Recently, I happened to catch a segment of Sesame Street that my daughter was watching. In it, Cookie Monster was trying to hire a human assistant to help him sell six cookies. Cookie Monster explained helpfully, “Cookie Monster sell cookies in order to have money to buy cookies”.
Virtual world exchange can feel like a Cookie Monster economy sometimes, but never more so than in Flying Lab Software’s Pirates of the Burning Sea. It’s been an interesting economy to watch as the live game has taken shape. Not so much because it is innovative or provides a fun game mechanic. Even by the standards of persistent virtual worlds, the economy in Pirates is unusually broken in functional terms. However, on one hand, it is one of the most successful Cookie Monster designs I’ve seen, in that it attracts players who are most strongly drawn to the game’s setting or the game’s design ambitions and niche vision. On the other hand, it also throws a sharp light on collective action in MMO economies that are designed to blunt or hedge against exposure to markets.
Mechanisms of exchange have evolved in graphical, commercial virtual worlds from some remarkably crude beginnings. Veterans of the early days of the first Asheron’s Call may remember that at one point, there was no mechanic for secure trade between players. You could hand someone else an item, and then wait and hope for payment in kind. Players responded to that certainty by trying to improvise a reputational culture, including players who built reputations as a trustworthy mobile escrow (both players in a trade would hand their items to the escrow player)., who would then verify that the trade met both of their expectations and distribute the items to their new owners.
Pirates of the Burning Sea has many of the features that have developed over the years to facilitate economic production and exchange, such as an Auction House. On the surface, the game presents itself as putting economic play at the center of its action. One of the three player classes for “nationals” (French, Spanish, English) is the “freetrader”, many of whose skills seem to confer economic advantages. The ships that players sail are largely built by player production, as are many other items used in the gameplay. Overall, the ostensible interaction of the economy and struggles between the four player factions most strongly invokes some of the design of EVE Online.
In EVE and many other games, the production of virtual goods begins either with materials gained through drops from combat targets or through the labor of gathering and extraction from the environment. In mining in particular, in EVE, the value and volume of the output is pegged partially to the game-mechanical skill of the player-character, partially determined by the amount of risk a miner is willing to take in dangerous areas, but it is also a product of the real-world time invested by the miner in production.
In Pirates of the Burning Sea, the faucet-sink relationship is skewed in an odd way. The faucet is as it is in many virtual worlds: players run missions and sink NPCs to earn money. The sink, however, is player-produced commodities. Players can pay to establish a warehouse in a number of ports, and then pay to build production facilities in those ports. Each production facility has a recurring rent associated with it, and there is a per-item cost that needs to be paid at the time of production. Many commodities also require other player-produced items as inputs.
The goods produced through this system are intended to be sold to players through an auction house. The first problem in the early history of the game is that the faucet and sink were significantly out of balance: the flow of money into the game’s economy was very tight while the sink of production-related rents sucked a lot of money out of the economy. The consequence was that the end product of most player production, ships and their outfittings, were expensive enough as to make many players reluctant to risk them in combat against other players. There were other problems, some familiar in the history of virtual worlds: some of the most potentially desirable player-produced goods are also drops from NPCs, the volume of production that the system allows swamps imaginable demand many times over for many goods, and some production chains seem to misconceptualize a high value of the ultimate product in relationship to its specified uses. This is aggravated still further by the fact that all types of players have effectively equal access to and capacity for economic production. Though the “trader” class on paper appears to have important advantages, in practice these are (so far) negligible.
The developers are moving to open the faucets wider, but there is still a structural issue that they and many players don’t seem to fully understand. When a player makes a sale of an item on the auction house, he’s not making value. He’s only moving value around. Money only enters the game through the labor invested in missions or combat against NPCs. In most other virtual world economies, including EVE, the production of items begins with the labor of players and is pegged to the time they spend extracting resources in some form or another. In Pirates, all players who want to engage in economic forms of play must rely on other players to generate currency value. Money can flow from the “worker” players to the trader players, but then money flows from the trader players back into the rent-sink.
The economy is a kind of Potemkin Village: on the surface, it looks like the economy of an economic-sim game like Port Royale with many primary and secondary goods being produced and listed that evoke the setting and mood of the game. But it doesn’t function very well, though a few players are fooled by the surface into imagining its depths. More importantly, the economy doesn’t sustain its own distinctive type or kind of play, it isn’t a sandbox of its own. The developers of Pirates have a lot of tasks on an urgent to-do list, but reworking the economy strikes me as something that both has priority and is exceptionally difficult to do.
Nevertheless, one thing that the flawed design in Pirates has helped me to see more clearly about economic behavior in MMOGs is something that I’ve come to think of as “turtling”. When I think about how a market in a virtual world could be seen as playful or ludic in its own right, I tend to think of an almost idealized representation of exchange and investment around a commodities or futures market. Looking for low prices as a buy, looking to make slightly differential profits as a seller. Looking for underserviced markets and opportunities, investing a great deal of effort in becoming a major supplier of a consumable good, maybe even engaging in a little collusion on the side with other producers or consumers.
In many virtual worlds, however, it seems to me that the most economically-oriented players look for serious bottlenecks in the developer’s economic design and move very quickly (often using knowledge from participation in a beta-test) to establish a commanding position at that bottleneck. This makes good economic sense, but it is often precisely what motivates a great deal of the actual economic activity of players to disappear from the structured mechanisms built into the economy, for a great deal of production and exchange to disappear from auction houses into the closed world of guilds. This is “turtling”: to protect themselves from being ganked in the open market by monopolizers dominating production bottlenecks, many guilds look to build vertical monopolies of important or crucial production chains from among their members and to reduce production to its base costs. This has the side-effect in some cases of killing any hope for playful exchange in public markets, of creating a kind of “guild socialism” within what is ostensibly a “free market”.
There is nothing wrong with this strategy. It’s a sensible way to curb one’s vulnerability as a player to the machinations of other players. And yet, it always makes me a little sad to see it happen to a major extent (as it has in Pirates). Any ideas about how to keep auction houses and similar mechanics sufficiently playful, to keep most players vested in the public economy rather than the private economy of guilds?
One of the elements favoring in house production in Pirates is there is very little economy of scale in production. It was a bit more efficient to set up ten lots producing one product, rather than ten lots producing ten different products. But not that much more efficient. So the incentive to buy from an efficient outside producer rather than produce in house was pretty minimal.
I don't think it would technically be a difficult thing to change. But there is a vocal group of players who don't want to rely on any outside party. Typically, half your player base resents there being an economy at all. That reality, and accommodating it, accounts for some of the strangeness of MMOG economies.
Posted by: Hellinar | May 02, 2008 at 18:13
One disadvantage that MMOG economies have is that they have to be have to be more "fun" than the real world, at least to the people playing that particular game. The closer that you manage to model a real life economy, the less people would want to play it instead of engaging in real commerce. If you are designing an economy for a MMOG, I think you have to accept that it is going to be warped, and concentrate on making it fit in with the rest of the world created.
This would be the perfect place to put my tirade about the economy that was planned for EA-Land, but I ain't written it yet.
Posted by: CherryBomb | May 02, 2008 at 23:30
It seems easy enough to make direct comparisons to Puzzle Pirates' economy because much of it is quite similar and Three Rings has done a lot of vocally transparent discussions about their Ocean economies.
Off the top of my head one obvious difference to the description here is that the sink of rents in Y!PP is siphoned into player bureaucracy, which can/does "turtle", but can be fought (blockaded) as well.
Posted by: Max Battcher | May 03, 2008 at 01:26
@Cherry…
How do we define an economy as *fun*?
While it’s hard to imagine the conversion of funds/raw-materials into virtual goods that can yield a larger sum of funds which exceeds the initial value of the funds/raw-materials used to produce said goods, that process seems to be exactly what drives crafting/trading focused players, thus providing them with a sense of satisfaction (AKA, I must say, fun). Sorry for the run-on sentence there, but it seems appropriate.
It’s been noted several times on TN, and on other MMO-centric sites, that one of the strongest features of SW:G prior to the Sony nerf-fest was its highly involved user-centered crafting/economic system (which by its sheer complexity insured that only a tiny fraction of dedicated crafters would become primary suppliers of *premium* goods).
EvE demonstrates a similar quality thanks to the enormous time investment that is required by players in order to “refine and perfect” the manufacturing processes surrounding any of the incredibly rare *premium* blueprints they may acquire. Shaving a few units of production cost off the manufacture of a widely purchased item makes the difference between profit and the poor-house in that environment, and there is certainly a contingent of EvE players dedicated to the goal of producing items that generate maximal profit for themselves and their corporations. I’m guessing here, but I suspect the folks who dedicate their time to these endeavors consider them *fun*.
@Hellinar et all…
Vertical integration within guilds/corporations/collectives seems to me to be an inevitable bulwark erected by players to counter mud-flation.
A stunning example is the recent economic upheaval exhibited in WoW. Blizzard introduced a number of “daily” events that allow high-level players to accumulate substantial cash rewards quickly (at least an order of magnitude of per-player revenue than was previously possible). From my reading, it appears that the developers intended these additional cash resources to somehow diminish inflation within the game world (a sort of *economy of plenty* was the intent).
What has happened, unsurprisingly in hindsight, is the *economy of alts*. Players with established high-level characters have been busily creating low-level alternate characters, and since it’s now easy to farm great quantities of funds doing the daily quests, the cost of items needed by lower-lever characters has jumped through the roof.
The interesting thing about this is the economic divide that now exists between the *haves* (those players who can utilize their pre-existing high-level character to generate required revenue to pay for over-priced items needed by their alternate characters) and the *have-nots* (individuals entering WoW’s virtual world for the first time and lacking the resources to acquire essential items that are now priced far beyond their economic means).
I suspect that many players encountering WoW for the first time at this juncture will become more than a little disenchanted by their inability to purchase items that would ease the grind-centric nature of Blizzard’s MMOG, and may ultimately alienate *fresh blood* that would continue to maintain the viability of their universe.
At any rate, given an environment with uncontrolled inflation (NPC *buyers* would need to maintain a lock-step with the virtual economy in order to somewhat offset the conditions we’re seeing in WoW these days, and that responsiveness hasn’t been programmed into WoW’s core economic engine), it’s not surprising that individual guilds/groups do their best to isolate themselves from economic upheaval by verticalizing their manufacturing infrastructure, often giving up individual profit entirely in order to insure the betterment of the group as a whole.
I’m guessing that a similar mechanic is driving guild/group vertical-integration in other MMOG’s, but I lack sufficient experience with those worlds to comment.
Nick G
Posted by: Nick G | May 03, 2008 at 01:46
Interesting read. First, in WoW as many players now have both 2 and 3 level 70 characters, this type of parallel economy is also taking place very much on an individual level. Secondly, I believe (at least in WoW) that the large volatility in prices and markets directly leads to this type of risk management.
Example; A dps-flask can cost anything from 50-100g, but if a player gets all the herbs himself, send them to his alt who is alchemist, he knows exactly what he is paying. (In time.)
Posted by: ML | May 03, 2008 at 03:10
In mining in particular, in EVE, the value and volume of the output is pegged partially to the game-mechanical skill of the player-character, partially determined by the amount of risk a miner is willing to take in dangerous areas
I'd just like to point out that what's stated here regarding risk is the way things are supposed to work, but the risk to reward ratio in mining in EvE has been broken for a while now. The level of profitability for the minerals the require mining in the truly dangerous parts of the galaxy is only slightly better than mining in highsec.
On our last lowsec mining op, we pulled in about 1.5 million isk per person per hour, whereas mining in a regular high sec belt makes about 1.2 million isk per person per hour. It is worth noting that we only had 1 guard and 1 hauler, the rest of the folks were miners... so we weren't getting hit too hard by support cost. The only people who are really mining in lowsec (or nullsec) are the folks for whom there is no risk, those who either control the space they're mining in or are so powerful that they are not really threatened.
Additionally, the recent change to remove NPC sales of shuttles removed one of the artificial caps to the value of Tritanium, which has made mining Veldspar (the most common ore there is, which can be mined without even NPC pirates to fight) suddenly one of the most profitable mining ventures in the game.
Needless to say, the folks behind the mining corporations are not terribly happy.
Posted by: cliff | May 03, 2008 at 08:13
Nick G. >While it’s hard to imagine the conversion of funds/raw-materials into virtual goods that can yield a larger sum of funds which exceeds the initial value of the funds/raw-materials used to produce said goods, that process seems to be exactly what drives crafting/trading focused players, thus providing them with a sense of satisfaction (AKA, I must say, fun). Sorry for the run-on sentence there, but it seems appropriate. <
Selling your outputs for more than the cost of your inputs certainly drives trading focussed players. But by no means crafting oriented players. Some are traders too, but a lot of crafters just like making stuff. In “A Tale in the Desert”, many crafting operations required player skill. Many skilled crafters simply gave their product away, because they had already been paid in fun while making it.
I think that “fun” should be the currency of MMOGs. At least at the design level. One characteristic of fun as a payment scheme is that there is a reverse economy of scale. Farming one resource for an hour can be fun, two hours a bit of drag, and three become work not fun. If you follow the logic of that through, then some things that are good in a money market economy become bad in a fun market economy.
For example, if WoW wanted to increase the fun quotient in crafting, they would allow people to list stuff on the Auction House as “bind on purchase”. This would allow crafters to sell to end users at the price they wanted, without people coming in and re-listing goods at a higher price. It would make gathering a lot more fun too, at least for me.
Posted by: Hellinar | May 03, 2008 at 12:06
Just speaking from a different MMO's perspective, this is why I went with the Cooking tradeskill in Final Fantasy XI when I still played. The economy has seen its highs and lows (including mass inflation by RMT and then a fallout afterwards), but Cooking has remained relatively stable since my customers use up what I sell them. The game reached a point where a lot of the tradeskills lost a lot of profit potential—to the point that there was almost no point in leveling a craft—simply because there was so much crafted weapons and armor that was continually being sold back on the auction houses. Equipment in that game had unlimited durability and would only go away if you sold it or threw it away.
Cooking, obviously, didn't have this problem since the product was being eaten on a daily basis, with a demand for various types of food and drinks which would help out various character types. A bind-on-sale property would have solved the issue in the long term, but it also raises questions about how likely people are willing to buy equipment if it were bind-on-sale.
Posted by: Jinn | May 04, 2008 at 21:30
Eve is a very special case because there are nearly 300k accounts on one server. When you have more like 3k accounts per server the economy must be simplified quite a bit, unless you want to force the bulk of your players to do nothing but craft and grind. Think of it like a small village economy, in a village where the average person is only "awake" for a couple hours per day. In such an economy, you can start with almost no systemic controls and nearly everything consumable will be imported until the village can become self-sufficient. Until people get on their feet economically, you have to set it up so that they can all work together for mutual benefit, to get the tings they all need from an outside source (like NPC vendors and loot drops). Once you get healthy competition established, you can impose restrictions and decrease faucets and/or open up the sinks. Eve finally removed the tech 2 blue print faucets in the last year, and the shuttle vendors in the past month. As the economy becomes more solid you take away the faucets and see if prices will solidify due to natural competition. You can't start an economy on such a small server and expect people to be able to provide everything the economy needs from day one, unless there are very few things the economy needs. Artificial competition from NPC vendors can be used to do two things: 1)Control end-user cost of goods, and 2)Provide sufficient quantities of goods to keep the game flowing. Another thing Eve has done right is that high value items are so complicated to make that a single person needs to specialize in certain items. Therefore, one person can't be a supplier for all types of goods. Even a large alliance will have a hard time with the amount of time and organization needed to produce everything it needs to sustain itself. Therefore vertical growth and turtling is limited by diminishing returns. There's profit to be made by producing things, but the amount of time and organization required becomes unmanageable at some point.
Posted by: SVgr | May 05, 2008 at 09:49
An MMO that has a rich, robust economy is the only kind of MMO that I find deeply fun.
Player made items in a game ought to be the primary source of items. Yes, this requires an interesting "start" as the world would have to somehow be entered by avatars at launch and you would have to dole out the wealth of existing assets, but once that is done, a true economy could be created.
I would love a virtual world that had huge amounts of raw materials, some renewable, some not, but did have a SET limit of non-renewables.
I would also see as ideal a vast tree of skills that would not allow any one player the individual ability to build houses, carts or boats alone.
Scarcity of materials as well as scarcity of skills would create an interdependant economy.
Finally, were this economy open to destruction, say...in an open pvp environment, wherein everything can be destroyed, including the avatars themselves having at some point a permanent death....this kind of economy would be most robust and rewarding.
Many balk at these ideas, but the most fun I ever had in an economy was the one where I could lose it all at any time, like the early days of UO some 11 years ago.
Posted by: Fornax | May 06, 2008 at 13:07
Mr. Burke,
As a long time Captain of Industry in POTBS, I can state that the main failure of the Cookie Monster economy and end result of Turtling is exacerbated by the failure of 1 doubloon to ultimately generate 2 doubloons. As you discuss your sink, in fact often results in only 1 doubloon at best generating 1.1 to 1.15 doubloons.
Those that are able to vertically produce a product and capitalize on the demand for individual commodities, in fact, can produce very high volume and at a higher rate of return than a dabbler in the same commodity.
The simple solution to this is to provide ample sources to return these doubloons into the market via NPC/Auction House buyers. As simple as returning 30% for raw resources, 50-100% for manufactured goods, 100-150% for finished products.
This would stimulate the production and economy by ensuring that 1 "sunk" doubloon resurfaces at least back into the hands of the manufacturer or trader. It would prop the player economy up, support the widening of production and stimulate trader interests in a number of ways.
If the buyback process held logic allowing a certain amount of volume per port, such as places far from wine production buying wine at a much higher volume. The designers, I'm sure, intended this to happen organically amongst the players and various factions, but in fact, turtling and socialized centralization has removed the opportunities for all those outside these specific groups.
As it stands now, the solution to making money is being terribly cruel to the individuals without centralized societal production or multiple accounts. As a multi account crafter, I could easily command large sections of the very few remaining high value commodities, but have chosen not to do this in fear of driving more players from the market.
Instead I provide my manufacturing and resource base to a number of individuals and societies at cost as a service to allow them to produce for a profit.
As the player numbers reduce, more society centralization occurs, the economy will remain stagnant and consist of only the highest end gear and ships and impressive rare drops from grinding.
The generation of net new doubloons and mass liquidity are over. New players, new needs for structures, for new ships, for startup of their own production no longer exists, or to such a low level that people join turtled societies or companies.
The grinding becomes so specific towards Ships of the Line and line ship bundle projects that the main source of in game net new liquidity is going right into society sinks with very little chance to grow any factions GDP.
FLS is taking steps to put pressure on players to produce without meeting the ultimate goal of ensuring a reasonable rate of return. The Free Market is broken and until players that do produce either leave, or stop producing, increasing the rate of grinding doubloon drops on the open sea, removing the grinding missions and allowing dropped loot to be pure profit to the looter, crafting economics will not make sense but for the very few.
FLS must introduce a commodity market, we cannot rely on those very few players that buy from the free market to fix the massive centralization of doubloons and production in single societies.
Posted by: Erik Engstrom | May 09, 2008 at 15:37
As a member of a "turtle" society within PoTBS, I'd like to provide possibly another viewpoint.
On my server, the British had a terrible advantage of numbers for a while. While this provided them with additional lots for production, they also held quite a bit of DB. They then used any money not needed in their production facilities to purchase raw materials from enemy nations' ports. As the 40% taxes on a foreign nation only apply to non-nationals production facilities in that area, not to purchasing goods at that AH, there is no penalty to them. Their ability to do this allowed them to crank out SoLs at a fairly rapid rate.
As a smaller nation, desperately trying to sustain the ability to defend its ports, what is the solution? We chose to stop selling our goods in the AH's, but rather setup "underground" supply lines within our nation and between our allies.
This was a coordinated effort between two nations caught in a war. That is what I like about PoTBS, that the economy is not there as something to do when not adventuring, but rather it's there to primarily support the ongoing wars of the various nations. Thus, in my opinion, it should be manipulated strategically as a tool of war.
Posted by: Pryde | May 16, 2008 at 10:05