Random Musings

Panel 3 of the day (Virtual Goods Summit 2008) has the following:

* John Hwang, RockYou
* David King, Lil Green Patch
* Shervin Pishevar, SGN
* Andrew Trader, Zynga
* Moderator: Mark Wallace, Wello Horld

Q: What are the advantages/disadvantages of doing virtual goods in a social network setting?

john hwang – updates are important; refresh content to keep users engaged; userbases on social networks is growing which directly correlates to your own userbase growth.

andrew trader – you do not control the users, the social networks do. that makes fraud and cheating a bigger problem. harder to build fraud and and cheating prevention systems. wants facebook to offer a payment processing system.

shervin of sgn – recommends you build a standalone service to go with your FB or Myspace app.

Q: what % of users on social networks purchase virtual goods? average revenue per user (arpu)?

AT – depends. estimates of 3-8% all seem high. economies are complex and you have to figure out how to manage the economy. (note from earlier in panel, AT mentioned $4K-$5K daily revenue on yoville)

JH – 3-5% is possible, but we see abt 10% of users try to pay for currency into the game. of the 10%, only 10% actually complete the transaction. also recommends a limit on able to level up via currency because it creates inflation of points and ruins the experience.  sees $20-30 revenue per thousand active daily users on speed racer.

DK- very limited percentage of users want to pay, so it avgs out to less than penny per user.

SP – its healthy but we will not disclose.   (lol)

everyone seems to want FB to develop a payment system. this would 1) help with getting users over the account registration hump, 2) make it easier to manage fraud, 3) see #1:)  but after seeing the fiasco of beacon, do we really want FB to have our financial information as well?!?!

Q: barriers for entry?

JH – apps in social networks have more virality because people want to show off their personalized creations. they buy, mod, customize and then show all their friends. therefore, there is room for innovation and success by individual developers.

AT – the entry costs for developers in the social network business is going up.  games are becoming better quality and more rich in experience, so it now takes more to build and launch.  (JH – jokes that AT just wants individual developers to go work for zynga instead)

Audience question: what is the ratio of active users to registered users and what are your retention rates?

DK – says those numbers dont matter so much because there are so many other factors at play – size of audience, activity of active users, etc.

no one else wanted to answer the question.

audience question: Pros & cons of using real dollars versus points or other forms of virtual currency?

JH – think back to when you were a kid in an arcade. after you changed you money into arcade coins, you didnt know what you were spending. it encourages people to spend more.

UPDATE:  Thanks so much to the following donors so far! You guys are quick!

those of you who follow me on twitter, facebook or this blog know that i spent a good part of july on the thailand/burma border volunteering at an orphanage there that is home to many burmese refugee children and abandoned thai children.

i was expecting some pretty tough conditions there – after all, it is an orphanage. i spent my time teaching the children english, learning about their lives and wishing there was a functioning toilet (!) the time flew by faster than i expected. and on my last days there, i spent a lot of time wondering and worrying about their futures.  they are in a tough situation – undocumented in thailand, limited access to schooling and medical care, lack of enough indoor space for the children to sleep comfortably.  but if the children had not found a place in this home, then they could have likely ended up in sweatshops in thailand or the sex trade for some of the young girls. if they were sent back to burma, they could be killed or used as child land mine sweepers – a disgusting practice.

my experiences motivated me to commit myself to running my own fund raising campaign.  they are applying for grants for some of the educational and health programs which are potentially fundable. however most foundations will not fund capital campaigns – which means no money for building buildings and the kids are sleeping on the ground, all crowded together.

so here is my plan: i am going to use all my social media and social networking tools to raise $10,000. this money will be used for the expansion of their building.  i will be using facebook, twitter, google groups, wordpress, digg, etc to see if i can reach this goal.  here are my flickr pics from my trip if you want to see.

i have rebuilt their website on wordpress (so they can update it themselves) and rejiggered their paypal to they can give US donors charitable donation receipts – (side note: it was fun building my first website – if you see major mistakes, let me know). and now its ready for all the amazing donations that all you lovely web 2.0 people are about to send over!

DONATE TO BAAN DADA HERE!

i will regularly post updates on donations and donors here. so come on, be charitable and take a moment to give to some really great kids that really need our help. thank you!

List of Awesome People who Donated – Thank you so much!

• Sean Kelly of Dizzywood
• Garrett Camp of StumbleUpon
• Albert Lai of Kontagent
• Fred Hasani of Fortis General Counsel
• Hiten and Amee Shah of Kissmetrics
• Ted Grubb of Get Satisfaction
• Shinyoung Park of Funji
• David Prager of Revision 3
• Dave McClure of 500 Hats
• Bong Koh of ibeatyou.com
• Russ Simmons of yelp.com
• Helen Kang of Morrison Foerster
• Susan  Kang of SOOMPI.com
• Dae Kim
• Eliana Sur of AKQA
• Chris Han of Shearman & Sterling
• Matt and Jennifer Gaarder-Wang
• Kevin Kim of Flushing, NY
• Jonathan Grubb of Rubyred Labs
• Lane Becker of Get Satisfaction
• Mysterious anonymous and VERY generous donor from Seattle, WA ping me if its you so I can say thank you directly!!!
• Kevin Burton of Spinn3r
• Yishaun Chen
• Jared Kim of Wegame
• Brandon Dennis of Oxhorn Brand
• Robert Dang of Fortis General Counsel
• Jeff Tseng of Kontagent
• Stuart Orsak
• Gabe Vanrenen
• Greg Stein
• Howard Steel of Kelley Drye
• Olimpia Michel
• Peter Buckland of WilmerHale
• Dan Chang
• Euna Kim of Reed Smith
• Dat Ngyuen

8/7: We are at $2000 raised thus far! Amazing!

8/8: wowie, wowie:) $4222 as of today!

8/11: gosh, i really love you guys, i really do.  we are at $6300.

8/14: the grand total now stands at $6542:)  over 65% of the way to the goal in 1 week!!!

8/20: we are now at $7872! and i spoke with the folks at Baan Dada, they already bought bricks with the first batch of money sent over:) real bricks! not the mud ones that they used to make by hand and use for walls.  just over $2000 more dollars to go!

8/24: Yay! Over $1000 came in this week in donations. Total now stands at $8972. woot!

finally! someone writes a good post about social networks in asia (tho i do have to say, I think qq is more an IM client, even tho it is an IM client on crack).

as i have been discussing the future of soompi and the potential for growth in the asian market with a lot of really smart people in the valley, i have been amazed with how little people know about the largest internet market in the world! social network services in asia are for the most part profitable. that, in and of itself, is a phenomenon worth studying.  also, is virality a cultural by-product there? or is a result of product development? these are all questions that could have major impact on how we do business here.

well, go read the post – its got some great insight. in the meantime, i will keep doing my research on the matter:)