By , the house, and home, had been successfully commodified. This course did not go completely uncontested. In , Philip Johnson, who had been instrumental in bringing modernism to America, built his now famous Glass House, as if trying to rescue the style he helped to coin from its bastardization. The Glass House was easily grouped with European elitism, however, and made its point too subtly to have any impact. The focus of the editorial was Dr. She made no attempt at subtly:. Farnsworth Interview What had happened? Capitalism co-opted the images of modernism to serve the aims of specific industries.
As a result of reform and art itself being dispensable, modern architecture was reduced to a thin veneer. Ironically, this made it an easy target. This time the opposition came from well known American architects. Social networks —based perspectives postulate network structures consisting of ties between individual actors, but what exactly counts as a tie is a point of disagreement Burt , p. In this dissertation, MMO users are theoretised using the interactionist notion social worlds, as described below. The social world perspective allows us to analyse the boundaries and subdivisions in an MMO user base whilst recognising that the users are simultaneously members of other social worlds, such as family and workplace.
The virtual space of the servers of an MMO is seen as the central site of a new social world; the world of World of Warcraft , for example. The social world also extends beyond its central site to other sites such as discussion forums, instant messaging channels, offices and school yards. The borders of the world are not determined by formal membership or arbitrary techical boundaries, but by the limits of communication and discourse. The limits of discourse can be understood as the ability to speak about the activities in a way that classifies the person as a World of Warcraft player as opposed to, for example, a developer or a first-time visitor.
This indicates that the social world has a degree of common culture, where culture is understood as a set of shared understandings. However, these only need to exist to the degree necessary to maintain discourse; there can be significant differences in core values, such as what kind of engagement constitutes legitimate participation. The social world also contains communities, groups characterised by shared interests and strong personal relationships.
Williams et al. The realisation that online hangouts are neither isolated silos nor independent realities, is, of course, not original. Manuel Castells argued for a vaguely network-based understanding of digital space in , somewhat against the then-prevailing accounts of online activity taking place in relatively isolated virtual communities e. In essence, it entails recognising that people are always simultaneously members of many social groupings, which continue to exert influence on them even as they engage in online activities.
In MMO related studies, this reality is sometimes still neglected in favour of an isolationist view, but in this dissertation, section 3. Whereas the previous section dealt with identity, interaction and social aggregates in computer-mediated communication and virtual spaces, this section is an introduction to the practices of consumption online. The form of presentation is a simplified history of how the online medium has shaped consumption, culminating with the rise of virtual consumption. Discussions on production and commerce are also included where relevant.
This form allows virtual consumption to be understood in context and to be contrasted with other modes of online consumption from which I will argue it is distinct. The influence that the adoption of Internet in everyday life has had on the practices of consumption can be expressed as a sequence of three waves. The first wave was online shopping: ordering traditional goods and services over the Internet and having them delivered by mail. The paradigmatic service of the online shopping wave is Amazon.
The second wave can be termed the participatory wave, and comprises a range of practices in consumption as well as in production that were set in motion by the spread of social media and social networking technologies. It involves both information goods as well as new ways of consuming material goods. The paradigmatic service of the participatory wave is YouTube , and the paradigmatic product is a video clip.
The third wave is virtual consumption, the acquisition and use of virtual goods that are rivalrous by design. Paradigmatic services are Habbo and Cyworld , and the paradigmatic product is a virtual sofa. The consumer Internet boom that started in the mids prompted retailers to start building facilities for online shopping. The basic model of online retailing was the same as with the existing modes of remote retailing, mail order catalogues and TV shopping, and utilised most of the same infrastructure: huge warehouses for stock and logistics, mail and delivery companies for distribution, and credit cards for payment.
Nevertheless, online retailing enabled a number of significant differences in consumption practices compared to brick-and-mortar stores and previous remote retailing methods. Despite, it could be said, the whole world of new problems it introduced in the form of computer related problems and glitches, online shopping realised certain clear advantages in the areas of convenience and availability Underhill Shopping at online stores is available at any time from any place with an Internet connection, allowing access for consumers who might otherwise be excluded due to distance, limited mobility or time constraints.
Online shopping can also be fast and efficient compared to the process of selecting from a mail order catalogue and relaying the order to an operator over the phone. Web search tools enable much more efficient price comparisons than traditional modes of shopping do. On the other hand, online shopping has been criticised for failing to provide some of the joys and benefits of traditional brick-and-mortar retail. But perhaps the most celebrated feature of online shopping is the ability to reach a far wider selection than it is possible to find in even the largest superstores or mail order catalogues Underhill , Anderson For example, while a typical Borders bookstore offers a selection of books, Amazon.
A similar situation prevails in several other industries and product categories. The massive selection is made possible by the low cost of listing products in an online store as well as efficient searching and browsing features that allow customers on the Web to find what they are looking for. As demonstrated in section 2. Still, the mere availability of choice is obviously no guarantee that consumers can make informed choices. The significance of the first wave is therefore in the broadening of markets rather than in some kind of emancipation from them.
The emancipatory potential of ICT becomes more apparent in the second wave, discussed next. What is termed here the participatory wave of Internet consumption has been the subject of much enthusiastic discussion and authorship in recent years, under such rubriks as Web 2. The basic claim is that certain new technologies and, more importantly, new ways of designing online services have lead to a radical empowerment of the consumer in certain processes of production and consumption. This paradigm shift, as it is portrayed in the literature, could be conceptualised as a shift from a model where vertical information flows originate at the producer and are mediated by marketing before terminating at the consumers, to a model where information is exchanged in networks between individuals and organisations.
The consequences of this shift have been most perceptible in the markets for information goods: computer software, music, movies, images, news and any other goods that can be represented in digital form. According to Shapiro and Varian , information goods differ from ordinary goods in two ways. Creating the first copy may require substantial effort and investment, but once that is done, the cost of creating additional copies by duplicating the original is negligible.
To overcome this hurdle, marketers have developed techniques such as trailers and testimonials to impress consumers of the value of their information without giving it away completely. The first part of the value chain that was to be affected by the participatory wave was distribution. Although authors of Web 2. The second change brought about by the participatory wave concerns the value appraisal part of the chain. As a result, consumers now have more powerful means and varied angles at their disposal when they seek to assess and compare the value of information goods Benkler The third change brought about by the participatory wave links the terminal part of the traditional value chain, consumption, to its initial part, production.
New technologies allow users to move from passively experiencing information goods to actively participating in the experience, appropriating the goods to new uses, and combining and altering the goods to create entirely new experiences.
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Open-source software and web application mashups represent analogous processes in the technology field. All of the shifts described above, from distribution through value apprisal to consumption and re-production, are epitomised in the video sharing site YouTube, which allows users to distribute commercially produced videos, rate them, comment on them, augment them with captions and annotations, and upload remixes, derivative works and original amateur content.
It is possible to identify similar if less extensive reflections of the participatory wave in the consumption of material goods. Internet auction sites challenge the rigidities of official distribution channels. Efficient methods of information sharing have made connected consumers less reliant on views provided by marketers and word-of-mouth in their geographical community.
Moreover, social networking and mobile communication technologies allow individual consumers to self-organise in ways that improve their traditionally weak bargaining position against vendors. In many ways, the participatory wave has enabled onlined consumption to regain much of the sociability, sensuality and experiential aspects of consumption that the first wave of online shopping was said to lack.
Rational choice and efficiency considerations are sometimes invoked as the explanans of the behaviour, but as discussed in section 2. They are clearly not the values of appropriation, accumulation and exclusivity, as found in the traditional status games of consumption, but a restatement of the hacker ethic articulated by Steven Levy : freedom of access, sharing to the benefit of others, using technology to improve the world, creativity as an end in itself and valuing people based on their mental abilities rather than on their material possessions.
In other words, the participatory wave of consumption is portrayed as ushering in a new, enlightened, post-materialistic consumer, in comparison to which the petty status games of the material consumer seem positively benighted. The online shopping wave and the participatory wave are well established in consumption-related literature. In this dissertation, I argue that it is possible to distinguish a third wave of online consumption, virtual consumption. Isolated cases of virtual assets being traded for real money can be traced back to the MUDs of the s.
Organised real-money trading began around , when players of Ultima Online , EverQuest and Lineage began to trade their game possessions with other players on Internet auction sites. Habbo , a popular online hangout aimed at teenagers, has been selling virtual goods to its Western users since Korean hangout Cyworld opened in with a similar revenue model. In this sense, it could be said that virtual consumption predates both online shopping and the participatory wave. However, it is not until the last few years that virtual consumption has become a mainstream phenomenon in the sense that mainstream Internet users can buy virtual goods in mainstream Internet services such as Facebook.
The distinguishing features of this new wave of consumption are outlined in articles two and three of this dissertation. The biggest difference is in the nature of the goods being consumed. Firstly, they are not abundant, but scarce. Operators can duplicate virtual goods at will, but to the consumer they are as indivisible as ordinary material commodities.
Secondly, the value consumers obtain from virtual goods seems to be primarily related to something else than information and experience.
Why are consumers nevertheless attracted to these uncopyable and aesthetically modest digital objects is a question that will be the main focus of the following sections. I will first briefly set the scene by outlining the global commercial significance of this new wave of consumption. To get a sense of the commercial significance of virtual consumption, let us place it in context on two dimensions. The first dimension is its market size compared to the two previous waves of online consumption.
The second dimension is geographical area. Virtual consumer behaviour is seen as differing considerably between these areas due to technological, cultural and historical factors Allison To illustrate the relative sizes of the three waves of online consumption in these two market areas, Table 1 presents total revenue figures from virtual goods sales, online advertising and online retail in Korea, China and the United States.
For the purposes of this illustration, online advertising is considered as a proxy for the participatory wave. The first is that compared to traditional online shopping, virtual consumption is a significantly smaller market. This is particularly the case in the United States, home of the Internet and the leading market in the two previous waves of online consumption. The second point of note is that in Korea and China, virtual goods sales actually exceed those of the United States, despite them being smaller economies. Moreover, in Korea and China, virtual goods sales exceed online advertising revenues and are not quite as dwarfed by online retail revenues as they are in the United States.
Table 1. Dollars . These observations support the thesis, common among observers of virtual goods trade e. The figures in Table 1 are for , which is the most recent year for which full data was available, but more recent industry estimates suggest that virtual goods sales have grown while maintaining the East-West pattern Plus Eight Star Currently being pioneered in the Asian market is the idea of accessing virtual goods through mobile devices, which presents a first step in taking virtual goods out of the online context and into physical social situations. Dollars worth of virtual items for mobile phones per month Nojima , p.
As discussed above in section 2. In this section, I analyse results from empirical studies to show how virtual consumption can be seen as social behaviour within these computer-mediated social aggregates, and how it displays many of the same forms and patterns that conventional modes of consumption have been seen to follow in offline social worlds.
The results provide answers to RQ 2: What kind of social structures promote and regulate virtual consumption? The analysis is divided into two parts. The first part focuses on relationships between virtual goods and status hierarchies in traditional fantasy MMORPGs, while the second part focuses on virtual consumption in a more open-ended online hangout. The first genre of online services where real-money trading began in a significant volume were so-called massively-multiplayer online role-playing games MMORPGs launched in the late s, described in article five of this dissertation.
In the Western market, the leading titles in this sense were Ultima Online and EverQuest, whereas in the Asian market, the leading title was Lineage followed by Ragnarok Online. This results in a pattern of play known as grinding: undertaking repetitive tasks over and over again, for dozens of hours, in order to obtain gradual increases in items and skill points. It is perhaps not surprising that many commentators as well as players themselves compare this aspect of MMORPG gameplay to work e. Furthermore, that they and their opinions should deserve the respect and esteem of other players and perhaps even developers is not simply a bid for seniocracy but a reasoned argument for meritocracy: as the most experienced of the players, they should be the most knowledgeable and therefore in the best position to offer guidance.
Thus legitimised, the achievement hierarchy along which players must work to climb was the stable backbone of the economy and social structure of the early MMORPGs. But very soon, or in some cases from the very start of the game, this idyll was unsettled by so-called secondary markets. Some of the high-ranking individuals, tired of the game or in need to money, decided to offer their virtual possessions and avatars for sale at sites like eBay. As a result, it was now possible for any player, no matter how experienced or inexperienced, dedicated or casual, to obtain high-ranking avatars and possessions simply by purchasing them from a website.
Virtual goods were commodified. While commodification preserved the material function of virtual goods, it was stripping them of their meaning. Thus many players demanded, and many of the developers granted, rules against the purchasing of virtual goods. The strict prohibition of real-money trading presents itself as a brave stand against colonisation by markets and for the conservation of better, more original values. But the story described above also facilitates an alternative interpretation, one with almost opposite moral implications.
The traditional MMORPG is ruled by the time aristocracy, because they are the only ones with the necessary resources to reach the top of the hierarchy. The introduction of markets has a democratising effect, as it allows access to those resources by the money aristocracy. The idea of the real-money trading controversy as a struggle between time aristocracy and money aristocracy is lent some support by an unpublished survey-based study of MMORPG players, where it was found that older respondents were much more likely to purchase virtual goods than younger respondents Yee The most traditional computer game players are young people and students who are able to dedicate significant time to their hobby, but gaming is also increasingy popular among the working adult population.
On the other hand, phrasing the situation in terms of class struggle perhaps makes it sound more consequential than it really is. MMORPGs are usually designed in such a way that players who wish to play together have to have avatars of approximately the same level of prowess.
If working adults wish to spend time playing with their children as described by e. Finally, it is interesting to note that the conflict over virtual goods markets is more of an issue in the Western market than it is in the East-Asian market. In China, Korea and Japan, virtual goods transactions are not uncontroversial, but they are more commonplace and developers have adapted their game designs and business models around the practice Huhh ; Nojima Virtual goods transactions are also sometimes embedded in other social and business relationships.
In , as the competition among PC bangs increasingly intensified, some invented promotional tools for attracting customers. One such promotional activity was the purchase of in-game items from their expert customers to entice new customers. Thus the birth and rise of RMT in Korea directly resulted from local trading between PC bang owners and their visitors. Because many players were on the receiving end of RMT, the trend was viewed favorably, which undoubtedly ensured the prospering of RMT.
Huhh , pp. In recent years, Western MMO operators have increasingly warmed up to the idea of markets where virtual goods can be purchased for real money. World of Warcraft remains strictly against real-money trading, but the sequel to EverQuest has an official marketplace for such transactions on some servers. Moreover, many MMOs, casual gaming sites and social games are now selling virtual goods to their users themselves, as an alternative to the old subscription fee -based method of reaping revenues.
The next section examines what implications this has for the social meaning of virtual goods. Article two of this dissertation presents an empirical study of Habbo, an online service maintained by Finnish company Sulake that earns most of its revenues by selling virtual goods to its users. In addition, it contains user homepages, group homepages, group discussion forums and social networking style features.
According to Sulake, Habbo is visited by a total of 9. A localised version of Habbo is available in 32 countries. Using the concepts discussed in section 3. Each of these social worlds also extends beyond their commercially-maintained central site to user-maintained sites and mediums. On the other hand, it can be asked whether a very open-ended environment such as Habbo contains a degree of shared culture sufficient to be described as a single social world, or whether the membership of each localised instance instead breaks down into several social worlds that have little to do with each other.
In article two, the observations speak for a degree of commonality of beliefs, particularly regarding virtual items. Instead, goods are available for purchase to anyone using a virtual currency that is obtained using the local national currency. In slightly simplified terms, each item is first purchased from Sulake, after which users trade them between each other in the course of their activities.
Due to the way goods in Habbo are purchased instead of earned, they do not have any inherent link to time served in the way they did in traditional MMORPG economies. However, article four of this dissertation indicates that users who visit Habbo every day are nevertheless much more likely to purchase virtual goods than infrequent visitors. Significant virtual possessions probably continue to be a mark of dedicated participation even in a market-based economy, although the connection is less straightforward.
For some users, acquiring and displaying such status items and comparing them to the possessions of other users is a central way of participating in the Habbo world. It is also interesting to note in this context that male users spend significantly more money in Habbo than female users, even though both genders are equally represented in the user base. Wealth is not the only axis along which members of the Habbo world seek to stratify themselves and each other. Knowledge of Habbo culture is another such axis.
Furthermore, it is possible to earn significant recognition, even the aforementioned celebrity status, by hosting a popular activity or venue, such as a soccer game or a match making club. Celebrities receive a lot of attention from other users: they are interviewed on fansites and their consumption styles are sometimes imitated by other users. Having such celebrities as friends is also a positive status sign.
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It is easy to see the above observations in the framework of a Bourdieuan capital system: financial, cultural and social capital as parallel resources in a game where participants seek to position themselves favourably in the field constituted by the Habbo world. The statistical analyses in article four allow us to make some interesting conjectures regarding the convertibility of these capitals.
Firstly, users who report doing a lot of organising games and events are twice as likely to have spent money in the service during the past month compared to those users who report doing little or no organising. Observations suggest that this reflects a need to spend money on components from which to construct attractive and functional venues as well as to buy prizes that can be handed out to winners in order to attract popularity. In other words, users who are attempting to establish themselves as cultural leaders or perhaps maintain their existing cultural capital are investing a significant amount of financial capital in doing so.
In principle, mechanisms exist in Habbo through which cultural capital can also translate back into financial capital; for example, some organisers are requesting admission or membership fees from their participants. The data does not permit a quantitative assessment of this payback, however. A more tentative result is that there is a relationship between spending money and the activity of making new friends.
In the United Kingdom version of Habbo, spending money is positively associated with making new friends, whereas among Spanish and Mexican Habbo users, spending is negatively associated with making new friends. In the fourth country included in the study, Japan, no relationship could be observed. This could reflect differences in the way financial capital translates to social capital in different Habbo worlds, although more research is necessary before strong conclusions can be drawn.
If so, the only thing the goods would seem to be able to signify is the wealth of the player who purchased them, making them a kind of conspicuously meaningless form of consumption. But there are two objections to this view. Firstly, the evidence suggests that it is the most dedicated users who obtain the greatest possessions in both types of virtual economies, whether it is accomplished through gameplay MMORPG or through direct purchases Habbo.
Finally, it is worth noting that in both MMORPG and Habbo worlds, goods are also used in the performance of social relationships: virtual items are presented as gifts to other participants and used to pay for favours. In the previous section, virtual goods were discussed in their capacity to act as markers of social status, and in the performance of social relationships.
Explanations for this variance should be sought in other directions. Sections 2. In this section, I discuss observations from articles two and three that link these perspectives to virtual consumption. The results provide answers to RQ 1: What kind of benefits do virtual consumers experience from virtual goods? If this body is understood broadly, it can include not only the avatar but the rooms and distinctive arrangements of virtual items and furniture through which the user can, in principle at least, express themselves.
In practice, users construct their overall appearance by making selections from a large and constantly expanding variety of virtual body parts, clothes, wallpapers, items and furniture. The design and appearance of these building blocks echoes bygone eras, national cultural symbols, fantasy and science fiction canons, contemporary fashions, and other sources the designers at Sulake draw their inspirations from.
Users combine these blocks in numerous ways in a process that could be likened to creative bricolage. The results are not only variations and mixtures of the styles pre-programmed by designers, but also call into existence completely new styles that the designers had not thought of. An example of this, given in article two, is the way a user has combined items to convey the appearance of a doctor in a hospital room, even though no notions related to hospitals or doctors were programmed in by the designers.
Styles can act as a means of establishing group identity. Article two mentions two cases where a certain type of dress is a formal requirement of belonging to a certain group. This could be related to discussions of discipline, uniform and power relationships Davis , pp. Above these groups and communities in terms of both scale and informality are aggregates that could be termed lifestyle groups: groups characterised by their tastes and virtual consumption choices, rather than, for example, strong personal relationships.
According to the discussion on lifestyle groups in section 2. One such lifestyle group, identified in article two and described in more detail in Johnson and Sihvonen , are goths: a style characterised by dark, gloomy, Victorian looks, horror themes and a sense of irony. In the virtual space of Habbo, the goth style takes very similar forms as in physical spaces, but it also shows differences. The differences can be due to the limitations and possibilities of the medium, but can also represent idiosyncrasies of the goth culture inside the world of Habbo.
This highlights the question of the relationship between offline identities and identities in virtual spaces. A goth body in Habbo could be an extension of a goth identity at school and leisure time, or it could be playful experimentation with an identity that is alien to oneself in other contexts.
I return to this issue below in section 3. The above discussions have not yet strayed far from the notion of goods as social markers insofar as all meaning and value of the goods is attributed to social reality, extrinsic to the goods themselves. In article two it is pointed out that when queried about why they chose a particular virtual attire, users do not usually respond by referring to social status or lifestyle groups, but by using aesthetic argumentation: it pleases the eye. Using a wide variety of qualitative data, a number of concrete attributes are identified that users pay attention to when choosing a virtual item.
Some of these attributes, it is argued, lend themselves better to establishing social distinctions, while others are more easily seen as delivering individual psychological benefits, such as aesthetic experiences or emotional sensations. Article three thus provides a concrete view to what kind of benefits users seek from virtual goods. For instance, one socially significant item attribute that relates to the prestige of the virtual item is provenance. This term is usually associated with art and antique, and refers to their place of origin, earliest known history or previous owners New Oxford American Dictionary.
One instance of a virtual item is generally identical to another. Individual users also attach personal meanings and feelings of nostalgia to virtual goods with which they have shared memorable times. The oldest Habbo furniture is soon a decade old, and some castles in Ultima Online are even older, so they potentially have a lot of stories to tell. Thus the notions of provenance and authenticity can be important in understanding the social as well as psychological value of virtual goods.
Another socially significant item attribute is rarity: rare items are better at establishing social distance than common ones. But the hunt for rare objects can also be described as an individualistic hedonic experience: a thrilling psychological pursuit that exists in isolation from any social meaning the objects may possibly have c. Belk Other hedonic experiences that virtual goods can give rise to include sexual arousal, the excitement of discovering new places and vistas, and the joy of playful creation.
In order not to over-emphasise social uses of virtual goods at the expense neglecting individual experiential ones, it is useful to remember that in many ways the historical roots of these graphical virtual spaces and virtual goods are in single-player video games. Whatever joys could be derived from virtual goods in these games must have been primarly hedonic and experiential, and only secondarily, if at all, social. In the sections above, I have described how spending on virtual goods is motivated and structured by social status games, construction and expression of identity, and the pursuit of hedonic experiences and art.
In each of these discussions, the environment in which the activity takes place, the virtual space with its various features, including the virtual goods themselves, has remained on the background. Yet it is obvious that by essentially determining the range of possible as well as impossible courses of action within an MMO or other online hangout, this architecture influences virtual consumption behaviour. In this section, I seek to outline the main mechanisms of this influence as well as the role of the operator more generally, based on findings from the articles constituting this dissertation.
The results provide answers to RQ 3: What is the role of the operators in promoting and regulating virtual consumption? In previous sections, the desirability of virtual goods has been located in their symbolic and aesthetic qualities. The idea of use-value or practical usefulness seems far removed from these tiny figures on the screen. But if usefulness is understood instrumentally, as the capacity to achieve some separately defined end, then virtual goods can be useful in their own environments, in the same way as the rake is a useful tool in the garden but not much elsewhere.
In article three, some uses to which virtual goods can be put are discussed. The archetypal example is the use of virtual swords and shields to vanquish computer-controlled monsters generated by the environment in MMORPGs. The operator makes the swords and shields desirable by first programming a challenging environment and then trying to convince players that overcoming these challenges is a worthwhile goal. All the other examples follow essentially the same pattern, where the operator is ultimately responsible for creating both the problem as well as its proposed solution, the latter sometimes costing money.
Though the tendency to compete for status positions is something that participants most likely bring to the MMO with them, the operator provides the means for its realisation and has ways to adjust its intensity. This is described in article three and article two. Thirdly, providing participants with more ways to flaunt their status or possessions is likely to intensify this competition.
Objects do not necessarily lose their value when used e. The value of goods may be based on non-existing properties e. As more culturally oriented views of the economy have been adopted in social sciences, consumption has come to be understood more widely: focus has shifted from literal using up towards experiences, meanings and processes involving people and goods Featherstone , p. As practical quantitative measures of consumption, scholars observe the allocation of time and money.
From this perspective, there is no difficulty in considering real-money trade of virtual goods as a form of consumption. As virtual consumption has become more common, adopted first by gamers, teenagers, and gradually by some in the older age groups, it has broken into mainstream consciousness. What was previously the obscure hobby of a few Internet-savvy youth, is now a topic of discussion among parents, in mainstream media, and among regulators. On the contrary, the first sites of virtual consumption might even have thrived in their impenetrability, like subcultures of earlier decades.
But the outsiders, the parents, the media and the regulators, became interested in this new phenomenon that seems to have taken over their dependents, and are keen on presenting their views on it — or passing judgement, as the case often is. Many of the typical views on virtual consumption that one encounters in the mainstream discussions are summarised in the quotes below. It is completely insane to pay for something that in reality does not exist.
Consider what better and real reality you could have gotten for that money. Children are victims of consumer culture and become blind to the concept of money, no longer realising its value. I think the ethicality of this needs to be considered, not just how to make money [with it]. The comments above exemplify a number of common views held towards virtual consumption that question the rationality of spending money on virtual goods.
Virtual goods are typically seen as illusory, imaginary, unreal or even nonexistent. Something real is better than something virtual. According to this view, virtual goods are not worth anything, either because of their ephemeral nature, or because they are digital, and digital image flows are reproducible without cost.
Spending real money on virtual goods is therefore considered irrational. Another view exemplified above posits that virtual consumers are so immersed in the virtual environment that they can no longer think rationally. They become addicted to the environment, the goods, or the act of virtual shopping, and spend money on virtual goods mindlessly. Virtual consumption is comparable to a dangerous drug: individuals feel compelled to indulge in it despite the fact that it causes more harm than good.
Finally, there is a strong belief that virtual consumers are, in fact, children: both literally as well as in the sense of being gullible and susceptible to exploitation by ruthless commercial interests. Virtual goods vendors entice immature minds, not yet able to distinguish between real and make-believe, into giving away their money for nothing. Selling virtual goods is therefore highly immoral. On a societal level, companies and marketers are brainwashing children into virtual consumers, making them see value in virtual goods and desire pointless virtual possessions.
The result of this capitalist indoctrination is another generation of loyal consumers, this time in the virtual sphere. It is probably safe to say that the above views, highly critical of virtual consumption, are often arrived at without substantial study or experience of the actual practices of virtual consumption.
They are outsider impressions. The insiders, the virtual consumers themselves, obviously have substantial experience and embodied knowledge regarding the actual practices as well as the meanings and motivations behind virtual consumption. But they lack the motivation and perhaps also the capability and analytical distance to express these in a form that could be digested by parents, regulators and mainstream media, and thus fail to contribute to a debate on virtual consumption.
What is at stake in this debate? From a societal perspective, the spending of real money on virtual goods, as an emerging phenomenon, does not have an established position in society. The way in which authorities such as regulators and parents conceptualise or fail to conceptualise virtual consumption has very practical implications for the people involved, individuals as well as companies. And whether society sees virtual consumption as something legitimate and desirable or something irrational and subversive will greatly shape its uptake.
In Korea, the National Assembly has passed a law that makes certain types of real-money trading of virtual goods illegal Yoon In Finland, complaints from parents lead the consumer ombudsman, a public official, to call negotiations with Sulake, a company operating an online hangout popular among teenagers Consumer Agency Consequently, Sulake now imposes a weekly limit on the amount of money its customers can spend on virtual goods.
The limit varies from country to country. The epistemological starting point of this study is that beyond all these different constructions of virtual consumption, there is also an objective reality of which it is possible to obtain indirect knowledge through empirical methods. In this view, phenomena are seen as socially situated but not socially determined, maintaining the possibility of objective critique of both actions and beliefs.
By providing an empirically-based account that strives towards objectivity, or is at the very least external to the existing viewpoints, I hope to contribute to the debate on the nature of the phenomenon in a way that helps participants see the matter clearly and judge virtual consumption on its merits. The strategy adopted in this study when empirical observations are to be explained as manifestations of reality falls under the amorphous category of sociology.
This strategy is contrasted with and complemented by the rational choice approach associated with economics. The economic approach assumes that all individuals act according to the same rules of interest and rationality, so that variance in behaviour is explained mainly by variance in external conditions and constraints. For instance, the reproduction of social class from generation to generation might be explained as the consequence of economic constraints facing disadvantaged children, making it impossible for them to pursue a strategy of education and social advancement.
Given equal opportunity, it is thought that every person would pursue a utility-maximising strategy of advancement and leisure, the exact mix depending on individual preferences. For instance, the reproduction of social class might be explained as the consequence of values and norms absorbed by children from their parents, leading working class children and middle-class children to make systematically different choices regarding education, irrespective of their economic standing. This approximates the explanatory strategy followed in this dissertation. The contemporary school of self-identified economic sociologists in North America has, however, focused on the production side of economic life, paying relatively little attention to consumption Zelizer a.
The literature that this study draws on for sociological theories of consumption centers on the work of contemporary British scholars and some of their continental predecessors. With the help of computer-mediated communication literature that establishes online spaces as capable of sustaining social relationships and social aggregates, these theories can be applied in the virtual domain.
The dissertation also places established social scientific accounts of consumption in something of a contrast with a mushrooming literature on Internet-based consumer behaviour, which emphasises a post-materialistic ethos and active participation by consumers. In this section, I introduce the research questions, scope and methods used in this study. The overall purpose of the study is to provide an informed account of the main characteristics of virtual consumption so that it can be assessed on its merits and compared to other fields of human activity.
The main task is therefore to explain the most controversial aspect of the phenomenon: why do people spend real money on virtual goods? This primary research question is divided into secondary research questions as follows:. RQ 1: What kind of benefits do virtual consumers experience from virtual goods? Under the rational choice model, it is necessary to assume that virtual consumers believe they are obtaining some kind of benefit from spending on virtual goods that justifies this spending over all possible alternative uses of time and money.
In order to understand why they might think so, it is natural to ask what such benefits might be. On the other hand, in the previous section it was suggested that rational choices are not the whole story. The fact that virtual consumption seems to be centered around online hangouts and other sites of social intercourse leads us to suspect that it may also be shaped by social norms and structures, against which the preferences of individual actors might appear as no more than fluctuations in an overall pattern.
A second question is thus formulated as follows:. RQ 2: What kind of social structures promote and regulate virtual consumption? While recognising that it is impossible to deal with this topic in a conclusive way within the limits of this dissertation, I put forward the following research question:.
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RQ 3: What is the role of operators in promoting and regulating virtual consumption? Social sciences offer several possible methodological approaches to generating answers to these questions. Empirical research methods are often classified into three broad categories: qualitative, quantitative and mixed-methods approaches Creswell The rationale for choosing one method over the other is based on its suitability for the purpose and context of the study, including its epistemological and ontological stance towards the subject matter Creswell , pp.
Inasmuch as this study is concerned with uncovering objects in the human world, particularly beliefs held by subjects regarding benefits that can be derived from virtual goods, as well as social structures such as groups and norms, its analyses should therefore be based on some kind of textual materials. Inasmuch as this research aims to uncover dependencies and propose causal mechanisms regarding how social structures and decisions made by the operator affect virtual consumer behaviour, its analyses should be supported by some kind of measurement results.
The notion of frequency brings up the question of scope and generalisability. Nor would we be very interested in the average attributes of such a huge and arbitrarily defined group does it include everyone who has once purchased a virtual good, or regularly purchases virtual goods, or perhaps regularly visits sites of virtual consumption?
Instead, the answers given in the articles constituting this dissertation address specific cases of varying breadth, situated in a limited span of time and space. Towards the end of this introductory part of the dissertation, these answers are collected together and synthesised, but the synthesis is not so much a generalisation to some unknown population as it is an ideal type: a reference point against which some observations compare better and some worse.
This is similar to, for example, the notion of fashion, of which a great deal is known even though its exact boundaries have never been discovered. For example, Kozinets has coined the term netnography, which he defines as follows:. Kozinets , p. In addition to the data collection methods, this strategy involves a general approach to interpreting the data and representing the findings in a way that, among other things, acknowledges and takes into account the subjective role of the researcher Maclaran et al. Their own ethnography of Internet use in Trinidad describes the use of online services as being highly embedded in existing practices and communities, such as family and church, as opposed to forming new communities and relationships that are detached from the rest of the society.
However, to some extent this must reflect the fact that only basic services such as email and instant messaging were available to Trini users, more immersive virtual environments being absent.
Measurement results or quantitative data is represented in this study by the results of an online survey of the users of three localised online hangouts: Habbo UK, Habbo Spain and Habbo Japan, all operated by Sulake Corporation. The survey was administered as a trilingual online survey with the assistance of Sulake employees in July The survey attracted responses, of which responses were selected for analysis in article four of this dissertation. The main statistical method used in article four is logistic regression.
A series of logistic regression models are constructed to test hypotheses regarding the influence of factors such as socio-demographic structures and usage style on virtual consumer behaviour. Logistic regression was chosen because it operates with categorical dependent variables and does not require that the variables are normally distributed Hair et al.
Additional details regarding the survey data and the statistical methods used are provided in article four.
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This dissertation consists of a collection of five scientific articles on the topic of virtual consumption, preceded by this introductory part. The purpose of this introductory part is to introduce and motivate the research problem, to position the work within the field of social sciences, to introduce the methods used, and to present the main results and the conclusions that can be drawn from them.
The introductory part is organised into four major sections. In this first section, I introduced and motivated the problem area and the methods used. In the second section, titled Theoretical approaches to consumption in social sciences , I will place the dissertation in context with related work in social sciences and describe the theoretical approach adopted in this research. In the third section, titled Virtual consumption , I provide background on the phenomenon under scrutiny and synthesise the main empirical results of this study into four subsections.
In the final section, I present conclusions from these results and discuss the resulting notion of virtual consumption in a larger societal context, in a subsection titled Ethical perspectives on virtual consumption. In this section, I will review the most important perspectives into understanding and explaining consumption behaviour in social sciences.
Understaning refers to the meanings attached to consumption, possibly with some ethical colour. For example, consumption behaviour can be understood as the exercise of free will, or as the result of manipulation. Explaining refers to identifying causal relationships that result in a given type of consumption behaviour.
The perspectives presented here combine aspects of understanding with aspects of explaining to form general theoretical approaches of consumption. I begin with economic perspectives to consumption, from classical notions of consumption to modern consumer theory. I then make a detour to some studies where economics is applied to virtual consumption. The aim is to situate this work in relation to these earlier efforts, and to illustrate the limitations of the canonical economic approach in this domain.
Armed with this understanding, I turn to more substantive, socially situated theories of consumption, which will act as the theoretical basis of this work. It is fitting to begin a review of theories of consumption from economics, because the early political economists of the eighteenth and nineteenth centuries are precursors not only to modern economists, but arguably also to some of the more sociological approaches to consumption. This claim is based on the fact that classical political economists analysed economic processes in connection with what would today be called their political and social context.
Later economists began to construct the economy as an autonomous sphere, achieving great clarity and rigour in their theories, but sometimes setting aside the commitment to empirical validity. Until the eighteenth century, the word meant waste, using up, as in consumed by fire, or consumption as a wasting disease Porter According to Slater , in the Western political economy and proto-economic thought of the premodern and Mercantilist eras, consumption was regarded as a loss, a departure of value from the society. It was a regrettable and undesirable thing, particularly when indulged in by the lower classes.
Higher classes could use extravagant consumption as a means to display their status, but in doing so they were deviating from virtue as opposed to performing a duty or contributing to the functioning of the society. The view of consumption as a loss can be seen as reflecting the economic stagnation and slow economic growth of the those eras. Under such conditions, economy was easily seen as a zero-sum game, where success is measured in durable wealth, such as gold bullion. Purchase, payment and subsequent consumption represented a one-directional transfer of wealth from one party to another.
Consumption, the using up of goods, was therefore a losing strategy. Towards the end of the eighteenth century, hand-in-hand with the progress of industrialisation and the onset of rapid economic growth, classical political economists such as Bernard Mandeville and Adam Smith brought about a radical refashioning of the concept of consumption. Consumption was redefined as demand: the driving force behind economic expansion. Consumption was no longer a vice, an infraction, a deviation, but the natural counterpart of production in the construction of a thriving economy and society.
The economic redefinition of consumption proceeded hand-in-hand with a moral redefinition. The idea of the consumer as exercising his sovereign free will by making judicious choices on the market resonated well with the ideals of Enlightenment thinking Slater , p. In the utilitarianist school of thought, instigated by Jeremy Bentham , all the diverse benefits and downsides of consumption were reduced to a single, measurable entity known as utility.
This idea was appealing to early economists, because it allowed comparisons to be made between otherwise incommensurable goods and provided a theoretical basis for the use of prices as a mechanism of social coordination Slater , p. Assuming that each good carries with it a certain amount of utility, and that the consumer is a being that seeks to maximise their utility, it is possible to predict which goods the consumer prefers to spend their money on.
In this context was also born the notion of the rational consumer as the one who behaves in a way that maximises utility, in contrast to the irrational consumer who allocates their money in a less than optimal way. In modern mainstream microeconomics, theoretical ideas regarding consumption have evolved into a coherent, canonical theory known as consumer theory. The final form of the standard theory is attributed to Debreu In practice, it consists of a number of axioms and theorems expressed in mathematical notation that allow far-reaching conclusions to be derived from a small set of starting assumptions.
What follows is a brief summary of the relevant features of modern consumer theory following Jehle and Reny Despite the name, modern consumer theory is essentially a general theory of choice that has been applied to a wide range of behaviours from shopping to voting. It places the consumer in a theoretical situation where they are presented with all the goods available in the economy and asked to decide how much of each good to purchase.
Given a set of assumptions, consumer theory predicts which of all the possible consumption bundles the consumer ends up choosing. It is assumed that for each possible pair of consumption bundles, the consumer either prefers one of the bundles or is indifferent about them. This is called the preference relation.
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The preference relation is a given: something that each consumer is expected to have at the outset and that remains unchanged throughout. Consumer theory does not attempt to say anything about where consumer preferences come from or what they are like, with the important exception that it expects them to satisfy a number of assumptions, known as the axioms of consumer choice. As will be seen later, the most important of these axioms for the purposes of this discussion is strict monotonicity: the idea that, other things being the same, more of a good is always better than less.
One notable use of this model of consumer behaviour is to derive demand curves that indicate how prices of goods affect the quantity demanded. Together with supply curves derived from another branch of microeconomics, the theory of the firm, demand curves can be used to predict and explain changes in prices and quantities of goods traded on the market. For example, classical economists could not explain why an increase in the price of potatoes in nineteenth century Ireland lead to an increase in their demand.
As the above discussion indicates, modern consumer theory no longer derives consumer preferences from the amount of utility associated with goods. On the contrary: the theory starts with the preference relation, which is conceptually much simpler and can to an extent be directly observed, as it consists of preferences over simple pairs of consumption bundles. From the preference relation, a utility function can then be derived: a real-valued function that represents the preference relation by assigning higher numbers to preferred consumption bundles. This reflects the notion in modern economics that value is subjective: a good is worth whatever someone is willing to pay for it.
This subjective theory of value can be contrasted with the view that goods have some kind of intrinsic, objective value independent of any consumer or observer, such as the view held by classical economists such as Smith and Ricardo that the value of a good is related to the amount of labour required to produce it:. The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it.
What every thing is really worth to the man who has acquired it and who wants to dispose of it, or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. What is bought with money, or with goods, is purchased by labour, as much as what we acquire by the toil of our own body.
That money, or those goods, indeed, save us this toil. They contain the value of a certain quantity of labour, which we exchange for what is supposed at the time to contain the value of an equal quantity. Smith . Equating value with price also implies that goods must be scarce in order to have economic value. This means that goods that in a psychological, physiological or other sense might be quite valuable, are nevertheless economically worthless if they are abundant. Regardless of these weaknesses as a moral theory of value, the subjective view has been shown to be superior to the labour-based views in predicting actual market behaviour.
In Marxist economics, the value of commodities is related to the amount of socially necessary labour time required in their production. Sociologists and cultural theorists claim that the cultural component of production is, in fact, constantly increasing, as will be discussed in section 4. Thus instead of a subjective theory of value and an objective theory of value, it may be more accurate to speak of a consumption-based notion of value and a production-based notion of value.
In the brief history of economic inquiry touching on virtual consumption, the author whose works stand out as the most cited is Edward Castronova. This sets EverQuest apart from some earlier digital environments, where objects could be created at will and were thus abundant.
Castronova documented various economic agents and processes within the virtual economy, and collected data from auction sites outside the game where virtual goods belonging to the game were traded for real money. Using this data, he calculated an exchange rate for the game currency against the U. Using survey data collected from the players, he also estimated the U. Dollar value of the virtual possessions of an average player, the U.
Other economists who have studied virtual goods include Huhh , Lehtiniemi , Nash and Schneyer They also observed that the prices of certain goods oscillated as a function of the time of day, and explained it with the fact that Japanese players exhibit different preference patterns compared to North American players. Canonical microeconomic approaches can thus be useful in explaining virtual consumption behaviour and even predicting how it reacts to changes in market conditions.
As illustrated in the previous section, microeconomic analyses based on modern consumer theory can go some way towards explaining why people buy virtual goods by, for example, explaining changes in virtual consumption patterns as a result of supply and demand shocks. However, this would be a false conclusion.
Economics is not concerned with where consumer preferences come from, only how they are acted upon. It moreover says nothing about where these tastes come from, nor how they are shaped. We require a deeper explanation for why people buy virtual goods. If economics is not sufficient to answer the question at hand, then where should we look next? In this harmonious division of labour, sociologists, psychologists and physicians reveal the processes that lead to a set of preferences, and the formal models of economics are then used to derive demand patterns and other behavioural conclusions from these preferences.
However, if Polanyi is to be believed, the market model itself is culturally constituted. I would like to argue that especially in the case of studying virtual consumption, the role of other social sciences needs to go further than discovering and explaining preference relations, into the domain of describing the economic models of interaction.
The argument is presented below. This is a crucial step if the happy division of labour described above is to be followed. But already in his first, famous paper, Castronova documented a phenomenon that seems to contradict one common assumption in microeconomics. Based on data he had collected, Castronova calculated that the prices of virtual goods in EverQuest decreased 29 percent in one year Castronova , pp. According to the monotonicity assumption of consumer theory, more goods is always preferable to less goods.
But according to Castronova, players were not happy about their increased affluence: instead, they expressed dissatisfaction about it. If such dissatisfaction reached a certain level, players would presumably leave the game and stop consuming the virtual goods altogether. In the real economy, this is called economic growth, and generally considered a positive thing, in line with economic theory. This is of course not the first time an economic theory fails to explain some set of empirical observations it is applied to. Basic consumer theory may be adequate to explain with reasonable accuracy the demand characteristics of potatoes in an agrarian economy, but in other situations, radical expansion or elaboration has been necessary to obtain a reasonable match.
In marketing, where predicting consumer behaviour is a key concern, a wide variety of extended models have been developed e. Thus the fact that basic microeconomic models are not able to account for the undesirability of mudflation is not necessarily an invalidation of the economic model-driven approach to analysing virtual consumption, or an indication that virtual consumption is economically irrational. Instead, it suggests that a different way of modeling the situation is necessary.
Castronova must have recognised this, because in his second paper on virtual economies, he no longer applied standard microeconomic theory. Instead, he developed a new a model of game consumption that explicitly accounts for the undesirability of mudflation Castronova Each player is furthermore assumed to have an optimum level of challenge which they prefer over insufficiently challenging games.
The effect of economic growth in this model is to reduce the challenge level of the game, resulting in a decrease in emotional satisfaction. Models must necessarily paint a simplified picture of reality, especially rigorous ones that are intended to facilitate mathematical reasoning. Nevertheless, the puzzle model is arguably a poor attempt to formalise player motivations. For one, it does not take social factors into account in any way, treating MMORPGs as if they were single-player games. The undesirability of mudflation could well be seen as a result of the deflation of the status value of virtual goods as they become over-abundant and available to everyone, for example.
Castronova must be commended for seeking to find a better model, but the underlying theory of human action encapsulated in the model is an ad-hoc one, and does not represent the best understanding of human action achieved in any discipline. In this study, I will not attempt to provide rigorous economic models of virtual consumption, but I do attempt to provide a rather thorough account of sociological mechanisms that could be used as bases for such. If economic consumer theory assumes that consumers behave according to their individual preferences over goods, then the sociological and sometimes psychological theories outlined in this section provide substance to that theory, by explaining where the preferences come from, and how they are shaped.
In the later sections of this dissertation, these substantive theories of consumption will be used as a background for understanding real-money purchases of virtual goods. I will start with a substantive approach that is the least sociological of the set, being more of a substantive elaboration of the economic model.
It comes from the little half-sister of economics, marketing. But as marketing has a more practical interest in the behaviour of consumers than economics has, it also requires a theory of where these wants come from. People need food, air, water, clothing, and shelter to survive.
People also have strong needs for recreation, education, and entertainment. Marketers influence the way in which needs are realised as concrete wants, but take no responsibility for needs, which are seen as natural and inborn. Sociologists have criticised the idea of all consumer behaviour emanating from a set of inborn needs e.
In extreme conditions such as famine-era Ireland, it is clear that knowledge of physiological needs can be useful in predicting consumer behaviour. While it is a biological fact that a person needs nutrition to survive and live as an organism, culture defines what the person needs to survive and live as a human. The wants that people pursue in more affluent societies can be seemingly pointless or even counterproductive from a physiological or psychological perspective. Any consumption decision, such as the purchase of virtual furniture, can always be explained after the fact as the pursuit of a suitably abstract need, such as the need for self-actualisation.
But if the only evidence for such an abstract need is the behaviour it is supposed to explain, then the theory is a simple tautology. Needs conceived as entirely physiological may be revealed as suprisingly culturally relative, as Darwin realised when he saw snow melting on the skins of the natives of Tierra del Fuego Barnard , p. Wants are understood as desires for such goods that fall outside these needs, also known as luxuries. Wants and whims may be morally judged as vice and excess, although in other contexts luxury can also be a status symbol. The consumption of goods that are considered necessities is socially acceptable and can even be desirable to the extent of being compulsory Belk , p.
According to Belk, increasing affluence and the continuous introduction of new goods into society results in classificatory shifts, where goods that were previously considered luxuries are redefined as as decencies and eventually as necessities Belk , p. Information technology is currently undergoing such a shift. For example, the mobile phone that used to be a luxury of top executives is now an everyday necessity for Finnish and Japanese teenagers Wilska ; Rantavuo The needs-based account seems tempting at first, but can quickly become a tautology that fails to provide a useful theory of why consumption patterns differ between individuals.
An influential sociological stream of thought that fares better in providing such explanations is based on the relationship between possessions and social status. Anthropologists have observed that in a traditional economy, the distribution of goods that results from the flows and exchanges of goods tends to be such that it more or less reflects the stratification prevalent in the society, the different levels of social status. For example, rare copper shields that were produced by natives of the American Northwest ended up in the hands of chiefs and nobles, not in the hands of beggars and paupers Mauss , pp.
That someone owned such a copper object was therefore a sure indication that they were a person of high standing. Drawing from his own experiences in late nineteenth century America as well as his unreferenced, somewhat idiosyncratic descriptions of other ages and cultures, Veblen traces the rise to prominence of a leisure class that holds as its core value the avoidance of menial work.