Can Virtual Goods Boost the Economy?

The venture capitalist Bill Gurley has an insightful post on why virtual goods will emerge as the economic engine for many kinds of online companies, especially those with a community aspect, like gaming, and social networks. In How to Monetize a Social Network, he points out the success of companies like China's TenCent, which generates nearly $900 million in sales from virtual goods, and argues that if self-expression drives people to spend money on consumer brands in the real world, they'll have the same drive in the virtual world.

Of course, Gurley's firm, Benchmark Capital, has funded Second Life and Gaia, two worlds heavily dependent on virtual goods. But his arguments are intriguing. Do you have a virtual goods strategy for your company? Should you?

Michael Fitzgerald

Michael Fitzgerald writes about innovation and other big ideas in business for publications like the New York Times, The Economist, Fast Company, Inc. and CIO. He’s worked as a writer or editor at Red Herring, ZDNet, TechTV and Computerworld, and has received numerous awards as a writer and editor. Most recently, his piece on the hacker collective the l0pht won the 2008 award for best trade piece from the American Society of Journalists and Authors. He was also a 2007 Templeton-Cambridge Journalism Fellow in Science and Religion.

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