or thing I like in real life — 10%

Virtual Goods Start Bringing Real Paydays ( NY Times)

Virtual goods have been popular in Asia for years. In the United States though, only ardent video game fans spent money on them, mostly for swords and spells in virtual fantasy realms. That is rapidly changing, driven by the popularity of widely appealing games for social networks like Facebook and mobile phones like the iPhone.

I know — I was totally amazed that THIS is what some people spend their time and money on. Sad, really….