December 22nd, 2005
A New Digital Playground for Kids
By Thomas Crampton
International Herald Tribune
The activities may not take place in the real world and the clothes may be only bits on a computer screen, but each wardrobe and setting on GaiaX, an online community in Japan with 200,000 members, costs real-world money.
Prices range from ¥100, or 86 cents, for a backdrop or special effect - such as fireworks or falling snow - to ¥170 for virtual clothes for the characters, called avatars, that young people masquerade as online.
This intersection of imaginary clothes, real money and young users represents an increasingly lucrative market for merchants, and an increasingly costly headache for parents.
Behind the obvious must-have gadgetry of today’s middle-class youth - digital music players, video game consoles and mobile telephones - lies a less visible market in digital downloads that many parents are only recently discovering: ring tones, Web site paraphernalia, songs and videos, online game clubs, Internet-only messaging and phone services, and accessories for avatars.
Businesses targeting children - take the back of cereal boxes, for instance - is nothing new, said Nathalie Sapena, Paris-based author of "L’Enfant Jackpot" - "The Jackpot Child" - a book published in French in October about how companies incite children to buy.
"The difference today is that new technologies now allow collection of money in new ways," Sapena said.
A child with a cellphone, for instance, is practically carrying a credit card: Kids use their phones - or their parents’ - to surf on the Internet at extra cost, send their friends pricey multimedia messages and dash off dozens of text messages, often at a per-message fee.
Movie posters, TV shows and, yes, even cereal boxes are adorned with invitations to send a mobile phone message, with the extra charge disclosed in fine print.
On a personal computer, the credit cards of their adult relatives are the currency of choice for many young people.
"We have had children as young as 10 years old making credit card purchases of clothes for their avatar without the parent’s knowledge," said Kenji Endo, a co-founder of GaiaX. One recent unauthorized purchase, he said, amounted to ¥10,000. "Parents are never happy when they find out."
But they don’t always find out: Kids can pay for items on GaiaX via prepaid cards through a system linked with Japanese convenience stores.
Purchases over mobile phones may require little effort, sometimes merely typing in a code from an advertisement. Participating in phone-based quizzes in Britain can cost up to 50 pence per message, according to Alexander Trommen, chief operating officer of Minick, a German company that runs popularity votes and competitions for broadcasters across Europe.
A song in ring tone version costs £3, or about $5, via Jamster, one of the Britain’s biggest ring tone sellers, compared with 79 pence for the same song purchased via the iTunes Music Store on the Internet.
"The music may sound the same, but we are based on very different business models," said Robert Swift, a spokesman for Jamster. "The iTunes model is about selling iPods, while we need to make money on the ring tones themselves."
In addition, the cost for ring tones is higher because mobile phone carriers charge a commission on sales that can amount to 30 percent of the consumer cost, Swift said.
Simon Gordon, head of media relations at O2, the British and German mobile phone company, said prices are determined by service providers.
"We do not set pricing for others, but we make sure all pricing is clear on our site," Gordon said. "We take a very dim view of people bending the terms and conditions to target children under the age of 16."
Jamster, which is owned by the American company VeriSign, was the target this year of complaints to the British Advertising Standards Authority over its ads for the Crazy Frog ring tone and subscription service.
Swift said Jamster now works to build trust by letting parents limit purchases to £6 a month and offers a product that lets parents block downloads to mobile phone numbers.
"Hopefully, the Wild West era of unethical sales practices has come to a close," Swift said.
Selling ring tones and wallpaper from Web sites has become a line of revenue for Walt Disney, and the company has announced plans to sell mobile phones and phone services next year in the United States and in Britain. A similar service associated with ESPN, the U.S.-based television sports network also owned by Disney, has phones with monthly service plans ranging from $64.99 to $224.99.
"This is not Disney targeting children," said Rachel Babington, a spokeswoman for the Disney Channel in Britain. "Our telephone services are more for the parents. The marketing is more for an adult who is stuck in traffic and wants to download a film to show to children on the mobile phone to entertain them."
Nonetheless, Commercial Alert, a U.S. consumer advocacy group founded by the activist, Ralph Nader, warned in a letter to the U.S. Congress in July that companies do in fact target children for direct sales.
The letter cited a Barbie-branded phone planned by Mattel, a Hasbro mobile phone for children called "Chat Now" and the company Enfora, which announced plans to offer mobile phone services targeting children as young as 6.
"Despite the industry’s rhetoric, Disney and the telecommunications companies really want to use children as conduits to their parents’ wallets," the letter said. "The targeting of young children as the next growth market for the telecom industry is one of the worst ideas to appear in the American economy in a long time."
Younger users have already turned into a sizable mobile phone market, according to a study conducted in August by the French Association of Mobile Phone Operators. In France, for instance, more than 90 percent of those between the ages of 15 and 17 have a mobile phone, compared with less than 70 percent of people aged 40 to 59, the study concluded.
Younger users also tend to spend heavily on premium services. Nearly one-third of teenagers surf the Internet on their phones, nearly 40 percent use their phones to listen to music and 100 percent send text messages, compared with much lower levels for older users.
At GaiaX, virtual sales have begun to merge with real-world retailing. The online community coordinates the introduction of new styles of clothes for GaiaX avatars with the arrival of identical clothes in shops. The company, which operates other communities as well as online games, expects revenue of ¥2 billion for the year ending in May 2006.
With countless game players, MP3 devices and cellphones about to unite with teenage owners this holiday season, the marketers seem to realize there is little parents can do, except parent.
"Even if parents take away the mobile phone to stop a child voting for the most popular artist on MTV, they will find a way by using the land line or something else," Trommen said. "I myself am a parent and I plan to show my children how spending money via the phone relates directly to weekly pocket money."