As chief executive of Gaia Online, an Internet hangout for some 6 million teens, Craig Sherman should be worried about how the worsening economy could slam Web advertising. Nope, not a bit. Unlike so many Web startups that until recently saw ads as an easy ticket to riches, Gaia gets most of its more than $1 million in monthly revenues from sales—in this case, virtual items: clothes, jewelry, and other accessories to dress up one's avatar, or online character. They run from a few pennies to $10 or so apiece. Gaia's gross profit margins on sales of virtual goods, which are up tenfold from two years ago, top 95%. After all, they're just endlessly reproducible bits and bytes.