IRS clarifies rules on virtual currencies & Oculus Rift VR --> FB for $2B
March 25, 2014 was a pretty interesting day for virtual currency and virtual reality!
It seems the IRS deems mined bitcoins (& Dogecoins!) to be income. So it seems pretty clear that Linden Dollars are a "convertible" virtual currency and should count as income too. I'm assuming professional goldfarmers should have to report loot drops too, since they're skilled at converting that virtual currency. But I'm still unclear about participants in primarily virtual, ludic economies -- e.g. MMORPG players who may occasionally sell or buy virtual property.
Language from the IRS follows -- full text is here.
...Virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value. In some environments, it operates like “real” currency -- i.e., the coin and paper money of the United States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance -- but it does not have legal tender status in any jurisdiction...
...Virtual currency that has an equivalent value in real currency, or that acts as a substitute for real currency, is referred to as “convertible” virtual currency. Bitcoin is one example of a convertible virtual currency...
..Q-8: If I “mine” virtual currency, do I have income from mining? A-8: Yes, when you successfully “mine” it, the fair market value is income.
Q-9: Is an individual who “mines” virtual currency as a trade or business subject to self-employment tax? A-9: Yes...
The Tyranny of Emergence: Modernity's Romance of the Game
It's been some time since I haunted the distinguished halls of TN, but after some tumultuous times that got me out of the habit of putting my working papers up on ssrn and pointing to them here (and at my own blog), I do have a piece that I wanted to share (and I'll be cross-posting this to Doubt is an Art, as I do with all game-related stuff). I'm sure my skin has grown thin from all this time away from the rough-and-tumble world of collaborative blogging. Be gentle. ;)
Last year I had the opportunity to give the keynote address in February at the Ray Browne Conference on Popular Culture at Bowling Green State University, as well as to participate in a symposium in April convened by the Potomac Center for the Study of Modernity on Modernity and Chance. Both venues seemed apt arenas for developing some ideas about game as a cultural form, one that we could place alongside ritual and bureaucracy in our understanding of institutions and the techniques for control at their disposal. The core question I'm asking is: What might we learn by examining the increasing use of games by modern institutions in the digital age as analogous to their longstanding and effective use of rituals and bureaucracy?
Player-Authors Project Summary Report of Research Findings
Thanks to all Terra Nova readers who participated in the survey.
The report is also available here.
Looking Back at Habitat
Great short podcast about the history of Habitat here. Thanks for the pointer, Randy!
Social Value is the amount of behavior that one person generates among their friends. An anology might be the ripple on the social pond. Let's say this person goes to see a movie, listens to a song, or plays a game. Now let's say that this person is influential. How much more likely are their friends to go see the movie, hear the song, or play the game?
Each person has a unique amount of influence in their social network, and on each friend. Maybe you are highly influential on Bob, but Steve doesn't care what you do. What the Social Value algorithm does is to add up all of your influence and put it in units we care about--like sessions, time, or dollars.
Clearly demarcated as blatant self-promotion: I'm happy to announce that an effort I've been working on for about 3 years in semi-stealth mode is now live. After doing big data work for the spooks in the government and running a team of social and computer scientists, a few of us spun out a commercial venture I dubbed Ninja Metrics (www.ninjametrics.com).* Much of this comes from constantly asking game companies for data, then getting smart people to do cool things with it. Our team has now published 80 papers on game data, which is kind of ridiculous. It was time to put that power into an engine so we don't have to work quite so hard.
Among other things, we've figured out how to automate predictive analytics. WTH is that, you ask?
Diablo III Auction House ClosesIt's not easy being a bank. Blizzard's experiment with a real-money trading system in its game Diablo III has come to an end. It is a good thing too. By embedding real money in its service, Blizzard was vitiating any claim that D3 was separate from the real economy and therefore not subject to real world taxes and laws. What a terrible precedent that would have made.
Well, almost. Next Wednesday will mark the 10th anniversary of the Terra Nova weblog.
Here's Ted's first post. Hard to believe...
The Politics and Economics of Closure
Toontown is shutting its doors. (Thanks Pidge Fielder for the tip.) When gamer properties close down, the gamers rant and, understanding that no one will actually listen, move on. Toontown is a Disney property, however, filled with ordinary people. They've started numerous petitions at Change.org, a place dedicated to windmill tilting."Disney! We insist that you ignore your bottom line and do what we want instead! Or else, or else..." Or else what? You'll throw away your Mouse ears? You'll stop going to horrible movies like Planes? You'll refuse to go to theme parks that charge a million dollars for the experience of standing in two-hour lines while eating food that would kill a buffalo?
One of the petitions is targeted appropriately. It asks Jesse Schell, a developer of the world, to take it over.
If I were Jesse, I'd consider buying the property and creating a new format for the industry: The Community MMOG. Make it a corporation and sell all the shares to users. Like the Green Bay Packers. Set up by-laws to regulate affairs among shareholders. Have an annual meeting to appoint a board of managers. Running a community MMOG would be a natural stepping stone for young people who want to build their own.
It would be good for the world if old virtual worlds were sold to their users in this fashion. And if it doesn't happen, I will refuse to purchase any Jesse Schell branded merchandise, INCLUDING the bobble head, the mud flaps, and the his-and-hers towels. Who's with me?
Who owns e-sports?
Got an interesting law article in the snail mail by Dan Burk. "Owning E-Sports: Proprietary Rights in Professional Computer Gaming." Unfortunately the digital version is behind paywalls. Man, does that seem stupid. Amazon charging $10 for a law article? It's an interesting article, but not $10 worth of interesting. Is any research article worth $10 sight unseen? Anyways.
Burk's analysis highlights the fact that the law of real sports depends on the physical instantiation of those sports: Stadiums, bodies, playing fields, equipment. As a result, e-sports, where all these things are intangible, cannot rely completely on the pre-existing sports law. And as we know, intellectual property law seems out of place, since the primary issues do not revolve around the writing of created signifiers to RAM. As a result, the legal foundation of e-sports is murky.
Here's the intro anyway.
Player-Authors Project - Survey One Data (Draft)
I posted here soliciting participation in the Rutgers Player-Authors survey of player UGC practices in games. We are beginning to study the results. A draft summary report of basic descriptive statistics is posted here. Please do not cite or repost this draft version, as the numbers will likely change slightly. We will have a firmer version posted on the Player-Authors website soon.
However, based on initial analysis, the following appear to be true:
- We had over 400 valid responses
- The survey participation skewed substantially male (over 80%)
- The median age of respondents was roughly 30 years old
- The PC was respondents' most popular and preferred gaming platform
- The Sims was respondents' most played game among the available options
- Respondents shared UGC on YouTube more often than on other listed platforms
- The most common motivation of respondents for creating content was intrinsic pleasure (enjoyment of creativity) and the least common motivation was financial (to make money)
- The most common UGC practice of respondents was making new objects within games
- The least common UGC practice was costumes and crafts
- Respondents generally favored the genre of action/arcade/adventure games the most -- racing and sports games were the least popular
- Roughly half of respondents stated that they had created "remix" UGC
- The most common reference material for in-game "remix" UGC was "other video games"
- The most common form of UGC creation among respondents was "maps/scenarios"; the least commons was "music/sound effects"
- Minecraft was the most popular platform for UGC sharing among respondents; Second Life was the least popular.
- The same was true for downloading: Minecraft was most the popular platform (among those listed) and Second Life was least popular.
- Respondents had a range of opinions on the value of UGC. Most respondents thought that creative tools and the ability to access player-created content were important to their enjoyment of games. However, many players felt that UGC was not so important to their decision to purchase a particular game.
More information about the player survey, including a finalized version of the Survey One summary, will be posted on the site shortly as we continue to refine and analyze the data. We will also be posting initial results of other components of the Player-Authors project.
Please note: If you are a game developer and want to participate in Survey Two of the project (targeted at the UGC perceptions within the developer community), that survey is still live and posted here: http://bit.ly/playerauthors2
Industry Survey on UGC in Games
As part of the Rutgers Player-Authors project, we're conducting a survey of industry perceptions regarding player-created content in games. If you're in the game development industry, please consider taking a few moments to share your views on player-created content.The survey is here:
And please pass the link along!
When results are collected, they will be posted on the website of the Rutgers Player-Authors Project.
Play, Evolution, and the Unspeakable
Steen and Owens ground play in human evolution. Now sociologist Robert Bellah makes play not just any element of human evolution but a core element of it. From play, he believes, springs almost all culture, including the topic I steadfastly refuse to bring up on this blog because of the anger it generates among TN readers; therefore I will not raise it here. It is the topic that Tolkien also believed was intimately bound up with fantasy and subcreation.
Recently in First Things, a scholarly magazine about the unspeakable topic I am not discussing, scholarly experts on that topic discuss Bellah's work and spend quite a bit of time on play. Huizenga is mentioned approvingly on several occasions. Interesting to see play given such weight by this brand of intellectual.
Also, I owe to this edition of the magazine a quote I will savor for many years: "The only time I ever saw Richard Dawkins reduced to stuttering silence was when an Irish philosopher repeatedly asked him about human freedom." Professor Dawkins, as you may know, though a biologist by trade, has positioned himself as a rather indomitable expert on the fantasies of certain ancient goat-herders. I have long wanted to ask him whether he is free and if so, how that could be. According to Professor Bellah, being free, and free to play, implicates a host of other assumptions all of which are closer to the goat herders' way of thinking than Professor Dawkins would likely accept.
Microsoft Points Go Away
Microsoft announced that it is retiring its virtual currency, Microsoft Points. This follows Facebook abandoning Facebook credits. Companies are trying to figure when and where it makes sense to have your own currency. The thing about a rewards-type currency, such as Microsoft Points, is that it adds a click to the buying process. Put in your credit card, buy Points, buy games (or movies or whatever). MS is saying, why not have it be just: Put in your credit card, buy games. What after all is the point of having the virtual currency in there?
Perhaps we are laready moving beyond virtual currencies to the next innovation, for which I conjured the name "digital value transfer." The technology FB has developed allows it to instantly and costlessly translate value from one app to another. Currently FB funnels any such transaction through dollars (so it can take its 30% cut). But it doesn't have to.
Games like Path of Exile have many things called currencies and a back-end system for translating the player's holdings of X, Y, and Z into different things of value.
The thing that makes Bitcoin valuable isn't Bitcoin, its the DVT that allows you to exchange Bitcoins for other things.
An economy backed by DVTs doesn't make any distinctions between the virtual entities it is tossing around. They may be currencies, or assets, or resources, or even virtual goods such as movies. Files. The DVT just knows how much of one thing is needed to exchange with another. Imagine a vast traingular matrix listing every good in the world. Each cell says how much one good is worth in terms of the other.
Save the Whales! And exploit them I guess.
A report just out from the fine folks at Playnomics confirms that much of the money spent in digital economies is spent by a fairly small share of the players. Vegas calls them "whales." Playnomics says that fewer than 1 percent of players spend any money at all in games, on average. Most of us free ride on the top 1% of spenders who contribute a third of the money.
I still like the game Lord of the Rings Online. It's free to play. When I look around in there, I see a very cool version of Middle Earth. It is interesting to know that one-third of everything I see there has been built because of the support of just one person out of 100 that I meet. And, if the power law holds throughout, I can fairly say that just about everything in that place exists because of the ten percent or so who love it enough to pay for it.
Here's the rub, the political economy problem. Given the above, what rights do I have as a player to express opinions about the environment? Suppose the entire thing is run for the benefit of those 10 percent. Does my voice count? Should it?
Diablo III Hyperinflation
Diablo III's real-money auction house had some potential to be a major innovation in virtual economies. Instead, it looks like the designers failed to grasp lessons of virtual money management that are now more than a decade old. Namely, make sure you have enough sinks.
There's a wonderful, well-informed, economically expert write-up over at Mises.Org, by Peter C. Earle. Mr. Earle knows his econ and he knows the game as well. It's some of the best virtual economy analysis I ahve seen in a long while.
Thanks to Waiyen Tang for the heads-up!
The Clausewitz Engine: A Major Scientific Advance
Wittingly or no, the folks over at Paradox Development are making an amazing scientific instrument. It's called the Clausewitz Engine. I know almost nothing about it, other than having been its victim over and over again.
The Clausewitz Engine is apparently a gigantic autonomous agent model. Tens of thousands of agents act according to a sophisticated set of instructions. These instructions are apparently very flexible. In Hearts of Iron, they drive divisions, armies, and countries to war against one another, whereas in Crusader Kings, the instructions drive men and women to seek marriage partners. The information on which the agents act is incredible. The agents respond to grand strategic considerations, political concerns, territory control, economic resources, personality traits, and past actions of other agents. Yes, they have memory. They also have variable goals and strategies. Not everyone is offended that you executed your brother's children. Some generals want to capture ground, others want to avoid looking bad.
In playing against these teeming worlds of code-people, I find myself feeling immersed in a genuine society. The whole thing responds in a way that feels right; my reputation and prospects rise and fall in a very natural way.
One interesting aspect of the Engine is that it allows you to take the place of almost any of these actors. You can be Stalin, or a commander of a single division outside Stalingrad. You can be the Holy Roman Emperor, or the Earl of Argyll. It doesn't matter who you choose, because every other agent in the game is handled by an AI. If you want to play as America but don't want to bother with politics, the AI that would handle American political actors if you had chosen Germany just takes over. Of course, if you do that, you might end up working for President Lindburgh, fighting for the Master Race. But you can do it if you want.
Why is this scientifically relevant? The brilliant mathemetician Stephen Wolfram has written about the need for a revolution in scientific practice, away from experiment and toward computational modeling. Do I know if he's right? Not a chance. I have no idea whether the natural sciences are moving in this direction or not. I do know that the social sciences are not doing much with this idea.
Yet over in games, we find a computational model of human society that is orders of magnitude more advanced than anything I have seen done on campus. The Clausewitz Engine could be modded to study how norms propagate through society, how political factions rise and fall, how crowds try to get out of disasters, how diseases spread, how religions influence shopping. I say that, not knowing anything about the guts of it. I have only been smacked around again and again by the darn thing. But my sense of it, as a machine of the human world, is that it is vast, flexible, accurate, comprehensive, and infinitely malleable.
What does the Clausewitz Engine reveal about us? I do not know. Much, I imagine. I suspect that the devs could have made all agents independent of one another, little islands, self-reliant. I wonder what would happen to total economic product then? What happens if all agents slavishly follow the commands of superior agents? What if resources are redistributed equally across the agent population, what happens to economic growth? Wow.
To Paradox Development: Bravo!
Hector Postigo's: The Digital Rights Movement
The latest Social Change Technology podcast is out. Burcu Bakioglu interviews long time friend of the show Hector Postigo about his latest book: The Digital Rights Movement. Those that have been around a while with know Hector's foundational work on modding.
You can listen to the show here: http://www.virtualpolicy.net/sct013.html