The impact of group membership on diffusion in virtual worlds

Virtual goods continue to emerge in online communities, offering scholars an opportunity to understand how social networks can facilitate the spread of innovations. We examine the social ties for over one million user-to-user virtual good transfers in Second Life, a fully immersive three-dimensional virtual world. We present several measures to investigate the unique role that groups play in the diffusion of virtual goods. The results shows that individuals – especially early adopters – are more likely to adopt a virtual good when they belong to the same groups as previous adopters. We also find that groups impact bursty adoption, in which many individuals adopt in short succession or when a virtual good is new. In addition, we show that group characteristics such as size, interactivity and structural makeup can further influence adoption. Our work provides insights into the interplay between social influence and homophily in the diffusion of innovations. Virtual goods continue to become incorporated into social network services, gaming platforms and virtual worlds, allowing users to enhance their online experiences or customize their online identities. These virtual items can be purchased for a small payment or distributed for free, and often manifest as commodities (e.g., fashion, brand name or celebrity gear) or game accessories (e.g., a World of Warcraft shield or a wagon in Zyngo’s Farmville) (Castronova et al., 2009; Malaby, 2006; Ondrejka, 2008). Most importantly, virtual goods represent memes: ideas and trends that are imitated and replicated from user to user (Dawkins, 2006), and have the potential to spread quickly and dramatically. The study of virtual goods provides new insights into our understanding of social networks and diffusion. While previous work in communication studies has demonstrated the important role that social ties play in the spread of information (Katz & Lazarsfeld, 1955; Rogers, 1995), We thank Linden Lab for sharing Second Life data. This work was supported by the Intelligence Community (IC) Postdoctoral Research Fellowship Program, NSF IIS-0746646, and MURI award FA9550-08-1-0265 from the Air Force Office of Scientific Research. Comments may be sent to the author at davidhuffaker2009@u.northwestern. edu. GROUP MEMBERSHIP AND DIFFUSION IN VIRTUAL WORDS 2 little empirical work has been able to test these propositions at a large-scale. More recent research on diffusion has highlighted the intricate, and perhaps intertwined, roles of social influence (i.e., the impact of a friend or opinion leader on one’s propensity to adopt an idea or innovation) and homophily (i.e., sharing similar interests increase one’s exposure to new innovations and willingness to adopt) (Jackson, 2009), but it is unclear which variables best measure these complex social behaviors. The purpose of this research is to examine the role of social influence and homophily in large-scale virtual good adoption with a particular focus on the role that groups play in the process of diffusion. It is motivated by the following research questions: What social factors increase the likelihood that a user will adopt a virtual good? What role does group membership play in the adoption of virtual goods, and to what extent do group characteristics impact adoption? In order to answer these questions, we examine how virtual goods spread along social networks using a unique data set of online interactions in a popular 3D immersive virtual world called Second Life (SL). SL allows users to create and distribute virtual goods, and uses an in-game currency that can be purchased with real money. Because 95% of the content in SL is actually created by the users, and because an astounding amount of paid and zero-cost transactions occur in SL (Bakshy, Simmons, Huffaker, Teng, & Adamic, 2010), SL remains an ideal venue to study why some virtual goods are adopted by users while others fail to diffuse. Second Life also allows us to examine the unique role of groups in the process of diffusion. Users can join up to 25 formal groups based on common interests or identities. SL users can send messages to other group members, hold events and meetings, and share information about products and locations inside the virtual world.