What are virtual goods?
Virtual goods are non-physical objects (i.e. rights) that are purchased and exchanged on the Internet represented by pictures, animations or three-dimensional objects inside online platforms, communities and games, controlled by rules. According to Joshua A.T. Fairfield, an expert in the law and regulation of e-commerce and videogames, virtual property are designed to share three legally relevant characteristics with real world property: rivalrousness, persistence, and interconnectivity. Rivalrousness lets the owner exclude other people from using owned objects, persistence protects the investment by ensuring that it lasts and interconnectivity let's other than the owner experience or interact with the objects.
There are three main categories of virtual goods:
Decorative Virtual Goods: Similar to branded physical goods Decorative Virtual Goods are used to express individual personalities, gain status, impress on others, and to give a sense of belonging. Items can be virtual pets or furniture in an online hang-out or clothes, shoes, jewelry or other accessories to dress up an online character in an online game.
Functional Virtual Goods: In online games Functional Virtual Goods can be used to provide new functions, convenience or gameplay options for the player to improve the user experience. The items are functional in the sense that they help the owner to advance in the game and convenient in that users can take shortcuts to save time or lower risk. It can also be to alter the gaming interface, enabling short-cut keys or tools to enhance the visual experience.
Virtual Gifts: Digital flowers or a box of chocolates might not smell as nice or taste as good as real ones, but often the gesture is what matters the most. Virtual Gifts are given away daily at social networking sites and dating services and people are paying as much as $10 to send a virtual flower to the object of their affection. In games, occasions to buy virtual gifts can be extended from birthdays and Valentine’s Day, to include a number of occasions based on the fiction of the game. For virtual items such as flowers that have a physical equivalent, there is also the possibility for the operators to provide real offline gifts.
Virtual goods as advertising
Brand owners and marketers are taking notice of the development and are starting to use virtual goods as a substitute for traditional advertising just as product placements in movies. When the Sex in the City movie was promoted, New Line Cinema gave away free virtual Manolo Blahniks shoes on Facebook. During the first day members gave more than 500 000 shoes to their friends accounting for more than 220 million viewings. Last week Britney Spears announced that she will launch a line of branded virtual goods on Facebook. The gifts that are sold for $2 include virtual birthday cakes, which members can buy for themselves or for friends.
But it's only kids who are buying, right?
According to a recent study by analyst firm Frank N. Magid Associates 12% of Americans Bought Virtual Goods in Past 12 Months. As can be seen in the picture below the largest share is women and in the ages between 25-34, 17% of the women purchased virtual goods in past 12 months.
Basically people buy virtual goods for the same reasons they buy physical goods.
- to make an experience more entertaining
- to express individual personalities
- to have a sense of belonging,
- to impress on others
- to explore new things
- to save time
- to lower risk
- to have power
- to collect items they like
- to resell the item and perhaps make a profit
- to give it away and make someone else happy
In online games one basic idea is that some people have all the time in the world while others might have all the money in the world. The first group of players spends hours, days and weeks finding rare in-game items, earning in-game currency and leveling up their characters. The second group might instead use real money to buy in-game items, exchange for in-game currency or get a character that is already leveled up. According to estimates more than 400 000 people worldwide (primarily in low-cost locations) were employed to perform something called Gold Farming, doing mundane actions over and over in order to collect in-game currency and items that are later sold to other players.
There is of course a continuum from players not spending a dime and players buying lots of stuff. What is interesting is that the vast majority is playing for free, subsidized by a few that are paying much more than they would with for example a subscription based revenue model. More about Value Proposition Versioning here. An example of players buying lots of stuff was mentioned by Adam Caplan at Super Rewards in this video:
Digital Product Life Cycle Managemet
In product life cycle management a product's lifetime is sometimes shortened intentionally to encourage customers to make repeated purchases and enable repetitive sales. This can be through quality deterioration or artificially by means of fashion cycles, technology development, new standards etc. For virtual goods there is no technical reason why virtual goods could not last indefinitely, so shortening of product lives is always rather artificial and in some online games items degrade with time or usage, sometimes vanishing completely, sometimes items have expiration dates after which they vanish. Another common method to increase sales of virtual goods is to limit the number of items a person can have at a time, forcing them to either dispose less needed items or purchase additional pockets for more items. In some games, such as Habbo, the operator offers to buy back items from the user for a fraction of the original purchase price.
New opportunities for Business Model Innovation
The opportunities for monetizing virtual goods are growing and providing new possibilities for business model innovation, not only in games and social networks. Virtual item stores are in their infancy but last week I witnessed an exciting live demo of a very realistic virtual 3D shopping centre made by MindArk, that operates, develops and market Entropia Universe.
Who will be the Amazon of virtual goods? Amazon…?
How to Make Money Selling Virtual Products from Home
If you own a mobile device and live in the USA/Canada, you’ve probably purchased virtual products like apps, iTunes, or a Netflix subscription at least once this past month.
In an era when most of our needs can be met virtually — from remote work and socializing to dating and entertainment — reality has imperceptibly shifted into the virtual realm as technology caught up with our needs and wants. No wonder the virtual goods market, currently at $52 billion and growing, is exceeding our boldest expectations.
The digital economy also gave rise to more side hustles than ever before. A decade ago, making a few bucks online meant dusting shelves for college textbooks left unchewed by our dogs and crossing fingers for a customer via eBay.
Today’s online marketplaces are booming with 24/7 demand, and much of it for virtual goods. With as little as $0 starter investment and little to no legal formalities, entrepreneurs can now find their own best way to sell virtual goods.
Ready to jump on the bandwagon and find out how to make money selling virtual goods? Below, we’ll fill you in both on the “what” and “how” of the process.
Virtual products to make and sell from home
Virtual products (also known as digital products and digital goods) are products you can sell to other internet users via download. This can be done through your website, blog, social media profiles, or online marketplaces.
The perks of virtual products are primarily a lack of long-term commitments. Unlike a provider of virtual services, you won’t be stuck tailoring your work to a client’s custom requirements. Instead, the customer will pick out the product right for them and use/edit it on their own.
Here are the top trending ideas for virtual/digital products you can start making from your swivel chair.
Design
Small businesses and marketers are always on the lookout for original illustrations and vector icons to use in place of stock photos.
Specifically, they’re looking for:
- stock illustrations
- vector icons
- icon sets
- infographic templates
- photoshop templates
- animations
- 3D rendered images
If your hobby is graphic design, you can easily make extra income by selling custom designs or illustrations on platforms like Shutterstock. Payments start at 25 cents per image download which may not sound like much…until you consider that one single image can tick you extra income for decades.
Skills and equipment needed: Drawing/art background. Knowledge of graphic design basics and platforms like Adobe Illustrator and Adobe Photoshop.
Ebooks and Guides
If you have something to say to the world, use your spare time to turn it into an Ebook and find your readers without printing and shipping costs. On a smaller scale, you can also make money selling PDFs and handy guides.
Digital ebooks come in many shapes and sizes from fiction to poetry, but for business purposes, stick to these exceptionally popular formats:
- life coaching/self-help books
- recipe books
- how-tos and “dummy guides” on business management, investment, sales, marketing, etc.
- email marketing and social media post templates compiled into handy PDFs and guides.
Skills and equipment needed: Writing background or solid skills. Basic knowledge of MS Word and a platform like Epubee to convert the word document into an e-book or iPages for Mac. Advanced users: a single solution like Kitaboo for creating, publishing and distributing e-books with fantastic multimedia.
Writing
If writing a whole book or even PDF guide isn’t your piece of cake, how about monetizing articles and blog posts? There are several ways to sell your writing as a virtual product and get instant payments:
- Blogging on Medium— enter Medium’s referral program and start gathering earnings from your blog posts on Medium. The only catch is you’ll only earn from articles accepted for distribution by Medium editors. Earnings range from $0 to $9000 per month depending on your output and popularity.
- Ghostwriting — on platforms like Upwork, this can range from novels to blog posts, to academic essays.
- Writing for magazines/publications — Magazines pay up to $500 dollars per fiction/nonfiction story, articles, and essays. Carefully research the publication and adapt your writing accordingly if you want to be featured.
Skills and equipment needed: writing background or solid skills; ability to work on deadlines and self-manage your time.
Pre-recorded voice greetings/messages
Small business owners are constantly googling for personalized voice greetings, messages, and IVR responses. By designing and recording custom professional greetings, you can meet the demand of one or several industries, age categories, or niches.
You can specialize in:
- Humorous messages
- Creative messages
- Industry-specific messages
- Bilingual messages
- Custom messages
Find more ideas of unique voice greetings.
Skills and equipment needed: Creativity; good diction. Quality mic and software to record/mix the greetings on your laptop
Apps
It’s been over 10 years since mobile apps have taken our daily lives by storm. While the debate between enthusiasts and skeptics is stronger than ever, the figures speak for themselves: according to App Annie, 2018 has seen a 16 billion increase in app downloads over 2017 stats.
Designing your app has become easier than ever, with some platforms allowing users to begin and publish even without coding experience. Due to the huge demand, exceptional creativity remains a must if you’re about to enter this field.
Skills and equipment needed: Programming or engineering background; knowledge of iOS/Android mobile development; ability to brainstorm your target audience and find a gap in the market.
Editable Video Content
Video bloggers and small businesses on a limited budget need editable video content to ease their video production processes. Template content, such as intro and outro clips are in demand by this audience, as are editable clips with source code.
While many generic-type clips are available for free online, by making and compiling several dozen original clips around a specific theme you can sell your videos to bloggers worldwide.
Try focusing on a specific category of video bloggers like:
- travel bloggers
- fashion bloggers
- food bloggers
- animal bloggers
Skills and equipment needed: tech background a bonus; HD video camera; movie editing software
Stock photography
Stock photography sites like Shutterstock, 500px prime, Dreamstime, etc. can showcase and sell work without giving you the trouble of finding personal clientele. However, any (human) models you work with will need to sign a license agreement allowing you to feature them on stock photo sites.
Most popular trends for stock photography:
- People doing specific tasks
- People socializing, relaxing, etc.
- Images depicting emotional states
- Nature (sky, water, landscape, sunset)
- Travel
- Money
- Tech and gadgets
As a twist, businesses selling products and services can also use stock photography for marketing. A great example is how Square PoS is advertising its services on Unsplash via free stock photos.
Skills and equipment needed: Preferably optical zoom camera; Photoshop skills
Downloadable courses
Do you possess knowledge that you’ve always wanted to share with the world? Are you good at teaching and explaining things? Whatever challenge you have struggled with and overcome in life — from business insights to programming skills to living a meaningful life— it is unique experiences that listeners are after, not academic briefs.
Here are the most in-demand formats for e-courses:
- Single course for download
- Set of courses for download
- Course subscription (monthly/quarterly/yearly)
As an example, mompreneurs can explainhow they got into business and provide step by step lessons to aspiring female business owners. Corporate marketers, salespersons, business or financial consultants can become personal coaches for the massive audience of wanna-be entrepreneurs. Healthy living or cooking enthusiasts can find their audience too!
Skills and equipment needed: Video camera or smartphone; video editing software like iMovie
How to monetize your virtual products
Building a business with a virtual product is much the same as building any business: it’s tough and it takes time. The inspiring business owners we get to read about aren’t the lucky ones who won the lottery: they’re just the small remainder who went on doing the job through the thousand little inconveniences that made others shrug and give up.
Here are 3 practical strategies to help you follow their lead.
Go for the Freemium pricing model
In a world where so much is available for free, customers are more apprehensive than ever about buying blindfolded. However high-quality your virtual product is, customers may pass it up for something more accessible and testable.
This doesn’t mean you should put in so much hard work for free. If you’re going to sell your virtual product via your website and social media sites, a great bet is to attract clients with a freemium product model.
With a freemium virtual product model, clients can get a limited-feature, basic version of your product for free, and then upgrade. This can mean “hooking” customers with a course, video clip, or pamphlet they can download for free to get a taste of your unique product.
Provide the very best sample of your work that shows just how unique the rest of your products are.
Build a website
Since your product is 100% virtual, a website is the virtual store that will sell your product. Make it as attractive and convenient as you would make a physical store.
When in doubt, evaluate these top criteria proven by web design research to attract and engage visitors:
- Minimalistic design – Give visitors lots of white space on your site and focus their attention on specific calls to action.
- Concise “About Us” page – a unique story told in the language your target audience speaks
- User-friendly navigation – help visitors navigate intuitively (including on mobile devices), so they don’t bounce from your site.
- Contact information on the homepage – 44% of visitors leave a business site without upfront contact information [SAP IGL] Grab attention with а Click to Call button on your homepage.
- Mobile-friendly site – this little perk helped 62% of companies increase their sales [SAP IGL]. Pick up your mobile devices and check for yourself how fast your site loads (and how easy it is to navigate).
Prioritize communication
As a business selling virtual products, you don’t have the power of face-to-face interaction with customers. Neither can you engage them on that charismatic gut level. Not unless you shift your communication paradigm.
When you’re selling virtual products, customers will need to talk to you via phone, chat, and website. A virtual phone system (VoIP) is a simple solution that covers all these channels and works perfectly for entrepreneurs selling virtual products.
Best features of VoIP for virtual business:
- Toll-free number — since a virtual business isn’t pinned to any locale, customers will appreciate both your professionalism and the nationwide scope of your virtual product with a toll-free number.
- Privacy — instantly tells you whether that unknown number is a business call or a personal one, so you respond accordingly.
- 100% mobility — VoIP forwards calls to as many devices as you own (smartphone, tablet/iPad, PC/Mac, IP desk phone, etc.). Find out more about call forwarding.
- Web and social media integration — Learn how to integrate your virtual product’s website, business Facebook, and Twitter for simpler communication with customers.
- Contact book — a business contact book that’s also a mini CRM lets you keeping track of all business clients.
A virtual phone system provides you with a pro-level business image and takes care of communications across all devices and platforms. Find everything your virtual business needs right here.
Final word
With little investment, few risks, and the ability to create and sell without leaving your house (or your day job), designing a virtual product may be the perfect passion project for a rainy fall afternoon.
What’s stopping you from starting right now?
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