Virtual goods now a $5-billion global industry

With minutes to go before the end of the day, you visit Facebook and send out a quick birthday cake to a friend. It's $1 for the virtual icon that is simply displayed on their page. Sound silly? Well, these types of transactions are now worth billions.

With the rise in social media, virtual goods are becoming a common purchase and those little batches of pixels are becoming big business. In the United States alone it is estimated they are bringing in about $1 billion billion per year, while global estimates are as high as $5 billion. It's a smart market to get into with no overhead costs and 100 percent margins. In an interview with the New York Times, Jeremy Liew of Lightspeed Venture Partners, a venture capital firm that has invested $10 million in several virtual goods companies, said, "It’s a fantastic business. Because it’s digital, the marginal cost for every one you sell is zero, so you have 100 percent margins." In Asia, virtual goods have been popular for some time. In the United States, avid gamers were the ones who started the trend, investing a few dollars in a virtual good. Today, with the rise of social media networks like Facebook, everyday people are jumping in on the pixel wave. People are now spending a few dollars on the wide assortment of time-killing games on Facebook, such as Sorority Life and Mafia Wars without considering themselves gamers. The virtual goods trade is also making strides by being a "green" way to shop for friends; instead of buying consumable goods people are able to pick a cute icon for a small amount of money and still a recipient they thought about them on their birthday.