Correspondent Unggi Yoon reports that Korean government agencies are considering a crackdown on RMT. There's a theoretical case that RMT is essentially a pollution effect, hence a market failure, hence regulable. That case is presented here. Unggi's report is within. The last chapter of Julian's book is relevant as well.
Unggi Yoon:
"Nowadays, Korean IRS is seriously considering the matters of levingy taxes on RMT(especially on Workshop) &
a Korean prosecutor who is in charge of anti-cybercrime division in Supreme Prosecutors's Office stated that the act of RMT is the violation of korean criminal code §314(Do not distrub other's business/service), so the traders should be punished and games shoue be kept as game.
i wonder the two approches can be compatible simultaneously, even though they have same objective.
--unggi"
They aren't exactly incompatible... here in the US criminals are still expected to pay taxes on ill-gotten gains. That's how they got Capone and several others.
Posted by: Bruce Woodcock | Jul 13, 2006 at 13:52
What the hell is RMT??
Posted by: Ben | Jul 13, 2006 at 16:26
Ben:
(R)eal (M)oney (T)ransactions
In this case, RMT not supported by the original game.
Let's say online game developer makes a game where you earn gold to buy bigger and better weapons to whack things over the head with, to take even more gold.
They build the game assuming that you'll earn the gold yourself. On occasion, a friend might help you along, but it's assumed you earned the coin for that shiny new sword.
The problem is, you WANT a new sword and don't have the time. You DO have real money, though.
I, on the other hand, have plenty of time, therefore, I earn plenty of gold in the game, but no real money. I offer my "gold" on ebay or another auction site, or sell it to a specialist trader. You buy it from one of those sites, and a character meets you ingame and gives you the gold you bought.
Sounds trivial... sounds fringe... but as some of the people here can tell you, the estimates of the yearly "RMT" market is in the high millions (somebody toss out the latest annual estimate, please).
Posted by: Chas | Jul 13, 2006 at 17:09
Can't dig up the link but I think the most recent estimate was about $965mil annually?
I'm not the biggest fan of RMT, though feel I understand why it's here and how it, done right, can become a lucrative basis for micro-transactions to benefit developers and publishers.
Having said that, taxing RMTers I think would put a nice crimp into the illegal side of it. This is because in order to tax them, you need to track them, and have a system that finds those who don't want to be tracked. More money for the governments that potentially drives up prices to potentially lower demand. At the very least though, it should be easier for developers to petition the governments to help crack down on the black market part of RMTing.
Maybe :)
Posted by: Darniaq | Jul 13, 2006 at 20:20
There was an article from Korea on the taxation issue earlier this week. This may actually have the effect of legitimizing RMT and have a notable impact on the business operations of online game companies.
I would be interested to see the reference on criminalizing RMT. What I have seen is a move in Korea to take action against gambling on games in PC bangs (Internet cafes).
The data I have seen supports the number of about 1 Trillion Won (close to US$1 Billion Darniaq). Of course the other side of this is if the RMT participants are outside of Korea, how will the Korean government ensure taxes are paid? This will accelerate the legitimization of these transactions (I would guess it would need to move to a VAT type tax at the time of the transaction).
This will affect both the game companies and the third party commerce sites but be difficult to enforce. Basically, any transfer of a virtual asset or character or account from one individual to another would trigger a taxable event that the game company would need to track & report. No one else can really see the transactions.
Most likely, game companies are going to have to embrace these economies or really redesign their games to "prove" to the government that there is no taxable transaction going on - Virtual Asset Purchase games (where players actually buy everything from the game company) are a good example of an approach that doesn't have this problem.
Any game that allows players to "give" things to others is likely to have RMT. The matching financial transaction simply occurs outside of the game. The other option is to have everything that people exchange in game be done through an open internal auction. This would take the ability to get any real economic leverage with real money as you couldn't guarantee who will be making the purchase or the price... so no RMT leakage.
Posted by: Steven Davis | Jul 14, 2006 at 09:22
The size of the RMT market is hard to estimate, but the recent seizures by game companies should give one pause:
$3 Million equivalent in World of Warcraft.
$21 Million equivalent in Ultima Online.
$4 Million in Final Fantasy XI.
All reported in June. If you assume that these gold farmers don't sit on money for a huge amount of time (say 1 week to 1 month), you can infer a pretty darn large market... especially if they didn't catch everybody.
Posted by: Steven Davis | Jul 14, 2006 at 09:33
Steven, thanks for those numbers. Outstanding.
Posted by: Edward Castronova | Jul 14, 2006 at 10:51
This morning,[WoW Gold] Ralph Peters says out loud what many have been thinking about[wow gold] "our prisoner problem[World of Warcraft Gold]" in the wake of Hamdan, Abu Ghraib, etc.:[Cheap WoW Gold]
Such a policy,[buy wow gold] Peters writes,[World of Warcraft Gold] would be consistent with the[world of warcaft gold] "oft-cited,[World of Warcraft gold] seldom-read Geneva and Hague Conventions" and with the traditional rules of warfare.[world of warcaft gold] And it would indeed solve the problem of what to do with all those prisoners who probably can'[buy wow gold]t be kept imprisoned forever,[wow gold] but are too dangerous to release.[wow gold] Prospectively, anyway.[wow Gold]
Posted by: wowgold | Jul 15, 2006 at 01:26
What the hell was that??? Looks like comment spam to me...
Posted by: gus andrews | Jul 15, 2006 at 16:04
@Castronova:
"There's a theoretical case that RMT is essentially a pollution effect, hence a market failure, hence regulable"
I can't see how it is a market failure. The purported downsides of RMT are IMHO due to exploitation of badly designed in-game economies.
In your paper you give the theoretical example 'World of Hoosiers' in which exists an unlimited supply of Angry Bears - each of which a kill yields 20 pieces of WoH-silver and the sale of whose fur yields 5 more. The fact that supply of the 20-yielding bears is unlimited is in itself inflationary and compounded by the fact that Aimee Boggins (presumably a character integral to the game) always pays 5 pieces for bear fur - no matter how much the market is flooded! No wonder this type of scenario attracts farmers.
A more true-to-life scenario would involve Angry Bear extinction and price-collapse if too many furs came to market at the same time. Alternative sources of WoH-silver should similarly appear and disappear if over-exploited.
This would not of course stop RMT but would prevent brute-force farming and the consequent downward pressure on the value of WoH-silver via the RMT market. I believe this would mitigate the negative effects of RMT - farmers could no longer simply set-up shop in an area of the game and generate endless coin.
My point is that (unregulated) RMT could peacefully coexist with the in-game economy if only the latter was well designed.
Posted by: ross w | Jul 19, 2006 at 11:08
This is the 4th or 5th server Blogskins has ever lived on, and it's by far the beefiest. http://swingersinsex.coconia.net
I'm hoping that it's able to handle the massive load that you people are able to deliver.(swingers sex)
Posted by: Maria | Aug 08, 2006 at 17:50
It me be possible to legally ban the exchange of virtual goods (incl. currencies) with real life goods, but that doesn't mean that it would be not allowed to exchange a virtual good against e.g. a service. After all, if someone exchanges 3 WoW gold pieces against a stack of virtual silverleaf herbs, it may not be seen as a trade of virtual goods, but a trade against a service, because creating this specific data field for a character needs real life time. By the way, most Terms of Trade of companies trading with virtual goods claim exactly that, that any customer would pay for a service, but not for a virtual good.
In addition, if enough people play a game, a virtual currency may have an effect also outside of the game, even if the exchange with real life currency is banned. Everything can turn into a currency as long as enough people believe in it. Why should there be a difference between the numbers on your bank account and the numbers on your WoW account, as long as it is widely recognised as payment method.
With regard to the taxation point, I think it is very natural that as soon as real money gets into the game, there is a tax. I don't see any reason why you would be allowed NOT to declare any profit from such a transaction (real money against anything). And don't forget VAT.
Posted by: Daniel Stengel | Aug 09, 2006 at 06:17
I really think maybe Blizzard is crazy. In the recent 3 months,Most of chinese wow gold farmer in US servers had suffered seriously from the Blizzard's account banning actions.
Many 'world of warcraft' players may have realized that wow gold price is growing continuously in the whole market. The main reason, whether you know or not, is about Blizzard large-scale account closing. The official of Blizzard announced that they had closed 30000 accounts and eliminated 300 million wow gold which were hard-effort products made by many Chinese wow gamers. In the black July, the crazy closing-account behavior continues. As a result, thousands of farming accounts from China are closed and many game workshops in China are forced to close down. Is Blizzard crazy? Such closing-account behavior will lead to serious shortage of wow gold. Furthermore, many European and US wow players who are not willing to spend time on gold farming will lose much fun in the game because they fail to buy wow gold to purchase equipments in the game. In the end, Blizzard will lose a number of real gamers. Imagine what the Azeroth world would be like without Chinese wow gold farmers! Can a real wow gamer, take you as an example, continue to enjoy virtual life in world of warcraft?
Posted by: jack | Aug 20, 2006 at 21:31
I really think maybe Blizzard is crazy. In the recent 3 months,Most of chinese wow gold farmer in US servers had suffered seriously from the Blizzard's account banning actions.
Many 'world of warcraft' players may have realized that wow gold price is growing continuously in the whole market. The main reason, whether you know or not, is about Blizzard large-scale account closing. The official of Blizzard announced that they had closed 30000 accounts and eliminated 300 million wow gold which were hard-effort products made by many Chinese wow gamers. In the black July, the crazy closing-account behavior continues. As a result, thousands of farming accounts from China are closed and many game workshops in China are forced to close down. Is Blizzard crazy? Such closing-account behavior will lead to serious shortage of wow gold. Furthermore, many European and US wow players who are not willing to spend time on gold farming will lose much fun in the game because they fail to buy wow gold to purchase equipments in the game. In the end, Blizzard will lose a number of real gamers. Imagine what the Azeroth world would be like without Chinese wow gold farmers! Can a real wow gamer, take you as an example, continue to enjoy virtual life in world of warcraft?
Posted by: buy wow gold | Aug 22, 2006 at 22:10
Is there a moderator somewhere who can delete all these "buy wow gold" posts?
Posted by: Michael Hartman | Aug 22, 2006 at 22:13
I really think maybe Blizzard is crazy. In the recent 3 months,Most of chinese wow gold farmer in US servers had suffered seriously from the Blizzard's account banning actions.
Many 'world of warcraft' players may have realized that wow gold price is growing continuously in the whole market. The main reason, whether you know or not, is about Blizzard large-scale account closing. The official of Blizzard announced that they had closed 30000 accounts and eliminated 300 million wow gold which were hard-effort products made by many Chinese wow gamers. In the black July, the crazy closing-account behavior continues. As a result, thousands of farming accounts from China are closed and many game workshops in China are forced to close down. Is Blizzard crazy? Such closing-account behavior will lead to serious shortage of wow gold. Furthermore, many European and US wow players who are not willing to spend time on gold farming will lose much fun in the game because they fail to buy wow gold to purchase equipments in the game. In the end, Blizzard will lose a number of real gamers. Imagine what the Azeroth world would be like without Chinese wow gold farmers! Can a real wow gamer, take you as an example, continue to enjoy virtual life in world of warcraft?
Posted by: buy wow gold | Aug 26, 2006 at 04:30
Nowadays obesity has become the major health issue & weight loss has turn out to be the prime goal of obese people. It’s not just obesity but also many other diseases that comes with extra fat. Stop worrying now because cheap adipex has come to your doorstep to help you out. It simply lowers your hunger cravings by altering the hormones. Without any significant side effects, online adipex had helped so many people as it is just one click away & you can order adipex any time from anywhere. Don’t be too late to buy adipex as it is a perfect diet pill that can get you a perfect shape within a short time.
Posted by: adipex | Jan 11, 2007 at 03:30