When my brother first started using Facebook, he got hooked on Texas HoldEm Poker. “Do something different than playing these poker games,” I told him hoping he would use the social network the way I did. The truth was I was scared myself of the addictive nature of Facebook games.

As FarmVille, Texas HoldEm Poker and Mafia Wars become increasingly important for a user, they gain tremendous significance for businesses. “Such games are the hottest thing going in the $13 billion online-gaming market,” a recent USA Today article reported. Interestingly enough, a big portion of this revenue is reaped not through traditional advertising but through what professional journalism might soon run on—micro-transactions.

This micro-transactions business model, based on both free and premium services, is appropriately termed as freemium. “The freemium model, with roots in Asia, is built on the concept of giving away games, then charging players 25 cents to $10 to buy so-called virtual goods that enhance their gaming experience,” wrote USA Today.

Yet this business model in the gaming industry relies on the first nature of social networks—interacting with people and spreading the word. The more people play FarmVille, the more people will be willing to pay 18 coins for a green alien cow. And I am surely getting the invitations to participate.

Photo credit: taberandrew