THE DREAM IN ACTION

This weekend @Mollstar and I had a long (relative to the amount of time I can usually get her to talk about the web) conversation about how we don’t really understand who plays all these Facebook games. Other than Poker from Zynga, which I play a decent amount of, I don’t understand who grows virtual farms, zaps their friends with black magic, and others. Then, on Halloween, Michael Arrington of Tech Crunch posted a follow up post to his question to Anu Shirkla of OfferPal at the Virtual Good Summit about the ethics of many adverting trends within the virtual currency markets. His post covered examples of these ad schemes and a very entertaining video of classic Arrington antics at the event. You may like him or hate him but you can’t deny he’s kind of a bad ass.

http://www.techcrunch.com/2009/10/31/scamville-the-social-gaming-ecosystem-of-hell/

Then the next day on Nov 1, Tech Crunch followed up with quotes from two respected entrepreneurs who admittedly said they’d executed these types of ad strategies in the past and weren’t proud of it. One even said, “I’m surprised it took this many years to be reported by the “media”. These kind of scams have been going on for years…”

http://www.techcrunch.com/2009/11/01/scamville-hotornot-plentyoffish-facebook-myspace/

Then Dennis Yu the CEO of BlitzLocal wrote a very honest post about scamming Facebook and the 3 most common ways to do it: 1) Downloading a spyware tool bar, 2) Tricking users to give up their email using ‘you’ve won a “free” camera, just tell us you email address’, or 3) Getting a users phone number by using ‘thanks for taking that IQ test, give us your phone number so we know where to send it’, which charges a user $20/month.

http://www.techcrunch.com/2009/11/01/how-to-spam-facebook-like-a-pro-an-insiders-confession/

The next follow up was from Zynga’s VP of Biz Dev Andrew Trader who stated that about 1/3 of Zynga’s revenue comes from advertising. This is the same advertising that Arrington calls ’scammy’.

http://www.techcrunch.com/2009/11/02/scamville-zynga-says-13-of-revenue-comes-from-lead-gen-and-other-offers/

Next Mark Pincus, who I wrote about last week, responded to Arrington’s claims with a very thoughtful post about the industry and openly admitting that yes, some players on these social media platforms are ‘scammy’ advertisers and they’re creating bad user experiences. He also raised a point I hadn’t thought of; there are many users who don’t have access to online payment methods (broke kids) who are still interested in making in game purchases. So they’re able to take survey’s and perform tasks to earn in-game-currency. Pincus says this about the worst offender:

In fact, the worst offender, tatto media, referenced in the techcrunch article, had already been taken down and permanently banned prior to the post.

There is no doubt that social gaming is entering the mainstream culture and there is a business to be created around fun….

As we evolve to a world where people connections are the basis for the largest consumer services, we will face more challenges. I’m confident that with so many smart people (and critics) we will overcome these.

http://markpincus.typepad.com/markpincus/2009/11/my-take-on-zynga-and-cpa-offers.html

Then yesterday Arrington respectfully responded to the Pincus post:

Hats off to Zynga. Flat out admitting that the problem exists and taking early steps to fix it is just something you don’t see from most companies.

http://www.techcrunch.com/2009/11/02/zynga-takes-steps-to-remove-scams-from-games/

I hope that I could catch you up to what’s going on here and make it easier for you to follow than reading every post (although you can of course). As I stated last week in my application economy post I really think that Pincus is a sharp entrepreneur. He understand that you can’t just F’ the user and still build a great business so I’m excited to see how he responds to this in the longer term. I wouldn’t doubt it at all if Pincus were to push Facebook to adopt the standards that Arrington et al. are calling for.

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