Virtual Goods, Accounting, And The Power Of The “Rental” Model

[Editor’s note: This article was written by Bill Gurley, a venture capitalist at Benchmark Capital. He published it on his personal blog, abovethecrowd.com, last week. Accounting for virtual goods is becoming a bigger industry issue, so we’re running the article here with his permission.]

American journalists and corporate executives have been slow to appreciate the beauty, brilliance, and consumer allure of the virtual goods business model.It’s not that they did not have data points – China is chock full of multi-US$billion market capitalization companies that are based on this business model.

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