Growth — in the virtual economy

Depressed about the state of the real-world economy? Maybe you should attend tomorrow's Virtual Goods Summit 2008, an event in San Francisco looking at the growing business of buying and selling "virtual goods" in online games and on social-networking sites — for real-world money.

How real is the virtual goods market?  Last year, one rough estimate of the worldwide market for real-money trading of virtual goods was around $2 billion. Lightspeed Venture Partners' blog recently estimated that Facebook is currently selling virtual gifts — such as digital hugging teddy bears — at an annualized rate of about $35 million a year.  Lightspeed's blog also reports that Sulake, a Finnish company,  is getting the majority of its revenue from selling virtual goods.

But it's not all sweetness and cuddly teddy bears in the world of virtual goods. One area of controversy is international outsourcing -- as online game players outsource time-consuming tasks in the games to workers in countries such as China — a phenomenon that has been called  a form of "virtual offshoring."

Ge Jin, a graduate student at the University of California, San Diego, has been working on a documentary about Chinese workers — known as "gold farmers" -- who play computer games for a living.

Not surprisingly, all this new economic activity has attracted the interest of academics. If you want to stay current on the virtual economic scene, The Virtual Economy Research Network offers a compendium of news and research related to this emerging field.