Edward Castronova has a great piece about how the growth of virtual experiences might be causing our real world recession. I think he's definitely on the right track. The only thing I'll add is that the main advantage of the virtual world is the almost-zero marginal cost of production for virtual goods.

Let’s construe the notion of “virtual economy” quite broadly: If you receive an experience by yourself through a machine that runs on digital technology, without doing or buying anything physical (other than press a few buttons), it’s virtual. To download a song and listen to it on your iPod is virtual; to go to a concert is real, to buy a CD and play it is real, to play your own instrument is real. The difference I want to highlight is in the physical nature of the economic transaction. The virtual transaction does not require the movement or alteration of anything physical. Not even physical money changes hands. The real transaction involves material being created, moved, consumed, all by human hands.

Using these concepts, there’s some evidence that an exodus from the real to the virtual is not only already underway (as I argued in my second book) but that’s it’s gotten big enough to affect our sense of a whether the real economy is healthy or not.

(HT: Marginal Revolution.)

0 TrackBacks

Listed below are links to blogs that reference this entry: Virtual World Boom Causes Real World Recession?.

TrackBack URL for this entry: http://www.mwilliams.info/mt5/tb-confess.cgi/7664

Comments

Supporters

Email blogmasterofnoneATgmailDOTcom for text link and key word rates.

Site Info

Support