Lehdonvirta on Virtual Consumption

I write to recommend Vili Lehdonvirta's dissertation, Virtual Consumption, which includes several academic papers with a thought-provoking introduction and conclusion. Vili has been an important source of energy in VERN, the Turku School of Economics, the HIIT, and no doubt many other organizations that I am unfortunately overlooking.

Vili gets it all right. He directly addresses the foolish notion that virtual goods are not real, and he does so using plain-language theoretical approaches in sociology and institutional economics rather than formal mathematical models and rational choice. In so doing, he situates virtual consumption in the ongoing discussion of post-material culture.

I would especially recommend his thoughts on the idea that virtual goods are real, and that indeed there are no virtual worlds. Rather, we all participate in play worlds and different spheres of interaction, all of which share in varying amounts of "fantasy" and "reality." 

Vili is not the first to say such things, of course (neither am I!!) but he makes the case extremely well and thus links the economics of consumption to broader discourses about the evolution of society in the digital age. 

Highly recommended.

Comments

[thoreau]

1.

For those of you interested, in the Entropia Universe, a virtual space station just sold for 330,000 U.S. dollars.

The owner will have tax rights to the hunting in the space station as well as the ability to sell 'virtual' shops.

[thoreau]

2.

http://www.entropiaforum.com/forums/mindark-news/175141-crystal-palace-auction-winner.html

A link with more info.

[Edward Castronova]

3.

thoreau I doubt anyone cares about your thoughtless post. I recommend you to remove yourself from this page before I block your IP address for further disruption.

[Kevin]

4.

Is there a way for a reader of TN to post links to other news items of interest? I, for one, did not mind thoreau's posts.

[RandyH]

5.

First, thanks for the reference to the dissertation. Very interesting.

One thing I fail to grasp from the premise, however, is how "virtual goods" are distinct from "information goods" such as music or software. Especially in the face of transformation occurring with the software industry in general -- the shift towards a services-based or "cloud computing" based model -- I believe that exactly what is being consumed in terms of software is permissions. It seems the difference between the uniqueness or rivalrous-nature of a SaaS client versus a virtual world consumer is essentially nil. Both are digitally generated, clone-able, with largely unconstrained supply potential, yet both are marked by a uniqueness insofar as how the implementation is consumed. And both can even be resold (digital/info services are not necessarily perishable).

[Vili Lehdonvirta]

6.

Ted, thank you very much for your kind words. Let me say again that your work has been a vital source of inspiration and a key ingredient in my strawmen.

RandyH: You are raising a very good point. The conceptual difference between information goods and virtual goods is introduced briefly on pages 167-168 (with a picture:). My conclusions on the topic are presented on pages 80-83 (with background on pp. 54-58). In summary, you are absolutely right in that many goods that have previously been categorised as information goods have become indistinguishable from virtual goods in terms of rivalry and scarcity, while many items that are considered virtual goods are not really that scarce at all.

One difference that can be seen, however, is that virtual items are often desired for the social status and meanings attached to them -- like clothes or furniture in the world of material goods. In contrast, software is usually acquired with more functional values in mind. But it's possible to point to examples like the $1000 iPhone app that does nothing to show that the distinction is vague. The fun question is whether software purchases in the future resemble shopping for clothes today, with social norms, trends and brands playing the main role.

Another lingering difference is expressed in the following quote from pp. 81-82 (although this was intended to refer to traditional (abundant) information goods as opposed to information goods turned virtual goods):

My conclusion is that the key difference between virtual goods and digital information goods is revealed in the discussion in section 3.4, above, on the concepts of provenance and social life of goods. For digital information goods, every copy is a manifestation of the same, abstract, singular information good. Symbolic meanings such as being fashionable, avant-garde, old-fashioned or vulgar can be attached to the information good, but the meanings are attached to its abstract idea, not to any specific manifestation. One copy of a file containing a Hollywood movie is semiotically no different from another copy containing the same information. They are both the same signifier, pointing to meanings attached to that movie.

In contrast, for virtual goods, every copy is distinct from other copies. Each copy is a different signifier, and can therefore point to different meanings. The notion of provenance and social life refer to the way in which individual virtual goods, through the course of their life, can pick up different kinds of personal associations, and even a social “reputation” of their own. Thus one virtual sofa can be quite meaningful to someone, while another visually identical sofa can seem empty and hollow. The result corresponds with Scott Lash and Celia Lury’s analysis of what happens when media become thingified as commodities: they become Leibniz’s monads, “all different from each other, because each carries its own trace” (Lash & Lury 2007, p. 12).

[RandyH]

7.

Vili,

Thank you very much for your thoughtful response. I'd like to explore the idea that software consumption decisions will increasingly be driven by norms, trends and brands. While this is obviously already happening for those information goods which have already become indistinguishable from virtual goods (some of the iPhone apps are a perfect example), I believe this phenomenon is beginning to take root in previously pure-utility software. I'm currently witnessing this first-hand in a large, corporate setting and I find it incredibly interesting how "software purchase" decision making is rapidly changing. Certainly at the level of personal consumption, decisions are being driven increasingly by brand and trend.

Interesting that the lingering differentiator may well be the "thingification". That is, technology advances quickly enough so that many info-goods-turned-virtual-goods expire (are obsoleted) too quickly to foster any meaningful trace or connection to it. Maybe virtual goods will ultimately suffer the same fate as the platforms which support those digital assets climb up the technology curve as well?

[Vili Lehdonvirta]

8.

RandyH,

Thanks for your response. That's interesting what you say about observing the phenomenon with pure-utility software. Could you give an example of the kinds of things you are referring to? Things like people adhering to a specific brand name OS (Apple/Linux)? For the next couple of years I will be involved in a project dealing with the "digitalisation of consumption", but perhaps I should also be looking at the "consumerisation of the digital" or whatever we call it.

Regarding upgrades and obsolescence, otoh many software update themselves so in a way you do have them for a long time. Digital information goods like music don't go stale (if not for DRM, of course). As for virtual items in games and other online hangouts, it's true that e.g. the typical Habbo user probably doesn't stick to the platform for more than a couple of years max, after which they leave the platform and give up on all the goods they have amassed. But especially in a teenagers' life, I think two years is actually a long time to hold on to an object, and plenty of time to attach memories and meanings to it! I would guess we don't hold on to most material goods as long.

Many people are of course thinking of (wishful thinking?) things like asset transferability between online environments, which would make virtual goods even longer lasting.

[RandyH]

9.

I am skeptical about asset transferability in commercial VWs, however perhaps such is possible if a truly open "web 3.d" i.e. OpenSim takes hold.

You raise a good point about hold on objects which I think definitely translates -- especially when considering youthful consumers -- to service-based info goods like MySpace, FaceBook, Twitter haunts. However I'd been excluding those based on your criteria of transferability (from one consumer to another, not from one "realm" to another). Then again, perhaps blogs (and prior to that web journals) are a better example. It would be interesting to see if there was consumer preference based upon the different blog platforms (WordPress, Blogger, TypePad, etc.) not as a utility value decision, but based upon positive or negative experience from a previous blog community action.

My comment about pure utility software (rather SaaS) decisions being based increasingly on brand and trend wasn't related to consumer consumption as much as business consumption, which is where I have most direct experience. As I've read through your publication more thoroughly now, I'm not sure this phenomenon is directly related to what you are studying, though I do think it merits study in its own right. Perhaps it is just the gradual evaporation "enterprise software" as a class of goods, which is leading to a more personal, and less institutional manner in which these sorts of decisions are being made.

Again, thanks for the interesting discussion from an armchair economist such as myself.

--Randy

[Vili Lehdonvirta]

10.

RandyH, my thanks to you too for the interesting discussion. I'm also an occasional reader of your blog. If you happen to write about your observations regarding software/SaaS purchase decisions vs. brand/trend, I will be reading it with great interest. As said my future research agenda is wider than the dissertation.