The Rise of the Virtual Economy


Tap Fish may be the economy of the future.

Imagine the surprise of a Florida father when he opened his credit card bill recently and discovered $600 being paid to Tap Fish.

Little did he know that he was pumping up the virtual economy.

For those that don’t know – Tap Fish is a free smart phone app that allows users to create a virtual aquarium.  The game is quite addictive as users get to design tanks with decorations and plants, populate them with fish and breed the various species into new and unique offspring.

But while Tap Fish is free to download, it has its own “in game” economy.  Users can earn “coins” raising and selling fish in order to buy special items and exotic breeds of fish.  However, the best stuff in the game can’t be bought with “coins.”  A user needs “fish bucks.”

And fish bucks cost real money.

For example, 25 fish bucks cost 99 cents and that’s not enough to buy most of the cool fish – which run on average between 28 and 42 fish bucks.  As a result, Tap Fish offers various fish buck packages – from 99 cents to a whopping $149.99 (for 6,000 fish bucks).  Tap Fish does an excellent job in providing just enough stuff for free, but enticing users into spending money for the really cool items.

Tap Fish is the product of a mysterious software company called Bayview Labs.  Bayview Labs has a creepy and rather draconian website that could have been created by the Ministry of Truth in Oceania (it even features a graphic of intimidating Roman columns overlooking a pink and purple sea).  There are no executives listed on the website – not even a corporate address.  The only way to contact them is via an email address: sales (AT) bayview (DOT) com.

So it is difficult to determine how much money Bayview has collected through its “in game” economy.  But Apple says that Tap Fish has been downloaded millions of times from its iTunes’ store.  So if the average user spent the minimum amount of 99 cents for fish bucks then Bayview has made several million dollars.

What Tap Fish has done is create a “virtual” economy.  They are selling virtual goods – in this case digital fish – for real money.  This business model is what the future of online commerce is likely going to look like as more people buy smart phones and flock to gadgets like the iPad.  We are living in the Age of the App – and games like Tap Fish have proven that people will spend money on virtual goods.

The idea of virtual economies went mainstream in 2004 with the popularity of the massive online role playing game World of Warcraft (WoW).  Almost from the start, WoW players were selling each other virtual goods – from magic swords to healing potions.  The biggest sale to date on WoW was for more than $9,000 – in real cash.  There are also thriving virtual economies on Second Life and other massive role playing games.

But virtual economies have taken the next step up due to the proliferation of mobile devices.  Think of how the Kindle has changed book buying.  People are spending money for a virtual book – a digital manifestation of a real good.  One could argue the same for movies and music as DVD and CDs are replaced by software code.

Even Facebook has gotten into the act of selling virtual goods that people can give to one another as gifts – for birthdays and other significant milestones.

What do you think? Are people crazy to spend their hard earn cash on digital goods?  Have you ever bought a virtual item?  Do you consider a Kindle book to be in the same category as a digital goldfish?

Links:

Father discovers $600 bill for TapFish

Bayview Labs website

1984

World of Warcraft (via Wikipedia)

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6 Responses to “The Rise of the Virtual Economy”

  1. We’ve been paying for virtual goods for thousands of years — probably ever since cave painting was invented. (“Psst, wanna buy a nice antelope?” “That’s not an antelope. It’s just a smudge on the wall!” “It will bring you luck when hunting! Yeah, yeah, that’s the ticket!”)

    Books, music, television, movies — these are all virtual goods. When you buy a book, you’re not actually buying the paper. You’re buying the virtual content that’s conveyed through that medium. That same book is now available as an audio book, as an ebook, as a Braille version, in a foreign language….

    We’re not selling actual things here. We’re selling ideas of things. We’re selling feelings. We’re selling experiences.

    Virtual goods like the fish in TapFish are no different. They’re the idea of fish, represented in a particular medium. They bring enjoyment, a warm-fuzzy-feeling, the experience of caring for fish.

    — Maria Korolov, Editor, Hypergrid Business

  2. “There are no executives listed on the website – not even a corporate address. The only way to contact them is via an email address: sales (AT) bayview (DOT) com.”

    That right there is the first problem. I always check out any company for full-disclosure before I start playing their games or sign up on their sites. These cloak and dagger companies should not be allowed to operate without us knowing who they are and where they are. You might as well hand your credit card to a stranger on the street.

  3. Hi Maria:
    Not quite. When you buy art you get a physical object in your hand – a painting or sculpture. When you purchase a book you get the physical object in your hand – a hardcover and pages. When buy the DVD or the album you get those physical objects. Yes, we are buying the “art” with those things, but now we are buying goods with absolutely no physical manifestation.

    That’s a HUGE change.

    Hi Tinsel:
    Good point.

  4. George —

    We pay for movies and leave the cinema with nothing at all. We pay for cable TV and satellite radio. We pay for concerts where we listen to music then leave with nothing except a program.

    More recently, we buy music through iTunes, ebooks on Amazon — more ebooks now than hardcovers! — we pay for software downloads.

    Is a virtual fish really all that different from a song, a movie, an ebook or a software download?

    — Maria

  5. Maria:
    Paying for services isn’t “virtual.” When you pay for a movie ticket you are buying the experience of the movie. It’s like buying the services of a consultant – you don’t get a product, but you get advice and guidance. Again – that isn’t virtual.

    What we are have moved to today is people buying virtual “goods.” Products that don’t have a physical manifestation, but are simply pixels on a screen. A virtual fish or a piece of magical armor. That’s a big jump.

    We have moved to a point where virtual goods have real value and people are willing to pay for them. That’s not the same as buying a ticket to a rock concert.

  6. i remember one of my friend even make a living from playing game by selling the loot

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