The World of Avlis

In a leap for post-modern mankind, Julian Dibbell, a sane family man, reports today to the United States Inland Revenue Service that he's earned more in 2003-2004 by selling imaginary goods than he's earned as a professional writer. He has profited from the trade of - literally - castles in the sky, purchased for virtual cash and sold for hard currency. Dibbell is engaged in a potentially far-reaching philosophical digital exercise: the perpetuation of the economies of online games.
Dibbell is a tradesman in Ultima Online, an internet-based game where people play together to propagate a virtual society. His progress, documented in the weblog Play Money, has followed his path from market obscurity to the number two seller on eBay Category 1654 - Internet Games - where people buy and sell items for everyday virtual life.

The phenomenon of the online economies is symptomatic of the increasing age and maturity of players of interactive entertainment. According to calculations reported by Edward Castronova, an economics professor at California State University, people are taking internet games so seriously that since the beginning of the year, Category 1654 has racked up $6,404,668 in sales - real money spent on things that do not exist.

The articles for sale are utterly removed from the physical realm. Dibbell has sold in-game currency, imaginary suits of armour and virtual real estate, for weekly profits of up to $1,086. Still, that's small potatoes compared to those who make six-figure sums a year trading virtual castles at $700 a pop, or specialist character accounts for more than $2,000.

At their most rudimentary, the games are a simulation of the basic elements of capitalism: trade, barter and asset accumulation. Although it's not possible to "win" in the traditional sense, many strive to have the biggest pile of stuff. This takes time, a commodity scarce in modern life.

Thus, the key to Dibbell's success is the time he spends in the game. The average player spends 22 hours a week in online games, but a professional trader such as Dibbell spends between 10 and 17 hours in the game per day. Thus, he accumulates more virtual wealth than "ordinary" players - virtual wealth he can trade for real money. "It's almost a cultural divide between people who have a lot of time and those who are able to buy their way into the game," he explains of his marketplace. "[Success] is not a matter of skill versus lack of skill, it's a matter of time invested or money invested." Through supply of and demand for virtual time, a fluid real-world economy has grown up.

"I suspect that only a handful of players per game have this as a sole source of income," explains Castronova. "There are many hundreds more who supplement their incomes this way, though. A typical story is the college student who pays for books by selling items."

This practice is not without controversy. "eBayers", or people who purchase fully created accounts or other items are accused of aiding schisms that reflect real-world concepts of haves and have-nots. Others are gaining from globalisation: virtual sweatshops have been uncovered in third-world countries with underpaid employees "grinding" accounts until they are fit for sale, for $200 each.


Castronova runs a weekly analysis of virtual world markets where he calculates hourly wages, totals spent and US dollar values of in-game currencies. This week's priciest item was a rare Jedi character account sold for $2,025. Castronova's 2002 examination of genre leader EverQuest's virtual economy placed the fictional setting of Norrath as the 77th richest nation in the (real) world. By investigating the flow of currency and the cost of key items, he was able to determine that it had a higher GDP than Bulgaria.

The city of Alphaville in Electronic Arts' The Sims Online has become a hot spot for the study of the seediness that results from such transparent free enterprise. The city suffers from user-created intimidation, muggings, theft and red-light activities, including citizens engaging in sex chats for in-game currency. Most games have at least one Mafia who oversees the creation of new products, gets cuts for protection and financially benefits from real-life sales. There are also rumours that the Japanese Yakuza is involved in the buying and selling of virtual goods.

Virtual trade also comes with complications of ownership. Throw in a global purchasing population and there arise questions of international trade and taxation regulations. Jamie Hale, co-founder of the Gaming Open Market facility, which provides an alternative system of inter-player exchange to eBay, believes their services don't step on the toes of any international treaty. "If we were brokering real-life currency trades, we would no doubt be subject to a whole boat-load of laws and regulations. Instead, we deal in "play money" - not legal tender - and hence are not regulated in the same sense that real foreign exchange markets are."

The major issue for games developers and publishers is potential copyright infringement and theft of intellectual property. Dibbell and others maintain he's not breaching any rights. Most games companies disagree. The most extreme case is an agreement made between Sony Online and eBay: items from EverQuest, the most popular game of the genre, are absent from category 1654.

Others are more tolerant, but have the right to pursue recompense. "If you are selling in-game items in violation of a contract you have entered into with a game company, you should be liable in a civil suit to the game company," explains Greg Lastowka, a legal scholar who studies intellectual property and virtual worlds. Only one has attempted. The publishers of Anarchy Online sued Black Snow Interactive for grinding too many accounts. They lost.

Dibbell doesn't envisage any issues with the tax office when he files his claim today. "The one ambiguity that I've come across is that the IRS wants to tax any economic transaction that involves gain for somebody." At deadline, all profits could easily be spent and the IRS told that the money, now invested in imaginary goods, doesn't exist. "At what point in the growth of these games does the IRS wake up and say everyone who trades in these games has to file?"

Since the first game was released in 1983, the genre has evolved from global versions of Dungeons and Dragons into something more worthy of investment. Several million people now gather online in more than 350 worlds, perpetuating systems that run 24 hours a day, 365 days a year. In Korea, the world Lineage has a population of more than 4m, making it more popular than TV.

"If human society migrates into cyberspace, as many seem to think it will, the coin of the realm will be these shadow currencies. Rather, pounds, yen and dollars may become shadow currencies to the gold piece," explains Castronova. "It's a shocking vision, but eminently conceivable within the lifetime of a person born today."

Krez wrote:Why don't people just spend the time to build there character and have fun playing the game?

4x4_Ender wrote:Yeah, i used to play AC too, and i would see some accounts go for thousands of dollars on ebay. Rediculous.

Speaking of AC, their going to do an expansion pack for it, which will double the polygon count (making the graphics ALOT better), and add new areas, items, quests, etc. Might be pretty cool, since AC is the only MMORGP that i even remotly resepct. Everything else ive tried just blows.

Bear wrote:I can't believe that anyone would buy virtual equipment. I mean really... go out and play the damn game yourself....

Wanted -- Boots of Haste -- $100 USD

Bear

So, what would real money someone pay for Laen's Logistical Ledger? A truly one of a kind item that allows you to cast expeditious retreat once per day and improved invisbility for 5 charges of a total of 50?

Midknight wrote:

So, what would real money someone pay for Laen's Logistical Ledger? A truly one of a kind item that allows you to cast expeditious retreat once per day and improved invisbility for 5 charges of a total of 50?

Not while you have a Builder client that allows you to make one.
It's the rare occurence of powerful items that make them valuable, not so much the power of the item. Of course, most rare items also happen to be powerful...

In reality it's not so much different than collectible cards like Magic or even plain old hockey cards. Heck, it's no different than any intellectual property nowadays - a game is 70$ Canadian, whereas a blank CD costs 50 cents. Why do we pay so much? Because we don't have the time or the talent to make our own. Same could even go for food...