Developers whose platform of choice for game deployment is Facebook say that the social network's mandatory payment system ends up being a "twenty percent net tax" and seriously hurts their margin of profit.

"We thought conversions would go up and be around 15 or 20 percent,” said Kevin Chou, Chief Executive for Kabam, “But it turned out to be around 5 to 10 percent, meaning that we’re taking a 20 percent net tax.”

According to new research by the Boston Consulting Group, the Internet economy among G-20 nations is expected to nearly double by 2016, reaching an estimated $4.2 trillion (up from $2.3 trillion in 2010). In addition to that astounding figure is the projection that nearly half of the planet's population will be connected to the Internet — with 3 billion users in 2016, up from 1.9 billion in 2010.

According to several outlets - most notably Inside Mobile Apps, Microsoft is rumored to be considering dumping its Microsoft Points currency that it uses on Xbox Live Marketplace for real world dollars. Transaction will allegedly be shifted over to real world dollars instead. Naturally transactions would use the currency of the region a given account is in.

Live Gamer has managed to raise $8.5 million in funding, according to a TechCrunch report. The new injection of cash comes from Charles River Ventures and Kodiak venture Partners, and takes its total investment to date to $30 million. Live Gamer is an e-commerce company that gives its 48 million users access to its micro-transactions and virtual goods sales services for various online and social games.

New research released by Newzoo digs a little deeper into the lucrative Chinese and Korean online gaming markets. The research focused on the 190 million Chinese (76 percent) and 26 million Korean (60 percent) consumers ages 15 to 50 - who make up the majority of those who play games in those countries. Newzoo found that both countries were passionate about MMO games, with 100 million MMO gamers in China and 8 million in Korea. While both countries enjoy games, players in each country have different preferences when it comes to social and mobile gaming.

According to a Wall Street Journal report, Zynga's latest IPO filing reveals that company CEO Mark Pincus will have "super voting shares" so that he can maintain control of the company. Basically Pincus's shares will carry 70 votes per share, as opposed to regular shares which will give stockholders one vote per share. While Zynga's five venture capital investors will hold a larger combined economic stake than Pincus, he will hold a larger percentage of the company's votes.

Is virtual property found within games and often freely traded real legal property? One legal expert says absolutely not. Minneapolis lawyer Justin Kwong says those virtual baubles you spent real-world cash on are simply lines of code owned temporarily through a license. Or so he posits in the most recent issue of the William Mitchell Law Review (as highlighted in this article).

Valve Software claims that more than $2 million has been generated from Team Fortress 2 micro-transactions. The popular free-to-play team online shooter allows players to create, buy and sell virtual items to wear during matches. Apparently fans are fond of the system and are willing to spend real-world cash on luxury in-game items. Valve also said that it plans to update the system with a new interface to make it even easier for customers to create and sell virtual goods.

PayPal can't seem to be able to differentiate between legal commerce and nefarious activity taking place in its service. For the third time in recent memory the leader in virtual currency has frozen the account of an indie developer over the money it has generated for making and selling a game. Game developer Goldhawk Interactive says that PayPal has locked down around $4,300 because its account has generated a lot of funds in a very short amount of time.

Sort of... For the first time in the history of the game industry digital sales have finally passed retail sales in the United States, according to new data released by NPD Group for the second quarter of 2011. Of course, the numbers they present are not all digital sales; NPD's category for “digital sales” is an amalgamation of digital sales, used game sales, and game rentals.

According to figures released by PayPal, 12 million of its customers use funds for various Facebook games every month on games like Farmville.

"In massively multiplayer online games, the number of paying gamers keeps going up," said PayPal's Carey Kolaja. "The perception about digital goods is that they lead to micro transactions, which are small. But the average purchase for a paying user is in the mid-20s (in dollars). It is on a positive trajectory."

The average purchase price of virtual goods in free-to-play games on mobile devices is $14, according to a new report. According to data collected by mobile analytics firm Flurry, consumers who make in-app purchases are willing to spend large amounts of money than they might have if they simply downloaded it for 99 cents. Flurry claims that 51 percent of in-app purchase transactions come from transactions that are $20 or more. The $20-or-more transactions account for only 13 percent of the total number of transactions.

“We were surprised the numbers were so high,” says Peter Farago, vice president of marketing at Flurry. “Clearly, the high end of the spending drives the average up.”

A BBC report (thanks Magic) tries to surmise why violent crime rates in the United States have dropped dramatically in the last twenty years. The report offers ten possible reasons for this including The Obama presidency, good police work, the fall in demand for crack cocaine, police department number crunching, aging baby boomers, a decline in children's exposure to lead in petrol, more criminals behind bars, and a controversial theory that the increased availability of legal abortion has had an impact on population in poorer neighborhoods.

But the most interesting reason comes in at number nine. That entry cites a recent study conducted by researchers in Texas working with the Centre for European Economic Research. From the article:

According to a report in UK-based paper The Guardian, China has been using its prison population as slave labor.. in MMORPG's. According to the report, prisoners were put to work breaking rocks and digging trenches in in the coalmines of Northern China. By night prisoners would be forced to play MMORPG's to earn virtual currency, which guards would trade for real-world money.

One prisoner, who served three years at the Jixi labor camp for pointing out corruption in his hometown, described the conditions at the camp in startling detail. Liu Dali told the paper that prisoners were forced to play online games to enrich the guards of the prison. The 54-year-old was a former prison guard who made the mistake of "illegally petitioning" the central government about corruption in his hometown in 2004. Dali says that the online slave labor is probably more lucrative than the physical labor that prisoners are forced to do.

EA's social games division Playfish announced that it is dumping its virtual currency in favor of Facebook's new currency. All of the company's games will now use Facebook Credits, putting Playfish in line with a recent Facebook edict that all social game developers would need to offer support for its new currency in all of their games by July 1.

Speaking to its fans on the Playfish blog, the company said the following:

"Rest assured, you will not lose any of the Playfish Cash you have bought up to now."

The FBI has raided the apartment of two University of Michigan students to investigate what it has called "potentially fraudulent sales or purchases of virtual currency that people use to advance in the popular online role-playing game World of Warcraft." The story comes from Computer World. The FBI thinks the two students are terrorists who are doing "something" in World of Warcraft to further some sort of terrorist plot. It's hard to say what exactly they suspect from the two within Blizzard's virtual world, but they obviously aren't going on a hunch here.

Despite still garnering around 40,000 daily visits, several Playfish games are getting the axe. The wholly owned EA Facebook developer says that it will close several games because they are no longer garnering the kind of traffic they deem as "good." The games, Pirates Ahoy, Poker Rivals and Gangster City will each go offline on June 7. Playfish urges users to spend their "Playfish cash" on its other games.

The firm, owned by Electronic Arts, said the trio of games "are no longer performing at a level in which they can continue to be supported."

According to data gathered by InsideSocialGames suggests that there is still consumer interest in these games. Pirates Ahoy, for example, still has around 40,000 daily active users and attracts approximately 267,000 customers per month.

Empire Avenue is now available as a Facebook App. The financial-social simulation game was developed by former BioWare employees and basically lets players trade in other people via a virtual stock market. Participants buy and sell shares in their friends, family, celebrities, etc. As you earn a higher stock price for yourself and others, you gather virtual currency and achievements. The goal of the game is to be more social and to show your appreciation for the social activities of others that use things such as Twitter, Facebook, YouTube, and more.

Empire Avenue is at least worth a look if you haven’t checked it out already and it being on Facebook makes it easy to jump right in. Plus it doesn't hurt that the BioWare founders have invested in it. Anyway, you can check it out at apps.facebook.com/empireavenue or at its original location - empireavenue.com.

While Capcom's Smurfs' Village is one of the top grossing iPhone games in the App Store, reports are circulating that Apple has called publisher Capcom in for a side bar after numerous complaints from parents about "hundreds and thousands of dollars in transactions" made by their children without their consent. I think some of these parents might call this situation smurfing ridiculous.

According to a PocketGamer report - citing "well-placed sources" - Apple has told Capcom in "no uncertain terms" that its free game is causing a lot of headaches for parents and Apple.

The problem has to do with the game's micro-transaction system that lets players buy copious amounts of "Smurf berries." Some of these parents have apparently been given refunds for what they call "accidental purchases."

Rep. Edward J. Markey (D-Ma.) has asked the Federal Trade Commission to take a closer look at the marketing practices of applications on Apple's App store and Google's Android Marketplace. Markey's concerns relate to programs geared towards children that may not adequately inform users of potential charges - particularly micro-transactions.

On Tuesday Markey sent a letter to FTC Chairman Jon Liebowtiz (and copied to Google and Apple), pointing to a story in The Washington Post about how in-app purchases on iPad, iPod and iPhone games such as Smurfs' Village and Tap Zoo have caught some parents off guard. The Children apparently used parents' passwords to buy in-game items instantly.

"I am concerned about how these applications are being promoted and delivered to consumers, particularly with respect to children, who are unlikely to understand the ramifications of in-app purchases," Markey wrote in the letter.

Facebook has added two new services to its Facebook Credits virtual currency called "buy with friends" and "frictionless payments." App developers will be able to implement these features into their games, adding some small measure of enhancement above what can be done currently with proprietary virtual cash. The "buy with friends" service allows users to spam share discounts on virtual items with friends (who are playing the same game) via the news feed. "Frictionless payments" are smaller sized Facebook credit blocks that can be purchased in small increments. This allows users to spend a little bit of money to buy 30 credits or less for the purchase small in-game items.

If you are planning your last will and testament in the state of Oklahoma, you now have to worry about what to do with your virtual belongings. According to a report in the IB Times (thanks EZK), a new state law in Oklahoma gives estate executors and administrators the power to "access, administer, or terminate" social media and online accounts.

According to former state Rep. Ryan Kiesel (D-Seminole), a co-author of House Bill 2800 (before he left office), the law is meant to remind people that, when they are planning what happens to their real-world estate, they should probably figure out what they want done with their virtual stuff as well.

The New York Times has created an online "game" that allows you to tackle the U.S. budget deficit by creating a plan of your own. When you are done implementing the plan, you can see how it actually will affect the deficit - if at all. I haven't tried it personally, but Gawker mucked around with it by moving tax levels back to the Clinton era and getting out of Iraq and Afghanistan. They claim that did the trick. Here is the lead-in from the NYT:

"Today, you’re in charge of the nation’s finances. Some of your options have more short-term savings and some have more long-term savings. When you have closed the budget gaps for both 2015 and 2030, you are done. Make your own plan, then share it online."

You can play Mr. -- or Mrs. FixIt by visiting the NYT. Thanks Gawker.

The European Service Network (ESN), operating under a budget of 275,000 Euros (approximately $349,000 U.S.) from the European Parliament's Directorate-General for Communication, is developing an online role-playing game—and social networking forum—that it hopes will capture “the essence of European Parliament.”

Named Citzalia, the online experience was compared to Second Life and will have users create an avatar before being able to,  “navigate around a virtual recreation of the actual Parliament, to create content, and to involve themselves in virtual law-making.”

According to a survey from VGMarket, women spend more money than men when it comes to social gaming. The survey found that female gamers spent $15 more per year on "first-party purchases" in social games than men, and twice as much on in-game money. Women 25 years old and older in North America spent a lot more on virtual currency and items than men: overall spending was $80 for females and $60 for males, even though 78 percent of 2221 respondents were men.

The original survey also found that 75 percent of respondents had purchased digital goods within the last 12 months; but it only polled users of micro-transaction sites PlaySpan, its subsidiary Ultimate Game Card and Facebook currency service Spare Change. It should also be noted that the survey was commissioned by PlaySpan; later VGMarket removed the 75 percent statistic has now been removed from the survey, because it only sampled PlaySpan customers. While the survey's methodology was slightly exclusionary in its questioning and only offered a narrow look into spending habits on certain services, it's still of interest.

A probe into the misuse of city funds by management information systems employees vendors of the Wisconsin city of Fond du Lac turned up money spent on videogames and will result in criminal charges.

Over $200,000 in municipal funds was spent illegally by four MIS employees and two city vendors, all of whom have been, or will soon be, charged in the embezzlement scheme according to the FDLReporter. Money was spent on items including an infant kangaroo costume, a Nintendo Wii bundle and even an $87 ham. Additional items seized under the investigation included a copy of Gears of War and 16 guns, “three or four” of which were suspected of being purchased with taxpayer funds.

Checks and balances designed to stave off such improper spending were easily circumvented, in part, because MIS employees new their supervisor’s password.

Items that were able to be physically recovered are being stored at the police department and may be sold at auction so the city can recover some money.

Finnish police are investigating the theft of virtual property in the popular teen hangout, Habbo Hotel. According to a news report published on breitbart.com, significant amounts of virtual property were stolen from some 400 users of the virtual world using "hoax web sites" to trick users into divulging their usernames and passwords.

Armed with that information, the thieves went through the user accounts and stole virtual property. What property was stolen was not disclosed in the report. Doesn't Habbo Hotel warn against this sort of thing like every other virtual world on the planet?

Police have allegedly searched several homes in five Finnish cities, confiscated computer equipment and brought several people in for questioning. The quantity, types and value of the property are not known at this time.

Source: breitbart.com

An article on Law of the Level takes a look at whether using real brands on virtual goods in online worlds—by someone other than the trademark owner—could be interpreted as trademark infringement.

A publication of the law firm Sheppard Mullin, the blog was written by Thayer Preece, a lawyer in the firm’s Video Game Industry Group. She begins to answer the question by noting that several real world brands have taken exception to counterfeit virtual goods sold online, especially when the money from these sales line someone else’s pocket.

One way to deal with infringements is to sue. Taser International, Inc. filed a lawsuit against Second Life creator Linden Labs (along with others) earlier this year, which alleged that fake Taser-branded products were being sold in Second Life and infringing on the company’s sales. Taser sought $75,000 in damages but eventually dropped the suit.

Another way to fight the knock-offs is to join the virtual world and pump out your own branded goods. Law of the Level writes that this is the tact Herman Miller took. In response to a number of fake Herman Miller goods offered on Second Life, the designer launched its own official presence in the world and even replaced “fake” Herman Miller products with “real” ones.

What would happen if a virtual world trademark infringement lawsuit made it to court? Breece writes:

At present, there is no legal precedent on this subject. But as the popularity of virtual worlds continues to grow, it seems likely that it will only be a matter of time before the courts make a decision on the issue. In the meantime, it will be up to each brand holder individually to decide how to respond to the emergence of this growing marketplace and its potential opportunities and pitfalls.

TASER International has - at least for now - dropped a trademark infringement suit against Linden Lab, which operates Second Life.

As GamePolitics reported in April, the maker of the controversial stun guns, filed suit after it discovered virtual TASER replica items being sold in Second Life as gear for SL avatars (see pic at left).TASER also alleged that its brand would be damaged via association with virtual sex and virtual drug use occuring within Second Life.

Virtual World News reports:

Taser filed a Notice of Voluntary Case Dismissal... and adds that because Linden never filed an answer to the original complaint, the dismissal is "without prejudice" -- meaning Taser could choose to refile at a later date.

If you're a Swede who has unloaded an unwanted MMO account for a few extra Kronas, the taxman would like a word.

On the other hand, if you're an American who has sold your account to a Swede, the taxman would still like a word.

GameCulture points out a Stockholm News report detailing efforts by Swedish tax officials to come to grips with e-commerce. To that end, the Skatteverket is even taking a look at small fish like gamers:

The Swedish Tax Agency hold that you have to pay tax for selling an avatar from a computer game. The agency has investigated the trading in avatars during a 14 month period and found the advertised sum of avatars for sale by Swedes to be 662 million SEK. But no one has ever declared any income for trading in avatars to the Tax Agency.

But even U.S. citizens could be subject to Swedish taxation on such virtual transactions, according to the Economics of Virtual Worlds blog:

[Note that] a sale has taken place in Sweden if the seller is a Swedish trader who sells [to]... a private person in Sweden or another EC [European Community] country. A sale from a foreign trader to a Swedish trader has also [legally] taken place in Sweden. The same applies if a trader from outside the EC sells services to Swedish private persons.

Thus, even U.S. citizens are subject to Swedish taxes in virtual worlds, as long as one of the participants is Swedish. The implication is that if similar tax rules are adopted around the globe, U.S. citizens could end up owing taxes to Sweden, Japan, South Korea, and other nations (depending on which and how many worlds they are part of) – all because they played some games...

Skatteverket states that gamers should send invoices to each other. It’s unreasonable stuff they’re talking about. The [game] users [typically] don’t know who they’re interacting with...