Not sure what to get that special someone on your holiday shopping list who has everything? How about a virtual T-shirt featuring the logo of his or her favorite virtual band—or a snazzy new pair of avatar swimming trunks? Too trite? Well then, how about a prewrapped present to put under his or her Facebook Christmas tree?

Many people of a certain age may consider such gifts a waste of their hard-earned and very real money. But not so a growing number of tweens and teens as well as 20- and even some 30-somethings, who spent around $2.1 billion in 2006 on virtual goods and services, according to researchers at Finland's Helsinki Institute for Information Technology (HIIT).

The reason for the very real popularity of virtual shopping? The same as for traditional buying, says HIIT researcher Vili Lehdonvirta: Shoppers see some value in the purchase of an item even if they don't necessarily need it.

"For kids in particular this kind of consumption is a social behavior," he says. "Adults have developed conceptions about what can and cannot be valuable, but kids who don't share this rationalization will do what they subjectively feel is right. Studying this can advance the understanding of consumer behavior in general."

Lehdonvirta is the founder of the Virtual Economy Research Network, a Web site that offers news, research and discourse on the virtual purchases, which include domain names as well as clothing and accessories for online avatars and video game characters. "Today, this virtual property is being bought and sold for real money by millions of people at numerous marketplaces around the world," he says.

Indeed, spending on virtual items for social reasons is a more sustainable model than the purchase of computer-generated real estate or avatar apparel in cyber worlds such as Linden Research's Second Life. Facebook's online gifts are a way to establish and maintain friendships, Lehdonvirta says. "Look at it as a form of creativity, establishing membership in a group, identifying social classes," he notes, "and what social group you identify with."

South Korea is the leading market for virtual consumption and one of the most trendy places to spend money on virtual items is social networking site Cyworld. Unlike Facebook or MySpace, a Cyworld participant creates an avatar called a "minime," whose hair, clothing, facial expression, mood and other attributes can be changed as often as the owner wants. Much of the U.S. and European spending that can be tracked—Facebook does not provide sales figures for its virtual swag—is on massively multiplayer games, a primary example being World of Warcraft.

Adults—particularly those in their 30s—that Lehdonvirta interviewed consider social networking sites to be their "virtual front yards," he says. "The kind of car you park in your driveway, your house, your garden—these things communicate information about your status. Some people believe that if you don't spend a decent amount of money to take care of your online image, you will see the social consequences, such as feeling pressure from peers."

Rumors have surfaced in recent years of incomprehensible virtual purchases, such as that of an Australian who allegedly bought an island in the online game Entropia Universe for more than $20,000 and another of an American who supposedly paid $100,000 for an Entropia virtual space station. "These claims can't be independently verified," Lehdonvirta says, adding that they amount to little more than good publicity for Entropia.

3 Comments

1. 1. NEVERDIE 11:42 PM 12/21/07

   A little research goes a long way,the prices you mentioned for Entropia Real estate are Low compared to what things trade for today... Entropia Universe features the most valuable virtual items and Real estate anywhere.... Check the UNofficial forums at www.enetopiaforum.com for Price checks

   Reply | Report Abuse | Link to this

2. 2. spiralsun1 09:02 PM 12/29/07

   Geez, im 43 and I bought a bunch of virtual stuff with real dollars for my kids on an MMORPG game. I never gave it a second though. The stuff I bought represents a lot of time and work to get in the game otherwise. It has real value.

   Reply | Report Abuse | Link to this

3. 3. pdarwin 06:27 AM 1/18/08

   Jon 'NEVERDIE' that commented here is indeed the said payer of large amounts to Entropia Universe.. interestingly he is also an employee of Entropia Universe.. figure that one out.

   Reply | Report Abuse | Link to this