Terra Nova

Social Value

Deep in our underground hollowed-out volcanic lair, ninja scientists have developed an algorithm that I think will have a large impact on both science and commerce. We call it "Social Value."

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.

Fun with mapping

Holy smokes, but someone did a real Mapping test using SimCity and his hometown's traffic. It's not exactly rigid science, but this is the sort of application I've been hoping to see since writing this thing.

A bit too far?

You can’t get arrested for using BitCoin (yet) but you probably can for that pun.

To get to the point - I'm worried about BitCoin. 

China Uses Prisoners to Farm Gold

Another reason to be against gold farming. Thanks Dmitri Williams for the heads up. (http://www.guardian.co.uk/world/2011/may/25/china-prisoners-internet-gaming-scam)

 

Lehdonvirta: Knowledge Bank of the Virtual Economy

Under the sponsorship of the World Bank and the IFC, Vili Lehdonvirta has authored a masterful overview of the phenomenon of virtual economies. This is a must-have resource for anyone interested in how virtual economies function and what they are all about. Especially innovative is the focus on using virtual worlds to spur development, a direction first indicated by Richard Heeks at Manchester. 

Rift: Coin Locks

Many years ago, I overheard someone at GDC say "Online games are big database transaction systems. Big banks." Last night I logged into Rift for the first time and saw the Coin Lock symbol. Your account becomes coin locked any time you log in from a new place, or haven't logged in for some time, or when they reset all the locks in the game. If your account is coin locked, nothing in it can be destroyed or transferred. You are unable to conduct any economic transaction. To unlock the account, press a button and an authorization code is sent to your email address. It's just like a bank security code system, in other words.

Rift's Coin Locks are a tidy way to enhance account security and increase the business costs of hackers, pirates, and gold farmers. Well done!

RMT is actually bad

Some years ago I argued against RMT. I published a paper in which RMT was described as a scourge, a blight upon game systems.

Analysts from the game industry have studiously addressed this issue from within, concerned as ever with providing their players with a superior experience. Even CCP, the most libertarian of developers, now engages in open war against the gold farmers. Since March 2009 (judging from Ajo's talk today), CCP has attacked RMT with a vengeance.

It makes sense. RMT is associated with degraded user experience (my original claim), credit card fraud, account hacking, and excessive CPU/user metrics. Playing the game for reasons other than game play are destructive. It harms other users. There's a good ground in policy for regulating RMT, and I am glad that CCP, with the Flak-88 of statistical power it now commands, has turned it reticule on this nasty problem.

 

Madness? Or Sparta?

WSJ reports this morning that Zynga is worth $7b. Is it?

Games, Narratives, Marketing

Multiplayer gaming is collaborative storytelling. That makes it hard to be an author. How to you induce the special experiences you want the Other to have? Sometimes you have to massage her behavior. Gee - if you knew how to use game tools to massage behavior in the service of nice aesthetic experiences, you could probably massage behavior toward other ends too (so long as nice aesthetic experiences went along in the baggage car). Yes!

For example, you could use D&D storytelling methods to sell stuff.

Virtually Level

 

Does a book (new out in the US) point to a happy, healthy, virtual future – just like a certain TN’er told us?

Gamification

You remember Jesse Schell's TED talk about games invading real life, and Lee Sheldon's Quest-driven syllabus. A new startup aims to help anyone import game mechanics into any kind of motivational situation.They call it "gamification" and can be found at Gamify.com. It's a strategy operating on the border between intrinsic and extrinsic motivation. Dangerous territory, filled with risks and treasures. Expert guides to it, though, will be in high demand.

(Disclosure: Nada. Don't know these folks from Adam.)

This Christmas, Protect Your Loved One From Games

Brett Arends of the Wall Street Journal offers ten reasons why he does NOT want an iPad for Christmas. Reason number 7: The games. Writes Arends:

"Yes, they're great. But that's the problem. Computer games are as addictive as cigarettes. And this is a habit everyone is taking up, not quitting. This is why I dumped my iPod Touch. Am I alone? Maybe. But I don't think so. I know lots of people with horror stories about addiction to immersive games. Someone I know—now, as it happens, a British member of parliament—once sat down to play Civilization, a role-playing game, on a PC one Saturday evening and didn't finish until three o'clock ... Thursday morning. (He stopped when he ran out of cigarettes.) And that was on an old PC. Games on the iPad are more intense than ever. A friend recently showed me some of the serious news apps on his iPad. I noticed that to get to them he first had to "wave" us past several screens of games. Is he really using his iPad to read that article about the Indonesian economy, or is he playing Angry Birds? Hmmm. You make the call."

Separating Recession From Trend

Blizzard's Cataclysm broke a single-day sales record for PC games: 3.3m copies in a day. At $40 each, that's $132m revenue in a day.

The weekend box office for the latest Narnia move this past weekend was $24m. The other fantasy releases like Tangled and Harry Potter, came to $24m in their second or third week. I took my two kids and three neighbor kids to Tangled last weekend. It cost me $90, you know, $10 for $1 worth of popcorn. I'm asking myself, what's the value proposition here? Why are we doing this?

Music sales numbers continue to slide. Michael Jackson sold 8.2m albums for Sony in 2009. If an album still costs $15 (does anyone buy albums?), that's $123m over a year. But after that blip, Sony's sales growth is in negative territory again.

TV ad revenue is down, though still in the billions and billions.

Activision says that Call of Duty Black Ops sold $650m over five days.

I'm seeing a really healthy interactive / fantasy media environment living in homes. Growing robustly despite the blah economy. But I wouldn't put money into music, TV, or going to the movies. TV can be soaked for a few more years yet, but the prospects are dimming. When the economy turns around, these things won't.

An Exodus Recession?

The economy continues to move slowly and economists seem as uncertain as ever about the causes and what to do. Months ago, I began to wonder – could this possibly be the first “exodus recession”? In my first book I sketched out the idea. Suppose economic activity moves from the real world into the virtual world. Human happiness is unaffected or even goes up, however, the goods that produce the happiness are now produced and consumed in a virtual environment rather than the real one. Measurements of economic activity, being all based in the real economy, would begin to show weakness. I argued that contemporary political and economic control systems do not tolerate much weakness, thus, there might well be some sort of crisis in the real world, for no good reason, simply because production and consumption was going “off the books” and into virtual environments. One term for this would be an "exodus recession" - an economic downturn caused by the movement of human attention and energy into virtual environments.

Are we in an exodus recession right now?

LOTRO F2P Seems to Be a Success

On September 10, continuing a trend away from the subscription model, the Tolkien MMOG LOTRO opened the doors of Middle Earth to anyone. I hadn't dropped in to check until tonight; I couldn't sleep so I thought I might kill some orcs for awhile. I was surprised to find, at this hour (3am US EST), a queue on my server. The game normally had 8 servers, now it has 15. There were more people than usual questing at mid-level, and quite a few young hobbits running around the Shire. I don't know about the end-game - as with most MMOGs, its more of a sport than a fantasy RPG at that level, so I don't have characters up there. 

In other words, it seems that Turbine's guess that F2P would greatly increase interest was accurate.

The economics of this involve network effects and entry costs. If your product provides exponentially more value when more people use it, you really want to take a loss on the first users. Those early users are the source of value of potential new users, and having them in your game means that more outsiders will join.

There's also an aspect of low entry cost here - why indeed should there be any barrier at all between the new user and the experience? The prior test drive mechanism required people to get the software at the store, sign up to pay, and then quit within a month if they were unhappy. The new method lets people simply download the client for free and click 'Play.' So long as you can eventually get revenue from these more casual folks - through simple in-game points systems and such - this can work.

The question is, will you get enough revenue? By opening the door, will you get enough new people that the nickle-and-dime revenue strategy makes up for the loss of good, solid, almost-guaranteed subscriptions?

The fact is, even though F2P started among casual games, it is the main model of new launches these days. It will be interesting to see whether LOTRO's move further extends this trend to the intense-game space, or conversely provides a counter-example.

So far, it looks like a winner.

Women, Men, and Virtual Item Purchases

Gamasutra has a very interesting report on a recent study of the virtual item economy. More men do it than women, but women spend more money on average. Medians are much closer, indicating that much of the difference is in the upper tail: There must be some women who really buy a lot of virtual items.

Among those who buy virtual items, the average spending amounts are in the $20 - $50 annual range. A very high percentage of the sample (drawn apparently from people who are in games and on social media sites) engages in some sort of real-for-virtual transaction. It seems to be mainstream, normal behavior within this group, and this group, as we know, is getting bigger and bigger.

Similar studies suggest that the virtual economy continues to grow in significance relative to the bricks-and-mortar economy.

Thanks to Ed Gentry for the tip.

Skirmishes and Powerleveling

I was doing an interview the other day and was asked about the future of gold farming. Without thinking too hard (because there's good evidence), I responded that I thought its future was not very bright. While the virtual goods market seems as hot as ever, it also has been internalized by experience providers. This stands to reason - why let 3rd parties monetize the eyeballs you've captured?

The conversation turned to powerleveling and I stopped to think about it - equally dim future there? I think so. I've been in the resurgent Lord of the Rings Online quite a bit lately, and the skirmish system seems well-designed as an internal PL system. (I understand WoW has something similar, instant dungeons.) The main forces driving the powerleveling market are the need of experienced players to level up alternate characters. Once you've gone through the geographic content a few times, exploring's not a thrill any more, and it becomes a grind. Riding switchback alley from Ost Guruth to Rivendell for the umpteenth time - bleh. Enter the Skirmish. If you just need to kill stuff and gain XP, you cut out the traveling. Press ctrl-J and pow, there you are, solo if necessary, facing a challenging 45-minute adventure with good XP and loot rewards.

On the whole it seems that the industry has worked on co-opting and internalizing 3rd party services. This seems to be good for the gaming experience. There's no gold spam in LOTRO, and my server (Landroval) has a very active RP community with little evidence of griefing between them and the powergamers.

Virtual Goods at GDC

Spent the day at LiveGamer's event. Virtual goods now a $6b business. Secondary market at $2b. Growing at 40% per year. Number of people with some kind of virtual world account in high hundreds of millions. Rumor that US states will begin charging sales tax on virtual item sales within the year. See RetailingToday.com, Dan Hansen, Feb. 26.

Virtual Goods Economy: Going Strong

Major James D. "Pidge" Fielder, USAF, points us to this report by CNET's Dave Rosenberg indicating that the virtual goods market, once confined to the insides of MMORPGs, continues to expand into all kinds of social software systems. Thanks Pidge!

Violins: Magic Items in the Real World

I have been discussing violins with my neighbor, violinist Alex Kerr (who is both classy and world-class).

Once made, a violin matures over the course of hundreds of years. It comes to produce sounds of unparalleled high quality: voice, sweetness, juice, subtlety. When played by an expert, the best violins produce experiences that approach a kind of transcendence for the player. For an eloquent expression of this transcendence, read these remarks of Thomas J. Beczkiewicz, founder of the International Violin Competition of Indianapolis. While we on the outside can detect the quality of sound, we cannot explain it, and we certainly cannot trace it to anything observable or measurable about the instrument. The instrument is, somehow, special.

The best violins have a known history: Who made them, who played them, for how long, and how they were transferred from one owner to another. As each generation of great violinists ages, speculation goes on about which members of the upcoming generation will inherit the great instruments. Once a great violinist has his hand on one, he does not easily give it up, as the instrument he owns becomes a part of his reputation vis a vis other violinists.

Violins become named for previous owners, such as the Strad ex-Gingold. While many violins sound about the same to an untrained ear, experts can detect minor differences in quality along many dimensions. Some violins are considered to be best in every respect; even though the quality difference between 'great' and 'best' may not be big, especially in terms of impact on the general audience, the price differences are huge. Since 1850, the price of fine violins has appreciated at 3.5% per year in real terms, better than US Treasury bonds.Given the high prices for the best instruments, fine violinists often enter into loan-to-play arrangements with groups of well-heeled investors.

Let me now describe violins in the terms game players apply to special items. Violins are magic items...

China to ban RMT, maybe.

Thanks to Andy Schwarz for tipping us to this article in Information Week reporting on a Chinese government press release supposedly banning the sale of virtual stuff for real money. In the backchannel, Julian Dibbell reminded us that Korea did the same thing a couple of years back to no effect. No effect because it is hard to do without redesigning the virtual economy, and also because the law's intent was not actually to ban RMT. As we all know, some laws regulating a practice are not really intended to stop it - whatever the preamble might say - but to control it merely.

So: What is China up to?

A Taxpayer May Wonder

Two weeks ago, the U.S. Internal Revenue Service's "taxpayer advocate," Nancy Nina Olson, announced the release of her office's annual report to Congress, a yearly federal ritual whose long and impeccable streak of unnewsworthiness was broken this year by the inclusion of an item that actually made headlines. IRS May Push for Tax Compliance in Virtual Worlds, was the Washington Post's. IRS Official Recommends Policy on Virtual World Transactions, echoed the gamers at Kotaku, and IRS Report Recommends Self-Reporting Virtual World Income, added Second Life watcher Wagner James Au at New World Notes. The stories all correctly related the basic fact of the matter: In a detailed, 13-page passage, the report urged the IRS to "proactively address emerging issues... arising from virtual worlds." And if the stories all nonetheless failed, each in its own way, to relate the real news of the matter, that's understandable, because the news here is subtle: What this report delivers, in effect, is nothing more and nothing less than official recognition that the question of virtual-goods taxation is actually, like, a question.

On The Serio

[1/13/09 there's a tech glitch with typepad right now that seems to be messing with some of the fields, including comments. we are trying to figure it out.]

A few days ago I sent an message to my distribution list (full text below the fold) telling everyone that I'm starting to sort my Inbox using a currency called the Serio. The Serio is a virtual currency that can be attached to emails. Since it is a scarce resource, I know that a message with more Serios attached means more to the person who sent it. For that reason alone, I should pay more attention to that message.

That was my reasoning. Since I sent the note out, there has been quite a lot of negative reaction. That is not all that surprising if you know much about the history of public reaction to prices - people hate them. Making things more heated in this case is the frequency with which people think that virtual is the same as digital which is then thought to be costless.  As a result, the idea of applying a price in terms of a virtual good, to ration attention, a good that has always been thought to be free, has stoked some angry discussion. The anger in turn calls for a calm reflection on what prices are, why we have them, how virtuality changes prices, and how all of these things relate to human well-being.

Whither MMO economies?

CBBC, one of our longtime commentators, asked a question by email which seemed worth asking here:

My question -- and do forward it along -- is: What now for virtual economies? What happens to Eve now that Iceland's economy is collapsing?

Long ago, I asked in a Terra Nova link-mail, what influence (or lack of it) Eve had on the value of the ISK. That was when I thought Terra Nova was a hip economist hangout. Nobody wants to identify themself as an economist anymore, so I suppose you are all social scientists. Okay. What now? Will my WoW gold be worth more or less? Will games go under taking their  value with them? Will we see a run on games the same as a run on banks?

Rigorous Analysis of RMT

Courtesy of Richard Heeks of University of Manchester, everything currently known with any confidence about gold farming is reported here, without any apparent agenda.

Arden: Final Results

The results of the Arden project are available in a working paper here.  The working paper has also been submitted to a journal for peer review.

Summary: In a fantasy game setting, we made two equivalent worlds and set the price of potions to be higher in one than in the other. We found that people bought fewer potions when they were more expensive.

Discussion: The result suggests that people in fantasy games act in an economically normal way. Perhaps these game worlds can be used to study real economic behavior.

The results are based on an environment that was significantly more fun to play than the first one we made and represents the completion of the Arden project. My thanks go to the MacArthur Foundation for their early trust, their support through hard times, and of course the funding that made the study possible. I'd also like to thank the Bioware corporation for allowing us free use of Neverwinter Nights.

You can download the game environments we used for the study here.

Patenting Virtual Commerce

Last week I received the following email from an officer of the US Patent and Trademark Office (USPTO):

I am a Patent Examiner at the U.S. Patent & Trademark Office in the area of Business Methods, Finance.  I am the examiner of record of multiple patent applications  (20+) involving virtual worlds and different types of credit accounts, charge accounts,  escrow transactions, risk mitigation (to name a few) used within these worlds….I am looking for references from 2004 and earlier.   A published paper, game manual, or even a detailed blog entry that details the economic system / banking system / shopping / business creation in a MMORPG (especially Second Life) would be amazingly helpful.

As a relative newcomer to virtual worlds (I started writing on these matters in May of 2007), I promised I would pass on this challenge to Terra Novans.   But I can’t help also asking for opinions on a few aspects of the patents that raise some pretty interesting issues.  More background and gory details below the fold, if you dare. (There are a LOT of details).

Maxwell's Hammer

From time to time here on TN I've delved into methodological territory, and in my last effort, quite some time ago, I focused on the charges of "anecdotalism" that qualitative research in the social sciences sometimes faces, and argued that generalizable claims can be generated out of such methods. But, in retrospect, that piece did not confront the root of the problem directly, given the degree to which I do not there question generalizability itself as the core aim of scientific inquiry.[fn 1] As research on virtual worlds continues to increase, and as the different parts of the academy ramp up their efforts to fight for their funding (and perhaps thereby seek to discredit other approaches), it seems worthwhile (and consistent with the ecumenical spirit that largely characterizes TN) to consider how scientific the pursuit of other kinds of claims apart from the general are.[fn 2] And that's where James Clerk Maxwell comes in...

Arden Experimental Results: Preliminary Release

Some of you may have been following the Arden project (reported in Nature and the Chronicle of Higher Education). I'm pleased to announce that the project has come to fruition. With generous support from the MacArthur Foundation, we have created a fun game environment and used it to conduct a month-long experiment. Our experimental question (kept secret up to now) was: Are fantasy game players economically "normal"? Or on the contrary, when they make themselves into elves and dwarves and hobbits, do they stop taking economic decisions seriously? We created two virtual worlds, one an exact copy of the other, except that in the experimental world the price of a simple healing potion was twice as high as in the control. If people are taking prices seriously in this fantasy environment, they should buy fewer of the potions when potions are more expensive.

Sub-Prime Crisis in Second Life

Real-world regulators are already seriously considering action against  high interest rates for poorly-collateralized loans with high default risk (so called "sub-prime" mortgages).  Well, Linden Lab has moved strongly to eliminate a class of such loans, with a twist:  the banks are paying the high interest rates, and are the ones that tend to default on their depositors.  Here is the key statement in the Linden Lab policy regarding inworld "Banks" (their quotes):

As of January 22, 2008, it will be prohibited to offer interest or any direct return on an investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter.  We’re implementing this policy after reviewing Resident complaints, banking activities, and the law, and we’re doing it to protect our Residents and the integrity of our economy.    (Full text here.)

My analysis and predictions below the fold.

Exploitation of Christmas Extends to Virtual Reality

Thanks to Sasha Barab, designer of the educational virtual world Quest Atlantis, this link to a news item about virtual gifts. Says the AP:

"You don't wrap these presents in a box. You can't wear them, play with them or show them off, at least not in the real world. Even so, virtual gifts -- computer-generated items given and displayed online -- are quickly becoming must-haves. And increasingly, people are willing to pay cold, hard, real-life cash to purchase them for friends, family and co-workers."

Metanomics

My plan to teach a course here at the Johnson School has blossomed into a partnership with Metaversed to present a public speaker series and website called "Metanomics."  Thie series is open to anyone who wants to hear from—and engage with—academics, industry leaders, regulators and influential virtual-world residents.  So far, our speakers list includes legal scholars Joshua Fairfield and Bryan Camp, the unclassifiable Ted Castronova and Julian Dibbell, Congressional Staffer Dan Miller, Second Life tycoon Anshe Chung, and senior representatives from IBM and Intel—with many, many others yet to commit.  Yours truly is kicking off the series with a session entitled "Metanomics 101."

This post defines metanomics, clarifies the scope and goals of the series, and asks Terra Novans for some help.

Goldilocks and the Three EULAs

Many TN readers know that I have been interested in developing a virtual world platform (Worlds For Study) that can be used to study regulation.  To get an idea of what I mean, consider the following experiment in a game like World of Warcraft or Entropia, except with a business focus (hostile takeovers, but no dungeon raids; I think of it as World of Bizcraft):

• Create two virtual worlds that are identical except for one regulatory feature (such as consumption taxes instead of income taxes).  After months of play, how would the worlds ultimately differ in terms of wealth creation, income inequality, or whatever other features interest you?

There are obviously many hurdles in succeeding in this ambitious project (as pointed out by the excellent comments to these posts), but also tremendous educational side benefits.  Today, I want to focus on one particular issue:  Can one craft an End User Licensing Agreement (EULA) that gives players few enough property rights to allow the world developer to impose their own inworld regulations, while still protecting property rights enough that players have strong incentives to pursue profit?

Sustain That Brand

State of Play V, from immaculate Singapore, kicked off this morning with a panel on "Building Businesses in Virtual Worlds." As I write I'm listening as the panel wraps up, with the panelists -- all involved in business development companies that focus to some extent on virtual worlds -- taking questions from the audience. But continuing to resonate in my mind is a phrase that panel participant Ken Brady of Centric used in his remarks to characterize what businesses should aim for in virtual worlds moving forward: "sustainable branding." This idea was echoed by the others on the panel as the discussion progressed, and to me this should prompt us to continue to think about the current era of virtual worlds as one that is beginning to be defined less by the relationship between their makers and their users (as individuals or nascent groups), and more by the expansion (one might even say colonization) of them by both emergent and pre-existing institutions.

All Bets Are Off

Linden Lab has recently changed their policy about gambling in Second Life, effectively banning it (find a clutch of news reports here). The specific demands, in terms of policy and regulation, that gambling and other significant-stakes gaming make on virtual worlds have drawn my attention on TN before. Here I'd like to ask TN-at-large the following: What do you think the effects of this policy are likely to be on SL? On virtual worlds in general (if any)?

SWI's Declaration of Virtual World Policy

Ted's Synthetic Worlds Initiative at Indiana University convened the second Ludium Conference this past weekend in Bloomington. Attendees were charged with hammering out a well-considered platform to guide virtual world policy. We were successful, and the Declaration of Virtual World Policy [Edit: along with its wiki] has been posted by the conference's designers, Studio Cypher. Here it is for your perusal and comment (along with more details):

Recalculating the Global Virtual GDP, Yet Again

Albania? Nepal? Try Lebanon, noob.

Very soon after the New York Times Magazine published my account of life in the gold farms of China, I received an email informing me of a ghastly factual error in the second paragraph. “I’m not quite sure who you are targeting with the article,” the message began, “but if it was any of the ‘8 million’ players of World of Warcraft they all stopped reading at ‘night-elf wizards.’” I was mortified, of course (everyone knows night elves can’t be mages, for God’s sake), but there was an upside. If all those WoW players were bailing at paragraph two, that meant 8 million fewer chances I’d be busted for the even more horrific cock-up several paragraphs below: My butchering of world geekery’s most vital economic statistic, the total gross domestic product of all known virtual economies.

The offending passage follows. It is a scene of wanton, unadulterated factual imprecision, but if you think you’ve got the stomach for it, read on…

Real Politik

Almost exactly a year ago I asked whether virtual world makers with significant economies and RMT should "'open their books' about how their economies operate, given how much control they have over the conditions and mechanisms of those economies." Today, via the New York Times, comes this account that suggests that the makers of EvE Online have answered in the affirmative.

A Virtual Slice of Tax Law

At the State of Play/Terra Nova Symposium in New York last fall, Bryan Camp of Texas Tech School of Law gave us a primer on tax law as it relates to virtual worlds. I never knew that listening to a tax professor could be so illuminating and fun (really). Now he has written a paper giving a similarly engaging overview of the issues as they relate to SL and WoW.

And to think his elegant solution may be ruined by pizza...

How American Is It?

I recently read, on a mailing list populated by astonishingly clever people, an assertion that will no doubt strike a lot of you as astonishingly misinformed: "Almost 100 percent" of online worlds, the writer claimed, are created in the United States. To which, you might think, a hearty "Not!" would have been sufficient reply, but being the inveterate statistics geek I am, I felt compelled to offer a more numerically precise rejoinder, and after an hour or two of data sifting I had my answer:

It's more like 61.5 percent, actually.  At most.

Iron Priaire: Genuine Currency Exchange

Faculty and students at the Rose-Hulman Institute of Technology have opened Iron Prairie for your review. It's a virtual worlds trading site, but not like the others. I'm blogging it because this is the first time I've seen a bid-ask structure for pricing. In this, Iron Prairie is the first site to replicate real world currency exchanges. They cut out the middleman. Check it out.

MMO != VC?

This is posted on behalf of Joshua de Larios-Heiman.
----
I was at a venture capital cocktail reception at Zibibbos in Palo Alto last week hosted by the Hina Group, a venture capital and investment banking specializing Chinese technology investment. I was there at the behest of a client, a venture capital group, who is currently investing in Massive Multiplayer Online (MMO) Games.

Around six o’clock, I ran into an Internet analyst for a rather well known investment bank. We began talking tech development and current trends, basically feeling each other out for our knowledge in the space. I asked him about what he thought of Wikipedia's efforts to commoditize its services without alienating its users. He asked me about what I thought of the iPhone copyright controversy between Apple and Cisco. It was a fine conversation, until I brought up MMOs.

Sony Releases Virtual Trade Statistics

Sony has released data about the first year of Station Exchange, its experiment in sanctioned RMT among players. First report by Dan Terdiman here; Raph Koster's analysis here; full press release here.

RMT to disappear forever. Just kidding.

From fellow muckrackers at Slashdot, we learn that eBay is going to enforce its ban on MMO RMT.

Will this have any discernable impact on the financial traffic? Will it simply move it to less savory locations?

SL Economy Misunderstood Again

A whitepaper is making the rounds claiming that the Second Life economy is a ponzi scheme. I wasn't sure whether to blog this at all; the SL economy is so obviously not a mere scheme that it's hardly worth opposing the notion. But what's interesting here is not that the SL economy is not as liquid as, say, the economy of the United States. It's that serious consultants such as Randolph Harrison would go into SL expecting the economy to be as liquid as that of the United States. What a silly expectation. Wonder where they got that idea?

cyber-sexdaq

In an effort to keep TN’s front page family friendly, the whole of this post is over the fold.

NSFW!

Korean National Assembly to Outlaw RMT

From correspondent Unggi Yoon and our friends at VERN, we hear that the Korean National Assembly is considering a bill that will impose fines on companies that engage in RMT for business purposes.  Jun-Sok Huhh has the report. Apparently the idea is that individuals can freely buy and sell informally, but if you take it to the business level and set up a gold farm or a business that makes money by reselling, you pay a fine.

In the United States, today is Thanksgiving. We're often asked what we are thankful for. Today, I am thankful for the Korean National Assembly.

Concept: Virtual Worlds For Economic Development

Norman Maynard of the Economics Department at University of Oklahoma sends us his paper, which proposes to use virtual worlds to test different approaches to economic development. The paper is available here.

VERN

We haven't spoken much about VERN, the Virtual Economy Research Network ("News, research and discussion on real-money trade of virtual property globally.") We should, because the impressarios Vili Lehdonvirta and Jun-Sok Huhh are putting together some really useful materials and discussion on virtual property and RMT. Go and have a look. The newest posting references a webcast for a mini-seminar on virtual property revenue models and apparently there will be a streaming archive available shortly.

IGE Buys 35% Stake in Korean RMT Market...for $5m.

This news from GameStudy.org, sent to us by Unggi Yoon. Not surprising that IGE would buy a substantial stake in the Korean RMT market, which must comprise a significant share of the $1b the IGE execs told us constituted the RMT world market. Surprising that a company in what's supposed to be a huge and exploding market, with huge profit margins, would go for $5m. From what we've been told, that's about the size of IGE's janitorial bill at its palatial Manhattan offices.

To me, that's three signs now that the RMT market is changing, in ways that bode well for us roleplayers.