Ebay, Duct-tape, and In-game Markets

Intrigued by Julian Dibbell's recent grand opus, I started to poke around into "Ebay" Eve-Online currency transactions. Along the way I had a number of discussions with folks, dabbled in a few trades. I have little data but the anecdotal, but I do have a theory...

For discussion here, let us assume a type of virtual world with an efficient internal (in-game) market. And let us assume that my case example, Eve-Online, qualifies. To my experience, most of what is available for sale on Ebay for Eve-Online is currency. Rare blueprints are sold too, but as these are often aggregated into large collections, they are designed to provide a convenience value-added. If the in-game market is efficient, then there should be little benefit to selling items per se on Ebay (versus buying cash and directly in-game buying the item). This would appear to be largely true for Eve-Online, although there are a few exceptions.

Claim: Players hoard cash. Lots of it in some cases.

Working hypothesis: Ebay, and other external markets, can incentivize players to redistribute in-game capital amongst themselves and discourage cash hoarding.

Note, that I'm not addressing motivations of players to trade $ for ISKs (Eve-Online currency), but the consequences.

So. Why might player's hoard cash? Well, let's mutate a set of theories (below) with respect to goods hoarding given by Zachary Simpson for Ultima Online. My comments are in italicized blue and are graded by my estimate of their relevance to cash hoarding (number of exclamation marks, e.g. "Yes!!!"):

Cash hoards, therefore, exist primarily because they are Status Symbols, Achievement markers and Pack Rat goodies. Thus:

Theory: External markets such as Ebay can dampen in-game hoarding pressures by allowing players to satisfy Status Symbols, Achievement and Pack Rat instincts with their cash pile externally.

My question then is this. Given the earlier hypothesis, can Ebay and its ilk offer duct tape for virtual economies?   Perhaps as a safety valve to allow them work more efficiently (or to live with imbalances in cash distribution for purposes of game play).


Comments on Ebay, Duct-tape, and In-game Markets:

Jeff Freeman says:

Players also hoard cash when the money 'flow' pools in specific places, which it seems like it always does.

In SWG, every crafter makes things and sells them to other players. These other players typically run missions and get the cash directly from the game's primary faucet. So the money flows into the system, then from adventurers to crafters.

The crafters can buy some rare components and the like from adventurers, too, but since they're buying things to use in crafting, to produce something to sell to adventurers (weapons, armor, etc.), they get that money (plus a little more) back from the adventurers later. So the net flow is always from mission system, to adventurer, to crafter.

Now, crafters need other resources, too. They can buy these from anyone, but again if the person they are buying them from is an adventurer then they'll get whatever they paid for them back later. They might buy them from another crafter, or plop down harvesters to gather their own resources.

Harvesters are made by one specific type of crafter: The architect. Architect make harvesters and sell them to other crafters, and in this case the crafter never gets the money back (not that architects don't also buy weapons and armor, etc., but not anywhere near the cash amount they make from selling harvesters).

So the flow of money is always from mission system to adventurer to generic crafter to resource-harvester to architect.

Architects don't buy anything (not at a high-enough rate to spend all the money they're making at any rate). Money piles up. They can buy everything in the world that there is to buy, giving some money back to other crafters and adventurers, but eventually they'll have everything they could possibly want and the money will still be flowing to them.

This is a problem exacerbated by cross-server lot-sharing: People putting down way more harvesters than they ought to be able to and just letting them rot because they're cheaper to replace than maintain. Maintaining them costs a fixed amount of money, whereas crafting them doesn't cost money, it costs resources, which are super-cheap because of all the harvesters.

Anyhoo. Selling the cash to other players for real bucks could redistribute it back into the economy, but:

a) I think it's probably better if the money goes away into this virtual 'sponge' (it's not exactly 'drained' since someone has access to it, but it's not out there inflating prices either)

and

b) It indicates a fundamental problem (or two, and perhaps three) that really ought to be addressed regardless.

Posted Apr 21, 2004 6:52:10 PM | link

DivineShadow says:

Let me re-spin your theory...

You wrote:
"Theory: External markets such as Ebay can dampen in-game hoarding pressures by allowing players to satisfy Status Symbols, Achievement and Pack Rat instincts with their cash pile externally."

To which I agree. But you are leaving out the most essential factor here...

My spin:
Theory: External markets such as Ebay can dampen in-game hoarding pressures by allowing players to more easily/instantly satisfy Status Symbols, Achievement and Pack Rat instincts with their cash pile externally."

You asked:
"My question then is this. Given the earlier hypothesis, can Ebay and its ilk offer a Duct Tape for virtual economies? A safety valve to allow them work more efficiently (or to live with imbalances in cash distribution for purposes of game play)?"

I ask:
... Or is an imbalance of wealth distribution the effect of an external market, satisfying a need (or optimizing inefficiencies) it creates in an escalating feedback loop?
Would EVE have an imbalance of wealth distribution if the distribution itself was not influenced by an external market?

Posted Apr 21, 2004 11:02:57 PM | link

Nathan Combs says:


b) It indicates a fundamental problem (or two, and perhaps three) that really ought to be addressed regardless.

Sure. As a wealth redistribution tool for VWs, Ebay would just be duct tape.



... Or is an imbalance of wealth distribution the effect of an external market, satisfying a need (or optimizing inefficiencies) it creates in an escalating feedback loop?
Would EVE have an imbalance of wealth distribution if the distribution itself was not influenced by an external market?

Hmmm, would the impact of this feedback loop be directed to the behavior of some players and not to the in-game wealth distribution? I can see some folk changing their play to earn more currency for reselling. But I don't see how these players or the traders would be incentized to hold on to more in-game cash than they need for their own liquidity.

Beyond the topic of hoarding cash. The question of whether the "esculating feedback" might apply to game play is interesting. Can this subvert enough of the player-base to farm currency? In the abstract, I would argue that the esculation would be checked by the demand for their wares and thus limited by the original game imbalance. I would also wonder whether this behavior is an issue. Put it another way, if I can convince enough good samaritans in a game to donate time and earn cash for newbies - where is the difference?

Posted Apr 22, 2004 6:29:02 AM | link

DivineShadow says:

"... But I don't see how these players or the traders would be incentized to hold on to more in-game cash than they need for their own liquidity."

They wouldn't. As per the theory, a player's "scarcity anxiety" is curbed in relation to the ease of which he can fulfill his perceived scarcity. Yet at the same time he fulfills, and so do other players, the overall wealth has risen thereby flattening any particular player's disparity and creating a new plateu for anxiety or a new standard of poverty. MUDFlation at its very best.

"Can this subvert enough of the player-base to farm currency?"

More than likely the extreme is a game where the only way to obtain sizeable wealth is through the external markets. If this is one of your goals in the game, then the gameplay will suddenly look a lot more like eBay and alot less like a space opera.

"In the abstract, I would argue that the esculation would be checked by the demand for their wares and thus limited by the original game imbalance."

Its a ripple effect, magnifying even the slightest imbalance. In a game where at least some of the market prices fluctuate by supply/demand the price an item commands is unchecked and free to express the full amplitude of the imblance.

"Put it another way, if I can convince enough good samaritans in a game to donate time and earn cash for newbies - where is the difference?"

I'm don't understand how this applies.

Posted Apr 22, 2004 8:13:50 AM | link

Dan S says:

One thing you left out of this that's fairly unique to EVE, Nathan, is the huge sums of ISK required for high end purchases. The very large ships require multi-billions, where the newb ships are free. This creates an impetus to hoarde ISK that may simply become habit in this game.

Other games may offer high price purchases, but those are usually player-driven, based on rarity, not cost-driven (huge amounts of resources). Hmm, trying to distinguish these two is trickier than I thought. It depends on the game a lot. In some games where these rare items that command huge prices are more random, luck is the driving factor. In others where their appearance is less random, persistence and time in game play a large role, and that isn't practically distinguishable from the mining of huge amounts of resources.

Still, in SWG (which I play pretty exclusively at the moment), the separation of rare item prices from newb gear is fewer orders of magnitude than I saw in EVE. I haven't heard of anything selling for a billion credits (I don't think our bank allows owning that much in the account). I don't recall from my days of playing in UO, AO, DAoC, EQ, etc. that any of those went past the millions in currency.

I guess my point is that the design of EVE is more focused on the development of huge fortunes than are other games. In the others it's a side "game" many play. In EVE it's required to reach the "end game" state.

One can (and many do) play SWG into the "end game" state on a shoestring. In EVE you can't get the big ships without a LOT of ISK.

How this affects your thesis I don't know. But it felt to me like something worth considering. EVE may be an exceptional case from which it would be dangerous to extrapolate.

Posted Apr 22, 2004 8:36:24 AM | link

Bartt says:

In relation to good hoarding, I think two of the bullet points above are tied together, but you seem to say 'no' to one, and a 'yes!!!' to the other. The two bullets are decoration and status symbols.

In my experience, players don't just use currency as status symbols, they use a vareity of decorations and rare products which they often display in their homes. Those people who have a lot of in-game money usually also have a very 'decked-out' home, with tons of rare items and decorations prominently placed where other players can see them. In my experience, status of a player is often visualized by both the amount of money the hold, the way they present their avatar, and the decorations/items found in their homes. It seems hat ll of these are linked somehow.

As for eBay offering a crutch to the in-game economies...sure, that's the case now, but that's going to change soon. IBM has spent a lot of time and money creating a middleware application that *supposedly* can be plugged in to these games to support direct in-game ecommerce, making transactions that normally go through eBay available within the framework of the game. (I actually think I read about the IBM product on a post here, but can't recall). This brings up some larger issues though, like each individual game being able to tax player-to-player transactions...which may leave the door open for continued eBay utilization, even with a similar in-game capability.

Posted Apr 22, 2004 11:58:52 AM | link

Nathan Combs says:


They wouldn't. As per the theory, a player's "scarcity anxiety" is curbed in relation to the ease of which he can fulfill his perceived scarcity. Yet at the same time he fulfills, and so do other players, the overall wealth has risen thereby flattening any particular player's disparity and creating a new plateu for anxiety or a new standard of poverty. MUDFlation at its very best.

Wouldn't MUDflation issue be independent of the "distribution" issue claimed in the theory? An economy where resources are fairly distributed can still be an inflating one.



One thing you left out of this that's fairly unique to EVE, Nathan, is the huge sums of ISK required for high end purchases... This creates an impetus to hoarde ISK that may simply become habit in this game... the design of EVE is more focused on the development of huge fortunes than are other games. In the others it's a side "game" many play. In EVE it's required to reach the "end game" state.

As for the uniqueness of the core Eve game (resource aquisition + production ladder channeled through a currency-based exchange) IMO its a pretty basic one (e.g. CG's: sim, strategy builder games), though I agree its relegated to a minor sub-game with most of the mainstream MMORPGs at this time. Perhaps, though, MMORPGs should feature them more prominently (e.g. "if they could only get it right")?

I agree that with these games, a "huge cash pile" is not automatically a hoard. But I do think there is a point when a cash pile can become one. Defining the tipping point is probably hard. The egregious cases, though, I feel would be clear.


In relation to good hoarding, I think two of the bullet points above are tied together... decoration and status symbols.

In my experience, players don't just use currency as status symbols, they use a vareity of decorations and rare products which they often display in their homes.

Yes, good point. I was limiting myself to an Eve-Online specific case. There are not many opportunities for purchase of decoration (items bought strictly for show display) in this game. However, dropping references to how much money you have in the bank (or your cash flow) in the help channel impresses newbies.

Posted Apr 22, 2004 12:39:25 PM | link

DivineShadow says:

"Wouldn't MUDflation issue be independent of the "distribution" issue claimed in the theory? An economy where resources are fairly distributed can still be an inflating one."

While the theory stated says that eBay is an alternate wealth distribution channel, can you really ignore that the activity required to operate this channel leads to increased MUDflation? Does the increased MUDflation lead back to heavier reliance on this alternate cannel as its (eBay) throughput is comparatively infinite?

Posted Apr 22, 2004 2:56:45 PM | link

crankyuser says:

The comments here about SWG and using cash as just another resource that some classes have in abundance is a good point. However, I agree with Bartt in that I don't think they're strong status symbols or hoarded like other objects. Do most players just convert cash to rare objects?

I attended a roundtable at GDC discussing collectibles, where we defined them as optional gameplay with some concept of scarcity and value; sought out of compulsion, completion, and need for status. Because of the aspects of being optional, scarce, and being able to be "completed," we ruled out currency as a collectible.

Posted Apr 23, 2004 1:54:49 PM | link