Popular social games like Farmville and Mafia Wars are huge money makers, but Michael Arrington of TechCrunch says a lot of that revenue comes from from "completely unethical" advertisements that trick players with false promises of free stuff .
Online games that are free to play but offer in-game items or currency for sale to gamers who want to advance faster or farther than everyone else should be familiar to just about everyone reading this. Microtransaction-based MMOGs have been around for years; their emergence in North America is a relatively recent phenomenon but the system has already been credited with at least the short-term salvation of Dungeons & Dragons Online. But on the more casual side of the gaming coin, ironically, Arrington claims that there's an unsavory aspect of the business that's often overlooked: "Lead gen scams" that trick unwary players into spending big bucks on in-game items they think they're getting free.
It works like this: Users respond to an ad promising free Farmville currency in exchange for filling out a quick survey or questionnaire. After answering the questions, they're told to submit their mobile phone number so the results can be sent to them via text message. They are then sent a PIN code to be entered on the quiz and that's where things get ugly: Following the steps to completion results in a subscription to a $9.99 monthly service, essentially for nothing and often at the hands of Tattoo Media, a company that was fined in late 2008 for serving up similar ads on MyLuvCrush.com.
The dicey part for game developers is this: A significant majority of game revenues (as much as 70 percent, according to one executive) can come out of these offers and small-time studios desperate for income, not to mention the social networks themselves, which take their own hefty cut, are hesitant to bite the hands that feed them. Meanwhile, companies that refuse to take part find themselves falling further and further behind in the battle for monetization.
The end result, Arrington says, is a self-perpetuating "social gaming ecosystem of hell" in which bad behavior breeds success - and more bad behavior - while companies with a conscience end up finishing last. Facebook and MySpace both have rules against certain types of scams but have apparently been rather lax in enforcing them, at least in part, one must assume, because they themselves benefit tremendously from this kind of advertising.
Arrington took his complaint to last week's Virtual Goods Summit in San Francisco, where he asked Offerpal CEO Anu Shukla to "explain the ethics of her business." Shukla initially met his complaints head-on, calling them "shit, double-shit and bullshit," but then dodged the point by shunting responsibility for ethical advertising behavior onto Facebook and suggesting that virtually everyone who signs up for an Offerpal program is an informed and consenting adult.
This, of course, is where the debate gets interesting. These offers do spell out their terms and conditions, including catches like high-priced monthly subscription fees, in the fine print - which we all know nobody ever actually reads. So who should ultimately be held responsible for these unwanted "surprise" fees: Companies who knowingly camouflage the truth of their "deals" with pages and pages of mind-numbing legalese, or the unthinking schmucks who blithely toss credit card numbers and other personal information onto the internet without giving a second thought as to what's actually being done with it?
I'm all for protecting the public from predators, but when it comes to protecting people from their own stupidity I tend to be a little less generous. There's no doubt that these offers absolutely push the ethical envelope if not the legal one and on a personal level I find it a despicable practice, but the question remains: How far are we willing to go to protect people from themselves? Fine print exists precisely because of various industry regulations; are we now admitting that we as a society have grown so lazy, indifferent and/or stupid that we need these warnings spoon-fed to us in monosyllabic 24-point boldface?
Interestingly, while Shukla aggressively defended her company's behavior and Offerpal posted a comprehensive rebuttal of Arrington's accusations on its media blog the next day, the company's mobile survey offers have apparently been removed from most, if not all, Facebook games. A quick look at Farmville reveals that while lead gen offers remain, including a freebie from something called EliteMate, there are currently no mobile offers available. As Arrington asks, "If there's no scam, why remove them?"