The digital elixir of commerce

July 30th, 2009

The consultancy kzero.co.uk reports that membership of virtual worlds grew by 39% in the second quarter of 2009 to an estimated 579 million. Not all these members are active but I can’t think of anything, anywhere, that has grown so fast in the recession this side of Goldman Sachs bonuses.

There’s another curious thing: Facebook and Twitter are lauded to the skies, but neither has found a way to make money – whereas virtual worlds such as World of Warcraft, Entropia Universe, Habbo Hotel, Club Penguin and Second Life are all profitable because their business models are based on the digital elixir of subscriptions and micropayments, a formula that other websites, including newspapers, would die for. Twitter makes the noise, Second Life makes the money.

Writes Vic Keegan. I am a huge fan of twitter, and it is doing something fantastic, and I see it more as an agora, and perhaps twitter should framework itself like the Mozilla foundation?

But its the micropayments bit that interests me as well as subscription. If the content is unique (think porn) and people are prepared to pay, one has a global market, take a bow Cyworld and World of Warcraft – both non porn.

Interestingly, I wonder if traditonal media has really studied the economic success of digital commerce and worked out how to re-engineer that into its own propositions? My sense is not likely. Why is that? There is a Mephisto waltz going on as the likes of Rebecca Wade and Sly Bailey are unable to say, ‘our business model is Fucked,’ because that would mean sending the willies up institutional investors. Plus the relentless focus on harvesting cashflow for the quarterly numbers for the stockmarket means media on the one hand is trying to keep a sinking ship afloat whilst a the same time powering full ahead for the rocks. Shame.

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