Free Games With Micro-Transactions: Brave New World or Passing Fad?

Micro-transactions -- it's the word that describes the $1 to $40 for items that you buy to enhance a free, or "freemium" game. For example, if you want to get a leg up in the free-to-play Facebook game FarmVille, you can spend up to 40 real dollars for in-game virtual coins that can be used to buy rare items and more for your virtual farm.

That idea of paying for virtual goods in small increments has turned into a huge trend that's gaining a foothold in the United States (it has actually been big in Korea for years). Popular music games like Guitar Hero and Rock Band have been doing this successfully for a few years, offering additional songs for $1.99 a download via Xbox Live, Nintendo Wii and PlayStation Network.

Zynga and Playfish, the forces behind games like Pet Society, Mafia Wars and FarmVille, have also found that people are willing to pay a few dollars to enhance their social game experience. A Mafia Wars product manager told us last week that a significant portion of Zynga's income comes from these micro-transactions.