Farmville "cheats" cash from users; Facebook "scam" strategy guide

Facebook and MySpace are accused of encouraging game developers to cheat users out of money. Games like Farmville stand accused of employing "unethical" monetization strategies. In IT Blogwatch, bloggers reveal the scams.

By Richi Jennings. November 2, 2009.

Your humble blogwatcher selected these bloggy morsels for your enjoyment. Not to mention Clean Me...

    Ryan Kim looks at Mafia Wars and Farmville:

It's all part of a booming market called virtual goods, which has grown into an estimated $1 billion business in the United States. ... The idea refers to any sale or trade of a digital item that exists only online, everything from clothes and homes for virtual world avatars to weapons, rewards and tools for games. The phenomenon hit its stride in Asia 10 years ago. ... The sites and games are free, but players can buy items with real money to personalize their experience or better equip themselves to compete.

...

Top Facebook games like Farmville attract about 60 million monthly users. By tapping into the large audience and interactive nature of the social-networking sites, ... Zynga, ... Playdom and Playfish ... alone will rake in an estimated $400 million to $500 million this year. ... Direct payments from players aren't the only source of cash. ... Zynga ... makes about a third of its revenue from ... companies that provide commercial offers, trading Netflix memberships and marketing surveys for in-game cash.
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Michael Arrington is as mad as hell, and he's not going to take this anymore:

The real story ... is the completely unethical way that ... games like Farmville and Mobsters ... are going about achieving that success. ... A wide variety of “offers” are available where [Users] can get in-game currency in exchange for lead gen-type offers.

...

A typical scam: users are offered in game currency in exchange for filling out an IQ survey. Four simple questions are asked. The answers are irrelevant. When the user gets to the last question they are told their results will be text messaged to them. They are asked to enter in their mobile phone number. ... They’ve just subscribed to a $9.99/month subscription. ... [But] nothing in the offer says that the user will be billed $10/month forever.

...

I asked Offerpal CEO Anu Shukla to explain the ethics of her business. ... Shukla went on a tirade, calling my points “****, double****, and bull****” (yes, really), but never really addressed the points.
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Dave Rosenberg agrees:

There's something weird going on with the ads and offers that have taken over the more traditional banner advertising role. ... [There's a] heavy emphasis not just on monetizing users but on doing so in a way that was transparent and non-intrusive. Theoretically, it's a good idea, but in practice, many of the "offer" providers are purposely or inadvertently running Ponzi schemes.

...

Facebook publishes a very clear set of advertising guidelines, but that doesn't mean that advertisers will actually follow them. ... Isn't the onus really on them to protect their users (whom I would argue are either too naïve or just plain stupid to know better) from these types of things? If you want to be the meeting place and voice of the people, you have to protect the people from ne'er-do-wells.
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But Anu Shukla's anonymous minions fight back:

Because our own Anu Shukla represented the only offer-based payment platform on the panel, she was in the best position to address [Arrington’s] hyped up claims. And boy, did she ever. By the time she was finished, the crowd erupted in applause, clearly proud that she had defended the industry so well against these uninformed accusations.

...

The terms for completing every single offer in our system are spelled out very plainly and very clearly in the language in our I-frame, and again on the advertiser’s landing page. We have a full team who constantly scour the offers to make sure they are in full compliance with our policies. ... Any landing pages that do not clearly spell out the terms of the offer are instantly removed the advertiser is banned from our system. ... Every single one of the offers that run in our system are exactly the same offers that commonly run as display ads (though without even the benefit of the terms of completion that we supply!) throughout the Internet or on Television.
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And Andrew Chen argues that offers add value:

There have been a lot of conversations about the evils of offers in social gaming, and one thing that’s getting lost in the conversation is the potential for offers to actually generate value. ... offers are about “product bundling” and it adds value to the economy the same way that any product bundling adds value – by giving people more of what they want, often for less.

...

From the user’s perspective, [it] can work well if the bundled product “makes sense.” If you were already going to buy a Netflix subscription, and you are being offered the same price and you get some virtual currency to your favorite social game, then that’s great. ... The biggest problem that offers solve for advertisers is the 1% problem of e-commerce. That is, at any given time, the number of people “in market” for anything is actually quite small, and the percentage chance that they will actually purchase something is also very small. As a result, if you are at a “Point of Sale” and they have their credit card out, you might as well try to cross-sell and bundle as much related stuff as possible.
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Meanwhile, Markus Frind is all at sea, with the fish:

That much of the social gaming/virtual currency is in fact a complete scam [has] been a open secret for at least the last 3 years, that no one ever questioned any of this is absolutely amazing.

  A lot of the networks promoting these offers are nothing but a smoke screen and if you dig deep enough you will see many of the people/companies pushing the offers are facing multiple lawsuits in many states. The top people/companies in these scams are pulling in revenues of over a million dollars a day. Should be interesting to see just how much of an effect this will have on facebooks revenues.
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So what's your take?
Get involved: leave a comment.

 
 
And finally...

Richi Jennings, your humble blogwatcher
  Richi Jennings is an independent analyst/consultant, specializing in blogging, email, and security. A cross-functional IT geek since 1985, he is also an analyst at Ferris Research. You can follow him as @richi on Twitter, or richij on FriendFeed, pretend to be richij's friend on Facebook, or just use good old email: itblogwatch@richij.com.

 
 
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