ENTREPRENEURS HAVE ALWAYS tapped their social networks to get a jump start, trawling for customers after church or at the golf club. Digital social networks like Facebook and MySpace, of course, serve the same purpose. But a handful of start-ups are taking this ethos one step further creating simple, often addictive games for which network users are willing to fork over real-life currency.

This nascent industry is sucking in staggering amounts of capital. Recently, in one 30-day span, Playfish, creator of Pet Society and nine other social games, sold for $400 million; Playdom, with its game Sorority Life, raised $43 million in financing; and sector leader Zynga raised $180 million. I was there during the dot-com, says Gareth Davis, head of Facebook s game unit. There was nothing like this. Indeed, unlike their 1999 analogues, these firms have real sales and profits.

The business model is a capitalist fantasy come true. While development costs of a traditional video game can resemble movie budgets, a Playfish can produce a game for under $100,000 and complete it in weeks instead of years. Virtual games don t have to fight for shelf space. Designers can release half-baked games online, collect feedback and only then devote resources to finish the game. As a game passes from friend to friend, it markets itself. If it s a hit, revenue expands exponentially, but not costs. Two years ago, the Playfish guys shared the game How Big Is Your Brain? with 100 friends; three months later, it had 1.3 million users (at press time, more than 20 million).

More mind-bending is where the bulk of social-gaming revenue comes from: the sale of virtual goods, digital stuff that doesn t actually exist. These games are free, but users have myriad opportunities to buy stuff: Playfish says it sells 60 million items a day, from $14 engagement rings to bacon sandwiches that cost a few cents. And those goodies make it easier for players to reach new levels and, generally, get more out of the game.

The popularity reflects a vaster audience than dudes who enjoy the solitude of strafing Nazis on 42-inch plasma. But after playing Pet Society, I decided the games aren t for me. I was put off by the kiddy-room graphics and thought the game s premise of dressing up pets to play with your friends pets, was, well, not my cup of tea. Then again, I might be tempted to play a word game, and Playfish and Zynga offer those, too.

In any case, the social-gaming world can get along fine without me. Playfish had an estimated $75 million in 2009 sales and could double that in 2010, analysts say. Still, I m not sure which is more astonishing the venture capital chasing this industry or that 20 percent of social gamers will spend real dollars for, say, birthday champagne for a digital piglet. What s more: There s little to prevent other entrepreneurs from launching their own games. It s why we have to work so hard, says Vish Makhijani, Zynga s COO.