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Social media – not a game. Okay, it is a game. But maybe the game is more real than you think…

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The hottest things in social media right now are so-called “social games” like Farmville (Zynga‘s big hit).  78 million people are “active monthly users” of Farmville on Facebook, and (according to a recent article) 235 million people purportedly use Zynga’s games each month on different platforms.  And no, that previous sentence was not filled with typos.  Zynga was recently valued, as part of a private placement, at over $4 billion.  

To give you some perspective, Zynga was founded in 2007

There are already a number of blogs and sites devoted to in-depth discussions of the newest social gaming platforms (Inside Social Games is one of the better ones), despite the fact that the phenomena is a fairly recent one.  Everyone is talking about this — it is the future of gaming.  It is the future of marketing.  It is the future of social connectivity.  Blah, blah, blah.

Marketers have noticed this incredible new development, and it isn’t easy to conclude that putting a social game on your site drives traffic, makes your site stickier, and gives consumers a reason to return.  So, why not put a game on your site to build your brands?  Why not interweave a gigantic, cross-platform promotion with social gaming? Actually, you should consider it — it can be, for many companies, a great idea.  But if you do that, suddenly you’ve gone from being a widget company to a company offering games.  What does that mean for the age of visitors at your site?  Are you offering prizes?  Coupons?  How are you monetizing this new initiative — and are you thus running afoul of the tangle of promotion laws in the United States or other nations? 

But forget about all of that for a moment.  Wired ran a fun article earlier this year that touches on social media game obsessives.  Does this story remind you of anyone?

Kira Greer was sitting in a meeting one afternoon when she suddenly remembered an urgent deadline. The San Francisco instructional designer knew there was no time to waste.

She excused herself, saying she had to go to the bathroom, then rushed back to her desk. Quickly opening Facebook, she began furiously clicking on rows of virtual vegetables, harvesting her FarmVille crops before they withered and died.

“I realized I was hooked when I was planning my day around when I knew crops needed to be harvested,” says Greer, 39.

Now THAT is a sticky site.   On Facebook alone more than 100 different games claim at least 1 million individual users.  And who knows how many of those sites also include parents playing the game for their children while Johnny is in school.  A mystery for many has been how the companies that make these games plan on profiting — after all, the games themselves are free.  But really, there’s no mystery at all, as the story goes on to explain:

Companies like Playfish and Zynga say their free games are profitable “many times over.” How? Through the sale of virtual goods. While the vast majority of users put in the hours to build their own little slices of nature for free, a small percentage pony up real-world cash to buy the best decorations, seeds, fertilizer and farm animals.

And this is where our little story about games starts to touch on the law yet again.  Social games and other virtual platforms such as Second Life involve the sale or exchange of virtual goods or (in the case of Second Life and some large massively multi-player games) virtual money.  So now virtual objects have real value — which means that all of the laws that address things of value in the “real” world begin to apply to cyberspace. 

The terms and conditions for these sites are effectively creating “laws” for this type of virtual world.  Suddenly, there are thefts, there are vandals, there are mischief makers breaking “real” laws through their actions as fake people on these sites. Some companies have placed restrictions on the transferability of “virtual goods” or “virtual currency” used on their systems , leading to problems with counterfeiting and black markets.  Companies hosting these sites (or participating on these sites — a significant number of well-known brands have a presence on Second Life, and others embed themselves in third party games) need to consider the intersection of real laws and terms of use.  When virtual commerce starts adding (or subtracting) from your bottom line, it becomes more than mere “marketing.”

When cyberspace was first imagined by William Gibson in Neuromancer, it was still an abstraction.  The characters were interacting inside a hallucination, but it was still presented as a kind of formless hacker world that sounded suspiciously like the world of TRON.  Later, in the groundbreaking Snow Crash, Neal Stephenson took that one step further, and imagined users living a realistic existence as “avatars” within a computer network.  The games and virtual worlds that exist today are still quite far from the seamless reality of those visions.  You can’t just shift your consciousness into a faux reality.  But each new generation of technology brings us closer to that dream, and as it does it brings the framework of our legal system ever more into contact with your avatar. 

So don’t assume that your efforts in cyberspace are just a game — the laws (and their implications) can be very real, indeed, and your lawyer may have just as much to say about how you play this game as your customers.