The new economy

2009-09-28

According to the Business Insider, Facebook is “‘Beating The S— Out Of Its Numbers’ Thanks To Zynga’s Virtual Goods.” I wanted to try to understand this new, emerging economy.

It all starts when a user sees an ad on Facebook:

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After clicking and installing the app, she gets a little farm where she can grow tomatoes and such.

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Game seems pretty fun. But she runs out of seeds, and wants more. So she goes shopping for virtual goods.

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Let’s say our protagonist is too young to have a credit card, so she decides instead to buy coins by signing up for a free offer.

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She decides to download a toolbar. Free greeting cards seem like fun.

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The download puts an Ask.com search toolbar in the user’s browser. Ask.com makes money off search ads. Ask probably paid $1 to $2 for the install. Some portion of that goes to Zynga, and then back to Facebook when Zynga advertises.

Farmville apparently does not advertise on Ask.com:

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Thereby preventing the entire new internet economy from imploding in an endless cycle of circularity.

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