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How Real Is Your Love?

Kim Hart

Genevieve Grossmann is a prolific secret admirer. So much so that she anonymously sends dozens of virtual gifts to her Facebook friends simply to see their reactions. And with so many Valentine's Day gifts to choose from -- roses, kisses, flowers, chocolates -- the gifter plans to be busy today.

"Some people say that paying for one of these is a waste of a dollar, but I disagree," said Grossmann, 24, of West Chester, Penn. "The cost of sending a gift is a dollar; the cost of driving someone crazy? Priceless!"

Valentine's Day has become a hot seller when it comes to virtual gifts, a growing part of online commerce. They range from cartoonish images on social networking profiles to three-dimensional-looking objects that people exchange in virtual worlds and on Web sites.

These virtual gifts hardly exist without a computer or mobile phone to display them, but as people place more value on their online presence, a bottle of champagne, diamond earrings and even lingerie have real-world prices and meaning.

"Sending a virtual flower is a way of showing lightweight attention and affection to someone online," said Susan Wu, a partner with Charles River Ventures and Menlo Park, Calif., who's been following the growth of virtual gifts. She estimates that the virtual-goods market is worth about $3 billion today. "It's become commonplace behavior on social networks."

Virtual goods have been a form of currency within video games and Web-based worlds such as Second Life for some time. But the latest wave of gift-giving began a year ago when Facebook began selling $1 graphical icons for members to exchange. Facebook says more than 24 million gifts have been given in the past year, and about 280 million gifts are currently available. MySpace offers Valentine-themed videos and other graphics users can exchange.

But does a collection of pixels have as much value as a physical gift?

Adrienne Miller, 27, said it's "cute" to receive online trinkets from friends on holidays, "but they're not a substitute for something tangible that required some offline effort."

What would she do if a romantic interest gifted her a graphic of a diamond instead of the real thing?
"Let's just say there wouldn't be another date," she said.

Nonetheless, Valentine's Day has mass appeal among social networking addicts, said Tammy Nam of Slide.com, the maker of interactive applications and widgets for users' profiles. One of the most popular features, called the SuperPoke, lets people blow a kiss, cuddle, have a candlelit dinner, or fall in love with other members.

Valentine's Day resonates with people more than other holidays partly because "the concept of love and self-expression go hand in hand," Nam said.

Companies like Gaia online are making a significant portion of their real world revenue stream from the creation and exchange of virtual goods, said Forrester Research analyst Jeremiah Owyang. "Like real life, inanimate objects --physical or virtual-- can hold value for consumers," he said.

Virtual entrepreneurs can also cash in on the holiday. Sales at Dianne Marshall's Second Life flower shop doubles on Valentine's Day with as many as 11,000 transactions. In the virtual world There.com, members plan on taking part in a scavenger hunt and Valentine-themed pajama party. Clothing is the most popular type merchandise traded on the holiday, said Ben Richardson, vice president of business development at There.com's parent company Makena Technologies.

"For the younger demographic, the line between the virtual and real world is fairly blurred," Richardson said. "The value of receiving a virtual gift can have more meaning because it has such a novel experience associated with it."

Giving such gifts may be easy, but they still cost real money. Grossmann said she might send her boyfriend a Valentine token today, but she doesn't expect one in return.

"If I send him a free one, he'll probably retaliate," she said. "But I don't think he'll actually spend a dollar."

By Kim Hart  |  February 13, 2008; 7:24 PM ET  | Category:  Kim Hart
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