Microsoft Wants Broader Use of Virtual Currency in Australia

Microsoft is pressing the Reserve Bank of Australia to consider adjustments to the domestic payments markets to help consumers conduct transactions in virtual currencies, such as Facebook Credits and Microsoft Points.

Responding to the RBA's call for submissions relating to innovation in payments systems, Microsoft points out that virtual currencies have some key advantages driving their adoption including the removal of the cost of multiple card processing interchange fees for low value or micro-transactions.

"While these systems are generally closed at this point of time, it is foreseeable that consumers may desire in the future to exchange value between the various schemes and that they could well become more widespread and prevalent within online retail environments," Microsoft says.

That's an important thought. Credits and tokens, even when purchased with real world money, now can be used only within a closed application, typically a game. What Microsoft and many others seem to believe is that demand will grow, at some point, for methods to convert such virtual currencies into real-world currencies. And the regulatory scrutiny already has begun.

French courts are being asked to define the status of the virtual currency Bitcoin, after local banks switched off accounts for exchanges handling the currency on the presumption that Bitcoin should conform to electronic money regulations.

At the moment, Microsoft Points are not convertible to a monetary equivalent, but are used solely to gain licenses to digital products. However, implicit in its submission to the RBA, Redwood is clearly looking to a future in which the store of value inherent in Points can be used for transactions beyond the XBox Live and MSN community.

Microsoft on virtual currencies

Are Virtual Goods a Bigger Business Than Advertising?

Sales of virtual goods are a significant, and growing revenue stream for Facebook and many developers who seem to be finding that they can make more money selling digital goods than they can selling apps outright or selling advertising within games.



That isn’t to downplay mobile advertising revenues, as a longer-term source of revenue growth for many participants in the mobile ecosystem.



Mobile advertising in the United States will grow from $491 million in 2009 to $2.9 billion in 2014, according to BIA/Kelsey, a compound annual growth rate of 43 percent. The global market for ads in video games is expected to grow from $3.1 billion in 2010 to $7.2 billion in 2016, according to DFC Intelligence. Video Games: More Ad Revenue.



But revenue models often “are discovered” in the mobile and online space, rather than intentionally created, and that seems to be the case for virtual goods.



Revenue specifically generated from the sale of virtual goods in social games has increased 245 percent from $2.1 billion in 2007 to $7.3 billion in 2010, according to In-Stat. Virtual goods forecast



According to eMarketer, the U.S. virtual goods market is expected to generate $653 million in revenue in 2011, up 28 percent from 2010. U.S. virtual goods revenue



Virtual goods purchased for use in social games might already be a more-important revenue stream for game developers than advertising represents, in other words.



And that might also suggest that virtual goods could be a more important revenue source for at least some social networks, for example, than advertising. Facebook is probably the best example of that, at the moment.



A study published in 2010 by Flurry suggested that monthly average virtual goods revenue per user amounted to $7.80. This far exceeds the ad revenue earned from marketers which is about $1.20 per month per user.




According to PayPal, a facilitator of online payments, about 12 million consumers buy virtual goods every month in the U.S. Often, the purchases are all about online currency. Flurry virtual goods forecast



Virtual goods sales already represent the primary source of revenue for social gaming on Facebook.  Michael Pachter, Wedbush Morgan Securities video game analyst, reports that social gaming has grown from approximately $600 million in 2008 to $1 billion in 2009.   


Further, he forecasts that social gaming will generate nearly $1.6 billion this year, and grow to more than $4 billion by 2013. Virtual goods beat advertising





Javelin Strategy & Research predicts that U.S. revenue from virtual goods will quadruple between 2009 and 2012, from $0.6 billion to $2.4 billion.



The increased use of virtual currencies and socially networked payments present new challenges to traditional payments services providers, regulatory bodies, and even cross-border economies. Virtual currency issues

Mobile Broadband Will be a Majority of "Broadband" Use by 2015

By 2015, more U.S. Internet users will access the Internet through mobile devices than through PCs or other wireline devices, IDC now predicts. That's the broadband parallel to what has happened with voice services, where mobile voice for many users is the predominant and preferred way to use voice, while for many others represents the only way to use voice.

The number of mobile Internet users will grow by a compound annual growth rate of 16.6 percent between 2010 and 2015.

Worldwide, the total number of Internet user will grow from 2 billion in 2010 to 2.7 billion in 2015, when 40 percent of the world's population will have access to its vast resources.

Global business-to-consumer e-commerce spending will grow from $708 billion in 2010 to $1,285 billion in 2015 at a CAGR of 12.7 percent.

Worldwide online advertising will increase from $70 billion in 2010 to $138 billion in 2015, with its share of total advertising across all media growing from 12 percent to 18 percent.

Mobile broadband to dominate usage

In-App Purchases of $20 or More Account for 51% of Revenues

According to Flurry just 0.5 percent to six percent of mobile game app players spend money in free games. Spending on virtual currency

Just one percent of people who play Zynga's games are thought to account for between 25 percent and 50 percent of the company's revenues.

Now data published by mobile analytics company Flurry indicates that "whales" (big spenders)  are also a key source of income for freemium games on iOS and Android. The company analysed in-app purchases by 3.5 million mobile gamers, and found that the average transaction value was $14.

About 71 percent of all transactions are for amounts under $10, Some 16 percent of transactions are for $10 to $20 and 13 percent of sales are for amounts greater than $20.

In-app purchases for less than $10 account for 31 percent of the revenues. In-app purchases between $10 and $20 account for 16 percent of transactions and 18 percent of revenues.

In-app purchases of more than $20 account for a mere 13 percent of transactions, but 51 percent of revenues. In fact, five percent of all in-app purchases were for more than $50.

What is Money?

What is money, or currency? According to Bitcoin, money is any object, or any sort of record, accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. In Bitcoin's case, "money" is a peer-to-peer exchange of value using a "Bitcoin," with no use of any central banking institution. http://bitcoin.org/

When the virtual currency bitcoin was released, in January 2009, it appeared to be an interesting way for people to trade among themselves in a secure, low-cost, and private fashion. Cryptocurrency

The Bitcoin network, designed by an unknown programmer with the handle "Satoshi ­Nakamoto," used a decentralized peer-to-peer system to verify transactions, which meant that people could exchange goods and services electronically, and anonymously, without having to rely on third parties like banks.

Its medium of exchange, the Bitcoin, was an invented currency that people could earn—or, in Bitcoin's jargon, "mine"—by lending their computers' resources to service the needs of the Bitcoin network. Once in existence, bitcoins could also be bought and sold for dollars or other currencies on online exchanges.

For small person to person transactions, there typically are no fees, thought complicated transactions might require some amount. Transaction_fees. But there is a problem. There are not many things a user actually can buy with a Bitcoin, transaction volume seems to be dropping, providing little incentive for real-world or digital goods merchants to accept them for payment. One take on Bitcoin

People have come to see it primarily as a way to make money. In other words, instead of being used as a currency, bitcoins are today mostly seen as (and traded as) an investment.

So just now the bitcoin boom of the past year looks not so much like the birth of a new currency as like a classic bubble. And this has created a real paradox for Bitcoin enthusiasts. The best thing for Bitcoins would be for people to stop thinking of them as an investment and start thinking of them as a currency. That probably requires the Bitcoin investing bubble to burst.

One of the reasons people seem to be hoarding Bitcoins is that there is a firm limit of 21 million Bitcoins in total, and the number of coins cannot be increased. That means Bitcoin value can fluctuate based on market demand, but cannot be bebased by "printing more Bitcoins." Controlled Supply

Bitcoin might wind up being an interesting experiment. Other similar systems might emerge. It appears almost certain that regulatory opposition from national governments will be an issue if any of the systems start to get serious traction. There are legitimate concerns about money laundering, criminal activity and tax evasion, for example.

So it is not likely "virtual currency" in the sense of a medium of exchange that supplements or competes with other existing currencies, is going to escape scrutiny by regulatory and governmental agencies. But it is interesting.

Right now, there is more interest in "captive" forms of value in the form of points, tokens or other "virtual" stores of value used within closed communities, and often for use within games such as Farmville. But as those activities grow, there is bound to be growing interest in virtual currencies that actually can be exchanged for "real world" currencies.

Square Has 750,000 Active Users

There are currently 750,000 fully activated Square Card readers. Half of the device users are individuals, Square says.

Businesses that use the card reader range from farmers’ markets and taxi companies to personal trainers, contractors and plumbers.

Earlier this month Square announced that its readers were processing $4 million a day. Square is doubling the volume of payment performed over its readers every quarter.

Square has 750,000 active accounts  (Wall Street Journal subscription required)

You Can Use SMS, MMS Channel to Surf Web, But Do You Want To?

I'm not sure you'd actually want to do this (would you want to connect to the Internet using 12 kbps dial-up?), but if you have an Android smartphone and a T-Mobile USA unlimited messaging plan, you can now use an app called Smozzy to surf the web at no additional cost. It's going to be painfully slow, but it is without additional cost, so some people might have reasons to try it, now and then.

Smozzy is a software wrapper around the standard Android browser, but uses only text messaging and multimedia messaging for communications.

How to surf T-Mobile without a data plan