Virtual Economy

About the Warden

noreply@blogger.com (David Price) — Mon, 17 Mar 2008 13:46:00 +0000

I apologize for the recent lack of updates. I've been pretty swamped with my graduate program; a lot of the material is very new to me, and most of it can be described as "fundamentals of computer technology" (i.e. how computers work). For a gaming enthusiast, it's amazing how little I knew about the operations of a computer.

In any event, I've been reading lately about botting and privacy concerns with regard to MMORPG's. I'm a bit late, but I just read about the Warden; a program developed by Blizzard to sniff out hacking and/or botting programs that players might be using while playing WoW.

Of course the biggest concern is the fact that the Warden actually scans your entire computer. That is, anything that is open and/or running is a possible target for the program. So, for instance, if you're playing WoW but have a browser running at the same time, and one of your windows includes the website of your credit card account, the Warden could "read" your information stored in your browser and/or your temporary internet files.

I'm running a bit late but I will update this post with additional (scary) information about the Warden. If my own experience is any indicator, it would appear that not as many people know about it as they probably should. My guild knew nothing of the sort, but it was a fairly significant concern a year or two ago.

6 Unique Properties of the WoW Economy

noreply@blogger.com (David Price) — Mon, 28 Jan 2008 14:35:00 +0000

7 Signs you're dealing with a virtual economy, based on reflections of my experience with the World of Warcraft economy:

When there are problems server-side, the whole world, not just the economy, grind to a halt.
Lag is more dangerous than too much supply, lack of infrastructure, or
Everyone starts with the same amount of capital regardless of race, gender, class, or height.
The biggest difference between gold-begging and expressing financial needs is that the former is always directed randomly and in public places; the latter is guild-financed and totally legit.
Auctioneer is your investment broker. When it fails to update and/or is buggy, it's analogous to your investment broker showing signs of dementia while still in control of your portfolio.
A bank amounts to storehouse. And anything more than that is sketchy and probably unethical. See here for an example.
Prices are driven by the raiding schedule of 13-yr olds. Damnit

World of Warcraft: Europe is more conducive to gold farming

noreply@blogger.com (David Price) — Mon, 28 Jan 2008 05:54:00 +0000

Students at the University of Sheffield reported data that seemed to suggest an inconsistency in Blizzard's enforcement of its opposition to gold selling.

Now, the data is quite outdated, at least in the context of virtual worlds/MMORPG's. I have no idea whether or not the data the authors cited as evidence for their claim is still viable. But the data motiving their conclusion was this:

This means that European gold is 8.33 times cheaper, costing just 12% of the price of the same gold on the US realms.

I need to verify whether this discrepancy is at all current. My guess is that, if anything, the discrepancy in WoW gold prices is larger today.

The USD price per 1000g has decreased rapidly over the past 12 or 13 months, at least in the US. Some of the culprits may include increased wow gold compensation from questing, increased pool of high-level, active players, and an increase in the number of players able to control/monopolize entire markets in their player auction house.

These effects have certainly influenced European WoW gold prices, though its hard to know the extent. In any event, the research conducted over at gamerprice.com attempts to show conclusively that the divergence between US and European World of Warcraft gold prices can be sufficiently accounted for in the context of Blizzard's hyper-enforcement of its anti-gold selling policies in US.

Blizzard is policing its American realms far, far more rigorously than it is policing its European realms. The figures are so very different, that they suggest an extreme imbalance, even extreme negligence on behalf of Blizzard Europe.

This suggests that in America, it’s actually harder for a farmer to produce gold than it naturally would be, because of an active and ongoing purge of these accounts, and indicating rigid standards, and good policing.

Linden Labs: one step closer to government intervention

noreply@blogger.com (David Price) — Mon, 28 Jan 2008 05:48:00 +0000

Second Life Bans Traditional Banking | Game | Life from Wired.com

Linden Labs delayed response to this virtual banking crisis was almost criminal to some--just look at the reactions. How long until California fires the first shots? I'm guessing within the year.

Where does the social responsibility for failed virtual banks fall? If its on Linden Labs, and many seem to be arguing that it does, developers ought to rethink just what they're willing to shoulder.

World of Warcraft Gold: Wow gold inflation?

noreply@blogger.com (David Price) — Sun, 27 Jan 2008 05:51:00 +0000

Well, looks like prices for World of Warcraft gold have rebounded a bit. If we're lucky the price per 1000g will surpass 50.00, but don't get your hopes up.

Wow gold in general has seen inflation, almost hyperinflation--though it'd be hard to restrict usefully the scope of the term "inflation" since it's kind of hard to measure, for instance, the relative purchasing power of 1g. Moreover, since wow gold isn't centrally controlled via a Federal Reserve-type of institution, we can't really do anything about the influx of gold. That makes it hard to compare a unit of gold from one time to another.

In any event, I'm hoping to release a somewhat comprehensive report on the steady decline of World of Warcraft gold over the past year. The goal is to associate significant drops in US price with various real-life events, such as Blizzard policy enforcement and/or changes, news and developments in the gold-selling industry itself, and a whole lot more.

Well, the value of wow gold has rebounded from a weekly low of

noreply@blogger.com (David Price) — Sun, 27 Jan 2008 05:43:00 +0000

The simExchange: to predict a video game's performance

noreply@blogger.com (David Price) — Tue, 22 Jan 2008 15:08:00 +0000

Well, I just joined an extremely provocative video game sales/review prediction service called The simExhange. This is probably old news to many of you, but I just reviewed it for the first time today and let me say: I am impressed.

simExchange: the basics of a video game-specific prediction market

simExhange serves two basic functions: (1) as a portal for game enthusiasts and/or interested market researchers to share their expectations regarding either how well an upcoming game will be reviewed or how well a game will sell for in a given month; (2) as a prediction market, allowing users to use virtual currency to purchase and sell properties of newly released video games

In a nutshell, the prediction market--which is essentially a game involving performance-based contracts--investment game---goes like this (should you decide to get involved): after registering (which is free), you can view the current games listed on simExchange and buy or sell stocks and futures using simExhange's virtual currency, DKP.

DKP? What is this, a World of Warcraft raiding guild?

Well, no--it's not a guild in any sense. The creators of the program simply paid homage to that term and decided to use it for the name of their virtual currency. As far as how DKP functions in simExhange, here's the official word:

DKP is the common currency among players in Massively Multiplayer Online (MMO) games like World of Warcraft and Everquest, earned for performance and used for bidding on items. It is also the name of the currency on the simExchange. DKP is a completely virtual currency and is not backed by real money. On the simExchange, 1 DKP of stock price corresponds to 10,000 copies sold worldwide over lifetime for a game.

So the currency is a measure of how well a given game sells for over its whole lifespan. It's a completely closed market: there is no direct exchange between real dollars and DKP. This isn't Second Life. ;-)

DKP is used to make trades, analogous to its function as a method of bidding on or purchasing virtual item drops within a particular gaming community. It retains its traditional sense here, but simply changes the metric of its standard. Instead of DKP representing how well a given player has performed for her guild over a particular duration, it here represents how well a game (or console) has sold since its release.

At the most basic level, the trading process here should be pretty familiar to most of us. 1 DKP of stock=10,000 unit sales (not $10,000 worth of sales). So if Game A is trading at 250 dkp, then the market predicts that the game will sell 2,500,000 units globally over the span of its lifetime. Thus if a buyer thinks that Game A will sell for significantly better than the market prediction, he should be willing to purchase it anywhere below the 250 DKP price tag.

Earning DKP in simExchange

There are passive and active methods for earning DKP in simExchange. Examples of the former include referrals and time trust: every 15 mins. you get +250 DKP. Its capped at just 25,000 DKP, so the time trust alone won't allow you to truly rake it in. For additional information about earning DKP, you should visit the Get Started page on the official website.

One unique thing about the simExchange service is that you can submit web content, in the form of articles, and earn DKP for your efforts. I have not completely familiarized myself with this feature, but it seems that a lot of the community has taken advantage this opportunity and the result is rich, pertinent content.

This is a nice idea and meshes well with user-generated content sites such as YouTube revenue sharing(video) or Associated Content (writing). But more importantly, it gives a foundation for simExchange's educational merits. I'd recommend joining simExhange if only for this reason: there is a ton of great information about upcoming games (and consoles), their potential marketability, and strategies for more advanced trading. Speaking of that...

simExhange: advanced trading

If you activate the advanced trading option--its turned off by default--you will be able to choose between two ways of entering orders:

You can either (1) type the price you want to pay per share and the quantity of shares you want to buy or sell in the order form OR (2) you can simply click on one of the existing orders in the order book.

Essentially the advanced trading feature makes it easier for you to short sell if you think that the market's expectations for a given console or game is unjustifiably high.

Additional tutorials/explanations

As I mentioned before, the site really has a wealth of quality information. If you want to read up more on this unique service, or if you'd like additional tutorials about prediction markets, for instance, then register and check out the tutorials section.

Online earnings since May 2007

noreply@blogger.com (David Price) — Wed, 16 Jan 2008 02:28:00 +0000

Well I calculated my gross earnings since May 2007 until mid December 2007. I'm looking at about $2,800, the majority of it made from writing gigs and the occasional sales of an online good.

I'm pretty happy about it, but I had anticipated a better showing. I suppose the upshot of it is that I proved to myself it is possible, though not easy, to make some money online. The next step is to actually make a significant amount, one that has implications for the rest of my life. ;-)

MMOGCHART.COM: The Census Bureau for MMOG's

noreply@blogger.com (David Price) — Fri, 11 Jan 2008 05:14:00 +0000

So, does World of Warcraft beat Asheron's Call 2 in a fight? If by "winning the fight" you mean "having more active subscribers", then evidently WoW wins.

Comparing the size of your subscription list

Subscription lists, I would argue, are the essential measure of success for most user-driven communities. Obviously there are other matters to consider: for instance, the legitimacy of the developers, or the price/user benefit ratio. World of Warcraft is the priciest of MMOG's, but its also (in the most important sense) the best, at least from a business standpoint.

In any event, one particularly useful site for comparing and contrasting the relative success of your favorite online gaming world is MMOGCHART.COM

I'm not sure who the author is, though he is very well-learned in the area of virtual worlds and the size of their subscription lists. According to his FAQ, he's now a consultant to MMOG companies and he became interested in MMOG's while attending college at Purdue University.

Blizzard: the New England Patriots of MMOG's

World of Warcraft is about as unprecedented as the New England Patriots are. You'll see why in a second.

You might think that the data offered is simply confirming what we already know; namely, that World of Warcraft trumps all. But after viewing it, I must say that the charts enriches, articulates, and refines my sense of the word "trumps".

Go ahead and look at the chart on this page. World of Warcraft's growth has been exponential from mid-2004 till the end of 2006 (which is apparently the last update the graph received) in a way that gives new meaning to "exponential".

World of Warcraft's growth is not merely exponential, its simply rewritten our understanding of what's possible! (for an MMOG, anyway)

But wait, reality check: while it is true that World of Warcraft has dominated in an unprecedented way in terms of subscriber growth, it doesn't hold a candle in the longevity department. Lineage has grown pretty much consistently from July 1998 to July 2003 (with only a couple of minor dips) and has actually not seen a sharp decline since Blizzard reared its ugly head in 2004.

That's quite remarkable, not only because that sort of sustained growth is slightly uncharacteristic for MMORPG's, but additionally because its been able to delay and lessen its eventual fall (albeit in an extremely relativistic sense) despite Blizzard's dominance (at least until July 2006).

All in all, this kind of finding pales in comparison to the import of the author's research, which he summarizes in a much-appreciated empirical presentation here.

There are other websites that track this sort of thing, but none (that I've seen) are so diversely enriched by variously (authentic) sources. I'd say that MMOGCHART.COM is a kind of demographics king for massively multiplayer online games; the Census Bureau for MMOG's, if you will.

Project Entropia: scam?

noreply@blogger.com (David Price) — Tue, 11 Dec 2007 17:32:00 +0000

I've been looking at some of the Second Life-type MMOG's lately and one big name is Project Entropia. One thing I noticed in many of the comments people make in response to press released concerning Entropia is that, similar to Second Life, the difficulty is not in making money within the virtual world but rather being able to cash out, once you've made it.

Here are a few of the enlightening responses from my research about Project Entropia and their more significant in-game auctions:

The game is a big scam , already targeted by the USA authorities for criminal activities. Also Mindark , the game company , is sued in an European Court for corruption and fraudulent relationships with some Entropia ” participants ” . Mindark’s basic investors are some shady ” businessmen ” located in Belize and Cayman islands , wich already are under investigations by FBI and CIA for money laundering and terrorists fundings. MasterCard already ceased to do business with Mindark and any serious Bank is now very carefull when about Mindark and Entropia. They are under the suspicions of ID theft as well. Just take care and beware.
Comment by Morinit — 1/6/2007 @ 3:29 pm
I used to play project entropia….

Years ago….since the times of beta and all the good rubberband effects of the time… A dupe bug did exist once upon a time, I remmember it still to this day (items duplicating all over the ground… in the thousands), I aquired thousands of peds worth in 1 trade, all Duped Gear then TTed… I have never deposited and never will, because i know this game is a scam, its true that mindark only gives the HOFs to swedish, or people who are their mates.

It is possible to make a profit, that being said, you have to be careful, not to make too much of a profit so you stand out to them - they will shut you down, and you have to be really smart about how you talk to people and what you do, they do have allies in the game (their HOF mates) that will report you if you are doing something thats giving you an edge… I met a person in the game who had discovered a way to profit by a large margin, and he explained his system to me, afterwards I was making a large profit, and so was he.. eventually we both got permanently banned because we were hofing too much…

I dont want to go into too much detail, but beware… If you are going to play PE, watch what you do, what you say, and how much you try to withdraw… And if you find something that is making you a decent profit… dont get greedy… they record everything you say.. Just keep quiet about any success you have, it could be your undoing, Good Luck
Comment by Mystery Man — 12/10/2006 @ 4:20 am

Here's my favorite one, posted back in 2006 as well. It's a great post and it explains the reasons why something like Project Entropis is unwelcoming to new comers and ought to be considered a money sink rather than a money maker. You can view all the comments/responses to the original article/blog post here:

After playing entropia for 8 months, the latest VU (version update) has really kiled the game …. allow me to explain. The first thing a player does in Entropia is collect sweat from animals and sell it to other players and indeed is how I started the game. The latest VU has taken the cap off this activity - resulting in nobody buying the players sweat. I have seen new players trying to sell for 3-4 hours, logging off and never returning. Result new players leaving very quickly and the starting town “Port Atlantis” looking like a ghost town.
Secondly the new VU has made everything — harder— crafting,hunting,mining— resulting in older players leaving daily. The ones who are stll playing have raised their prices on tools, weapons, etc, that are bought by players of lower lvl coming into the game, to keep their costs covered. The result is that prices are becoming untennable - MA hve priced them out the market.
The other reasons people are leaving (including myself), are the following….

a) - Over the last 6 months prices for raw materials have increased on average 10%-15%.
b)- With increased raw material costs and lower crafting success rates, this has resulted in items within the game increasing to incredulous prices.
c)- Auction rigging, reseller madness, and scamming are becoming common place now- as unseeing players try to cope with the increasing costs within the game.

Currently no new players are staying around, prices are constantly going up, older players are leaving daily. The main increase I noticed was for space flights to the asteroid. at first the price was 16 PED(1.60US one way), then 20 PED, and now advertised at 25 PED…. all witin 6 months.

RIP Entropia — The Gamers Lost- Beggerman ;-(

So yeah, if you were thinking about making money with Entropia, you should probably recast your question in terms of how much money you're willing to lose before ever seeing a dime. If you want to sell virtual currencies, you're probably going to have to trade legality for support: WoW gold is a much more profitable venture, unfortunately its a breach of the user agreement; Entropia is fully supported but is more of a sink than an earner. Ironic, isn't it?

Activision and Blizzard: Nothing is Going to Change?

noreply@blogger.com (David Price) — Tue, 11 Dec 2007 15:39:00 +0000

This is old news but it warrants discussion so I'll reiterate it here: Blizzard has merged with Activision. Read the official FAQ about the deal here.

The official response to this on the World of Warcraft website:"Blizzard won't change." I highly doubt that's the case. One reason is that Activision and Blizzard are very different companies when measured by the games (and the kinds of games) they produced/marketed/published. Consider this list, which is not at all exhaustive

Activision's Library

Tony Hawk series
Star Wars Jedi Knight games
True Crime Streets of LA
True Crime NY
Quake series
Doom series
Call of Duty series
Gun
Guitar Hero series
Mechwarrior
Pitfall

Blizzard's/Vivendi Library

World of Warcraft
Warcraft series
Starcraft series
Diablo series

So why would Blizzard, an MMO company, merge with Activision, a company that is so varied in the kinds of games it produces it would be incorrect to identify it with any one genre. Finances aside, and this is reportedly a very, VERY big deal, why would Blizzard/Vivendi merge with a non-MMO company?

IGE's unethical practices are not unexpected

noreply@blogger.com (David Price) — Sun, 09 Dec 2007 20:03:00 +0000

IGE, one of the most popular and profitable seller of virtual items (and currency) apparently didn't or does not regularly pay their gold farmers. According to this article on mmobux.com,

Despite all the exposition and media attention IGE received through these high profile acquisitions, trouble started mounting within the company, especially at the back-end operation site in China. Gold suppliers had been left unpaid for their services. The company began losing its credibility and supply chain. Things got out of hand, there was even a rumor that an upset gold farmer stormed into IGE's Shanghai office with a gun, holding an employee hostage. This was later dismissed by IGE. In China, rumors spread that IGE was going bankrupt, that major shareholders were planning to run away and that investors' money was being transferred out of reach to a Swiss bank account. Eventually, the website IGE.com.cn went offline.

I'm not surprised that IGE didn't regularly pay their gold farmers. Given my previous post about the already low earning potential of a single gold farmer, its not a leap to conceive that a major supplier of virtual items would opt to ignore outsourced workers in an already severely underpaid industry.

IGE also blew a lot of money acquiring world of warcraft database sites, such as Allakhazam. The fact that major wow gold suppliers control WoW database sites like Allakhazam is interesting if disturbing; it is sites like wowhead.com and Allakhazam that report on the value of various in-game items and the information they provide, in my opinion, is not merely passively received but should be understood as actively altering the perceived value of the virtual items. If major virtual item providers control these databases, they can leverage them to their vested interests and ride the wave of these databases' authority on price and value perception within the game's themselves. Obviously this DOES, or should, impact the real world value of these items.

World of Warcraft: Jewelcrafting > anything else

noreply@blogger.com (David Price) — Sun, 09 Dec 2007 19:48:00 +0000

I recently made the decision to forgo any prospect of leveling blacksmithing up to its maximum level. I wanted to make gold quickly and after having done some research and looked at other people's success stories with it, I decided to try it myself.

Well, right now I'm only at around 70 skill points into Jewelcrafting but I've earned 1-2g per item I've made. These are items that maybe level 6-12 players would use. I haven't really confirmed who is buying my items--it might be the case that higher leveled players are buying my items and then reselling them on the AH for higher values, or at least they are acting on the belief that the market will support higher prices.

In any event, I'm making a ton of wow gold for very little time spent--and this is just the beginning!

My earnings through various online programs

noreply@blogger.com (David Price) — Fri, 07 Dec 2007 08:14:00 +0000

Well, within the next day or so I plan to give some sort of rough sketch of the money I've made from online ventures/programs. It certainly isn't stellar, and the majority of it probably has been through freelance writing positions that I found online and in forums. I have made money off of selling WoW gold and some Get-paid-to (GPT) programs but these pale in comparison to the writing revenues.

Anyway, as its 3:16 am now I'm kinda tired and thus don't really feel like totaling the many sources up. I did just want to give a heads up. Also, I want to thank the many other bloggers out there who have inspired me to do this. It really is helpful for your readers to display, however "insignificant" your online revenues. Its a confidence booster to those for whom the world of making money online is foreign and somewhat inconceivable.

When I get on my other computer I'll link to the bloggers I have in mind. Unfortunately my laptop doesn't currently have all the links to these blogs and I haven't got that great a memory. ;-)

WoW Gold Farming: Motes of Mana

noreply@blogger.com (David Price) — Thu, 06 Dec 2007 17:34:00 +0000

So here I've been doing some thinking: how much money can one make by farming motes of mana, assuming they did it for 8 hours a day and 6 days a week for a year.

Of course you have to make a lot of assumptions. And those assumptions probably won't turn out to be too accurate but its an entertaining if sobering thought experiment to conduct, nonetheless.

So, on average I'd say that in an hour I can get about 4x primal mana's. Remember that a primal mana consists of 10 motes of mana. On my server (magtheridon US) that amounts to about 68g.

You also have to remember that gray items drop and that you can vendor these for some gold as well. After a couple hours of testing, I got about 20g per hour worth of gray items to drop. I got misc. white items to drop as well but they're too many to list so I'll simply say that they totaled about 20g 18s. In total, including gray items and trade items (i.e. white items) plus the 4x primal mana's, that's about 107g per hour.

Personally I found that number to be higher than my expectations. Now lets see--what kind of real US dollar value would that sort of number represent if we make some assumptions about time spent over the course of a year.

107g per hour x 8 hours a day= 856g per day

If you assume around $0.032 per 1g--which seems to be about the going rate these days on Sparter and other sites (at least for my server)--thats roughly $27.39 US dollars per day.

Now, 27.39 x 6 days=164.34 per week

That's lower than expected. I mean you figure gold farmers farm something, and farming primal mana's is a pretty valuable thing to farm. I just didn't think you'd make so little per week doing that. I guess the research I've done about china farmers is correct: they make about 100 per week. Anyway, the rest is equally sobering:

164.34 x 4 weeks= 657.36 per month

657.36x 11.5 months (didn't want to assume all 12 months of the year--even farmers have to take breaks, right?)= 7, 559.64

Wow. What a measly income from some decent farming numbers. If someone posted a YouTube video showing exactly 107g per hour farming I'd be impressed, but maybe thats because I was naive myself about how much I could make.

You should probably note that the character I farm with is a combat-swords rogue. That said, he can down mobs pretty quickly, and probably faster than most other class-types can, you're assuming stellar gear.

Another thing that is obviously flawed about this is that if you were to do this for several weeks to months you'd no doubt come across some epic drops. In fact, just a few days ago I got an epic blacksmithing recipe to drop which wowhead.com tells me is worth an average of 1,000g. Of course, I haven't been able to sell it yet on my auction house--who knows why--even at the much-reduced-price of just 600g. The point I'm making though is that this thought experiment, in actuality, is somewhat conservative in its assumptions. The number of epic items, green items, and white items you'd get to drop is probably higher than a mere couple hours of testing can show for. I should try this again by posting numbers from a whole week of doing this.

I'd love to do that, but on second thought, not really. I also don't' have the time to pretend china farm. Its much more profitable to try my hand at the auction house reselling gray items that can be sold to vendors for higher prices than the buyout price, ha ha.

Anyway, pretty sobering information, despite the shortcomings. Those poor gold farmers.

An interview you need to read

noreply@blogger.com (David Price) — Mon, 03 Dec 2007 01:49:00 +0000

Thankfully for me, I stumbled upon this interview with the CEO of Sparter on the My Financial History blog. Anyone reading this should absolutely read this interview because Dan Kelly does a fine job of articulating his opinions concerning the secondary markets of MMOG's and other virtual economies as well as the issue of scarcity in virtual markets.

On this last point, I couldn't agree more with Kelly's ideas. When asked whether scarcity existed in online games, Kelly posited that indeed there was. One reason is because in World of Warcraft for instance, you need to do something, some sort of activity, to obtain gold. Virtual currency is not freely distributed and the design of the games themselves can and do restrict its availability.

Here's what Kelly said explicitly on this point:

UM: It’s interesting, because it has been noted that with online goods there is no scarcity - we’re essentially talking about processing power.

DK: There can be scarcity in virtual worlds. We’re talking about earned goods, or earned currency. It’s a scarce item because there is controlled scarcity. You have to do something to get the gold. It isn’t just given away. And because of this there becomes a good reason for secondary markets. We think publishers should encourage this activity, of course.

Obviously publishers could sell more of that currency - that would be one option - but then they would be adding more of it to the game and encouraging inflation. It would reduce the value of the currency.

And, by allowing secondary markets to exist marginal utility is increased. Both the buyer and the seller get increased value from the market. The seller makes some money on extra gold. The buyer can get enough gold to get what they want. And, what’s really interesting is that we’ve increased value in both the real and the virtual worlds.

I have used Sparter myself and find it very useful, not to mention my opinion that it represents a new kind of auction service. Whereas Ebay denies virtual items, Sparter embraces it and I wouldn't be surprised if it serves as some sort of model for future projects.

World of Warcraft and the "Rogue Server" Market

noreply@blogger.com (David Price) — Mon, 19 Nov 2007 06:24:00 +0000

I knew that there was a considerable market for World of Warcraft private (sometimes referred to as "rogue") servers. I almost played on one myself but then decided against it after noting that it is against the World of Warcarft End User License Agreement.

What I didn't know was how gigantic this virtual black market is. According to Sergey Golovanov, author of this article, the number of google search results relating to WoW private servers is close to 11,000:

The number of rogue servers is enormous. For example, a Google search for "private game server" on 22 June 2007 returned approximately 10,800,000 results and that number is constantly on the rise. One popular online game can spawn hundreds of thousands of rogue servers. This high number results from the fact that rogue servers are in high demand among players who want to save money or who simply don't have any, like teenagers and students. The idea is very tempting: why pay a subscription to an official server every month when you can play the same game on a rogue server and you only have to cover traffic costs? However, in reality the situation is very different...

Of course, rogue servers tend to be extremely buggy and are not always online. As Sergey mentions though, that opportunity cost isn't much compared to what's gained: free access to your favorite game, the World of Warcraft.

So how these private servers profitable if they don't charge a subscription fee? The answer is through selling virtual (in-game) goods. Often times the in-game goods will also be sold to players who play on authentic blizzard servers on auction sites, only for the player to find out good they paid for doesn't exist or won't be provided.

In the next post, I'll explain how rogue servers essentially partake in virtual good(s) theft.

Sparter--Ebay for mmorpg goods?

noreply@blogger.com (David Price) — Sun, 18 Nov 2007 00:41:00 +0000

Sparter.com is an interesting site. Buyers and Sellers meet in a "gamer2gamer" service called Sparter. Essentially, Sparter attempts to allow sellers to sell directly to buyers so that there is no middle man. This is somewhat helpful since it eliminates the gold farmer--i.e. the one who obtains all this gold, only to give it to a third man who actually makes the sale to the buyer.

That said, Sparter.com takes a commission of each sale. It's not much--but that kind of makes them a third man, in my book. After all, it is Sparter which gives the possibility for the buyer to contact the seller--or vice versa--in the first place.

They do have very cool Widgets, though. Check this one out:

Second Life: May not sport such a winning economy after all

noreply@blogger.com (David Price) — Fri, 16 Nov 2007 01:58:00 +0000

I stumbled upon this article while researching. Apparently, economists ought to be prudent when it comes to assessing the financial value of Second Life. As an unknown financial consultant explains (you can read it here):

In 2005 I began working as a venture consultant for some entrepreneurs and investors regarding some fairly ambitious "RMT" ideas. My work resulted in my collection of a large amount of RMT market data for most of the popular MMO/VW games. Although the new venture was never pursued (largely due to my analysis of the true RMT market), one game stuck out as an aberration: Second Life. Unlike most other games, the operators of Second Life not only allowed and encouraged exchange of game currency for real money, but they facilitated it.

More significantly, investing in the Second Life economy may not be as profitable as the media says it is:

As I discussed this type of stuff with a self-fashioned hedge fund manager friend, he determined to sink a more sizable amount into testing the Second Life market. After all, talk about uncorrelated returns. He'd read about Second Life in increasingly more sophisticated business and financial press. The Economist, The Financial Times, etc. All of which touted the large and exponentially growing size of the SL "economy". So a mere $10,000 USD shouldn't be but a drop in the bucket, given the fact SL was supposedly producing virtual millionaires.

Once we started playing with real money in SL, however, the truth about the supposed economy therein quickly came to light:

• You can earn a lot of Linden dollars in SL, in fact fairly rapidly sometimes, but...
• If you can actually collect your SLLs from your counterparty - which turns out to be an enormous problem - you can't cash them out for USD easily or profitably.

Anyway, it seems like its easy to see a return on your investment but extremely difficult to actually make use of it! Put the money in, watch it grow, but then be unable to easily exchange it so you can buy real things and/or solve real problems.

Additionally, virtual banks within Second Life reportedly vanish--that is, they are generally unstable. And forget about Lindens (the name of Second Life's virtual currency) being backed by any credible source OTHER than the US dollar.

This raises an interesting question. Linden Labs obviously touts their own economy via floating exchange rates. Compare the economy of Second Life with that of World of Warcraft. Blizzard hates gold farmers, but that seems to be irrelevant since the industry is thriving every year. Does "not" setting an exchange rate have anything to do with the health of WoW gold farmers? I really have no idea, but I'm interested in where this sort of question could lead.

What are the necessary conditions for something to be a virtual economy?

noreply@blogger.com (David Price) — Fri, 16 Nov 2007 01:28:00 +0000

What conditions must obtain in order for something to be a virtual economy?

This is a tough question, mostly because it's hard to realize what's necessary about the wide variety of different kinds of virtual economies out there. A few out of the many kinds are listed below; I hope you acknowledge just how distinct one kind of virtual economy can be as compared to another:

MMORPG's: examples include World of Warcraft, Everquest, Lord of the Rings Online

MMORPG's are the largest of virtual economies, but they also contain probably the most economically irrelevant aspects to them, such as fantasy and RPG-like experiences and player-vs-player combat. I'm just pointing out that WoW isn't characterized entirely by it's being a virtual economy; rather it is the case that WoW characterizes, among other things, a prototypical supply/demand virtual economy

"Life-simulation games" (this type courtesy of the rather incomplete Wikipedia entry on "virtual economies" available here)

Life-simulation games are virtual but probably in a more limited sense than the above. For instance, whereas the currency in MMORPG's is almost always worth something in 'real' money, the same may not hold true for Life-simulation games...at least not to significant extent. Examples include The Sims 2 and Second Life. Obviously the latter DOES have 'real' monetary value. Note Linden's "hands-off"--and more correctly, "motivating" mentality with regard to the selling of in-game currency.

Internet browser applications

Web browser games like utopia feature some of the properties of a virtual economy, but again, it's not necessary that there be a 'real' value in these games. You won't find many users buying and selling Utopia accounts and you certainly don't hear of someone exploiting it for real-world profit. That said, there are cases of Web browser applications earning real-world profit for its users (see my review of Weblo.com)

Internet auction sites/services: Ebay/Ubid.com

I consider auction websites to be a subset of the above category. However, given the relative distinctness of Ebay next to Utopia, I feel compelled to mark this category as its own. Simply put, these are services characterized by their virtual presence. It says nothing about what is being bought or sold, and more often than not Ebay users are probably buying 'real life' goods/services (although some virtual property is sold--e.g. WoW accounts)

What makes each of these categories categories of virtual economies?

I'm not sure. I think the best bet is to assess each one individually rather than attempt to sweep them all under one categorical picture of what it means for something to be a virtual economy.

Variance amidst members of the same category

Disregarding for a minute the variance among types of virtual economies, note that in some instances, members of the category of MMORPG must be distinguished based on important parameters such as "MMORPG publishing company's stance towards the buying/selling of in-game gold"

This is a huge one that divides World of Warcraft from something like Fury, a new MMORPG (but focused exclusively on player-vs-player combat) in which the developers "apparently" try to sell you in-game gold.

WoWecon.com

noreply@blogger.com (David Price) — Fri, 16 Nov 2007 00:11:00 +0000

Below is a list of some of the websites I use regularly to track economic trends. They are extremely useful for getting extra WoW gold.

WoWecon.com

This website represents the way game-specific services ought to be: give players the option to pay extra for extra services while maintaining completely free essential parts to the service.

What you get for free-
All of the market data about server-specific and/or server-wide items--this includes information about the auction house, and vendor prices.

You also get a UI module which allows you to view data from wowecon.com's website while you're playing the game.

The charts are by far the most useful and comprehensive. You can view variation in median auction price as compared to the time of day for copper bars, for instance.

I still haven't downloaded the User Interface module for WoW but I think I'm going to. The website is awesome but it'd be nice to have that data available in-game.

Unnecessary Data?

What follows is not meant to point out a shortcoming so much as it is an indication of some unnecessary part to all that data.

The flaw is simply that the more servers are scanned and accounted for when figuring out the ideal price to sell it at on your particular server, the higher the chances are that the ideal value will deviate significantly from what your particular server is fit to allow.

In my opinion, the best choice is to simply scan your individual server and not be so concerned with data about a total of servers.

For additional links concerning www.wowecon.com check these out:

http://www.wowinsider.com/2006/12/29/woweconomy-com-tracks-the-ah-online/
http://wow.curse.com/downloads/details/6815/

Weblo

noreply@blogger.com (David Price) — Wed, 14 Nov 2007 17:34:00 +0000

What is Weblo.com?

It's a virtual economy which features simulated properties from all over the 'real world'. Users spend real money to purchase in-world properties. Weblo features not only real-world locales, but also domain names. Check out the description:

Weblo has got you covered with your second chance to own any domain name - even if it's owned outside of Weblo! Weblo lets you make money the same way real world domain owners do. It's quick and easy so type the address of your favorite website now and become its owner. Don't miss out a second time!

Not just ANY domain names, but domain names that are unavailable in the 'real world'. For instance, you could own blogger.com on Weblo even though--quite obviously--blogger.com is owned by Google here--in the real world.

Virtual celebrities


Be the Exclusive Virtual Representative for your Favorite Star.
Have you ever dreamed of being the celebrity publicist for your favorite actor, singer or sports star? Dedicate your FREE celebrity website to any star you want or use it to make yourself famous! Post celebrity news, videos and photos on your site and watch the money pour in. How? Weblo places ads on your celebrity site and you earn most of the revenue. Hurry - get your FREE celebrity website now and start making money while you have fun.

That's right--you can buy and sell your rights to your favorite celebrity on weblo.com--kind of scary, huh?

The most pressing concern for us here is simply: does weblo.com offer an interesting if effective business model?

Its hard to find a decent review of it. Here's what totemik said on Stumbleupon

You'll love this if you enjoy playing monopoly. Plus you make real money if you're smart enough. It's a place where you buy and sell virtual stuff, such as states, cities, and property. They started in December 2006 and they had over 10,000 investors by April 2007. Here's a link to one of my assets as an example: http://www.weblo.com/property/state/Tavush/446660/

I've been trying to find screenshots of people's earnings but I can't find any. It certainly sounds interesting, but the biggest problem I see with it is that its contingent completely on replicating real-world values and goods.

Dissimilarly, an MMORPG such as World of Warcraft features "its own items" and/or services and the value of those services is independent of what those same items or services would be worth in a 'real world' market. Moreover, often times there simply is no market for a virtual item in an MMORPG (though thats not to say that these items don't have real-world value, its simply that their real-world value is determined in virtue of their original value determined independently within the game world)

World of Warcraft: facebook-like addiction + visual splendor

noreply@blogger.com (David Price) — Tue, 13 Nov 2007 13:11:00 +0000

If you play World of Warcraft, or another MMORPG, chances are you've gone through some period that a clinical psychologist might label as 'addictive'

The following post is simply a reaction to an article that I wrote about the addictive quality of WoW. You can view that article freely here.

Is there something truly novel about MMOG's--Massively Multiplayer Online Games---or is their ability to capture our attention represented in a host of other online communities and networking services such as Facebook or Myspace?

That is, can one or is one addicted to WoW in the same way that someone is addicted to Facebook or Myspace?

I'd like to say no. One reason I'd put forward to justify this stance is that MMORPG's such as WoW or EverQuest not only sport the communal and/or networking features that MySpace and Facebook share, but they conspire to infuse a sense of economic obligation in the user. Such is NOT the case with MySpace or Facebook: users of these networking tools may feel motivated to make money via leveraging the networking features of the service, but it is not at all part of the fabric with which the community and total experience is founded on.

To put it simply, WoW is addictive in a very different way than Facebook. Part of this difference is linked with the economic motive infused in the very fabric and design of how WoW is experienced. Facebook doesn't have an auction house. It doesn't have real-time inclusion of supply and demand principles.

World of Warcraft: should honor points/arena points be considered a kind of currency?

noreply@blogger.com (David Price) — Tue, 13 Nov 2007 12:48:00 +0000

Can we say that honor points and/or arena points are a virtual currency? In my opinion, no.

In order for something to be a virtual currency, it must not only represent an ability to purchase a particular good or service within the game for a community of players, it must also be directly valuable and/or financially rewarding for exchange with currency in 'the real world' or some other virtual game world.

If you take world of warcraft gold, for example, you see that it satisfies these two conditions:

(i) It represents or indicates one's potential buying/purchasing power for in-game items/services.

(ii) World of Warcraft gold is available for direct exchange for real-world dollars to the extent that it is marketed and itself sold for 'real world' dollars.

Notice that, in an important sense, honor points/arena points are not directly available for real-world financial compensation. The essential point is this: since you can't go ahead and sell "honor points" on Ebay or Sparter--an Ebay-like website that specializes in gamer-to-gamer virtual goods trading--it doesn't make much sense to consider honor points as economically significant.

Possible counter-argument

A possible counter-argument might go like this: "well yes, you can't sell honor points themselves in a real-world marketplace, but you can sell characters and emphasize/market their 'large amount of honor points'

Yes, that is true. However, since the honor points are always attached to the character itself, whereas Wow gold is NOT attached completely to the character, we ought to add a third condition. Namely, that another requirement for something to be considered a virtual currency is that it must be, to some extent, exchangeable and/or not necessarily tied to the character and/or avatar.

World of Warcraft: the price of copper bars

noreply@blogger.com (David Price) — Tue, 13 Nov 2007 12:34:00 +0000

Copper bars never seem to lose as much value as I think they should. Here's a screenshot of the auctions listed on my server, Magtheridon.

20 copper bars is worth between 1.8 and 2g. That's slightly ridiculous considering something that only high-level players have use for--at least predominantly---like Netherweave Cloth has recently gone down to less than 2g per stack.

What is the point of this post? To point out that its not irregular for an item to fail to be valued solely in virtue of its availability to members of relative economic opportunity. Netherweave Cloth ought to have a higher price than a low-level trade good such as Copper simply if you assume that the value of an item is mostly determined by its availability.

Of course, what this really points out is that its not really easy to figure out just how available an item is. Availability is not merely and solely a function of one's level--understood here as relative economic opportunity.