Here's What Happens When Someone Takes The Right Approach Online

The New York Times had a big, glowing article this week about the viability and success of the virtual goods market. The article went into a half dozen or so cases of successful virtual goods companies who are making great money online. In case you’re not sure what a virtual good is, it’s something you can buy and play with or send to someone else via the web — digital birthday cakes you can send to your Facebook friends, etc. It’s not a new or novel concept but as internet usage and consumer web savviness increases, it has created a market for it.

What’s interesting is that most people will think the success of this category is about virtual goods or the category itself. They’ll believe there’s some kind of magic element to the market, that somehow virtual goods has created some new way of making money online, etc. But, it’s really not a magic bullet at all. The virtual goods category could have failed miserably just as easily as music and content have (and continues to do). What set it apart? The right approach. Virtual goods companies didn’t assume that consumers wouldn’t pay and therefore automatically offer their wares for free. They didn’t fall into the trap of believing that you’ve got to give something for free to “entice” users to pay for something else, or create things that don’t have a market (which is really rampant on the web). Nope, all they did was create something of value to users, and charge for it  — right out of the gate and right away. And surprise, surprise — people will pay. Uncanny? Not at all. This is what happens when you take the right approach to the internet platform.

The next time you hear a blogger or journalist say “people won’t pay for things online,” remember this article. Then, ignore them.