You use virtual currency even if you’re not in a virtual world

On December 1, 2009, In Biz, By Tac Anderson
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Mahendra has a great post hypothesizing on Facebook’s announcement to offer it’s own virtual currency and how other social networks (namely LinkedIn) could do the same thing: Why LinkedIn Should Have A Virtual Currency | Skeptic Geek I was glad to see Mahendra’s post because it reminded me of a post I had been noodling over.

I have long been fascinated with the success of virtual worlds like World of Warcraft and Second Life. Yes calling SL a success is a misnomer but a lot of people made a lot of real money through their virtual money, Linden Dollars. Why would people waste real money on virtual money? I understood that to buy things you had to use their currency. Then it struck me that this model has been around for years.

When I was a child I would go to video game arcades and buy tokens. As an adult I buy things on my credit card so I can get “miles.” Many people use reward cards when they shop at their favorite stores and earn bonus points they can redeem for goods. This is all virtual currency.

One of the reasons virtual currency works is that it negates the 1:1 ratio we have in our minds. Airline “miles” aren’t actual miles.

Chuck-E Cheese get’s you your kids to spend way too much money to buy tokens to win tickets to exchange for cheap crap. This really warps the 1:1 ratio because you play the games (presumably) for fun. Winning the tickets becomes a mechanism to keep you playing the game. The tickets then become their own currency and exchanging them is like a bonus. It’s not why you played the game, but it is a motivator to keep playing the game past when you normally would.

All of these motivators are explained by Gaming Theory, something every marketer or startup should be familiar with.

Beyond social networks I think the next big opportunity with virtual currency is in the mobile space. Especially with developments like Square Up and advances in mobile and micro payments.

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New Channels of Engagement

On April 17, 2007, In Comm, By Tac Anderson

I find myself debating with people about the business relevance of New Media tools. For the last two years (and probably for the next two years) I have dealt with sceptics who question the validity of blogs, podcasts, wiki’s, forums and online social networks (LinkedIn) as a viable communication medium.

Lately I have been fielding the same questions about communities like Twitter, Ning and Second Life. In my last post I wrote about the problems with e-mail: The channel is clogged.

The same problem exists with radio, TV, newspapers, magazines, junk mail, spam, and telephone marketers. The channels are clogged. When users no longer find a particular channel useful will they use less channels? No, they will find or make new channels.

This is what Twitter, Second Life, MySpace, blogs, etc, are: new channels of communication. Ironically, this is what TV, radio and the printed press started off as: channels of communication. Then people started asking what the business application was. Now these channels are so clogged with ‘business applications’ (ie marketing) that we have to find new channels of communication in order to talk to each other.

In a previous post I talked about what New Media could learn from the “demise” of old media. My recommendation to Marketers: Tread lightly, don’t yell, don’t interrupt, engage, add value, participate.

The same is happening in our workplace. We don’t have enough channels for the amount of information we have (and we haven’t seen anything yet). All of our old channels were designed in a different world; a world of limited information. This is why I blogged about the death of e-mail. As we have created more information we have crammed it in the same channels: e-mail, TV, radio, etc.

New Media is a channel, how we use it is what makes it powerful or just another annoyance.

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