by Ed Castronova, the economist who pioneered the study of the economics of virtual worlds
* Synthetic Worlds: The Business and Culture of Online Games
* Exodus to the Virtual World: How Online Fun is Changing Reality

by Julian Dibbel, a journalist who explores gold farming and real-money trade in games:
* Play Money: Or, How I Quit My Day Job and Made Millions Trading Virtual Loot

I’d say that Castronova’s first book, Synthetic Worlds, introduces some interesting ideas, such as determining the labor productivity and GDP of Norrath, the world of EverQuest. He dedicates a lot of the book to explaining what virtual worlds are, and both of his books feel like they’re aimed at people with little to no experience existing in a virtual world. Still, they’re worth reading.

Julian Dibbel’s book could also be considered a general audience book, but there’s enough content in there to engage any reader, even veterans of virtual worlds. The book is superbly written, which is no surprise because Dibbel is a journalist. In Play Money, Dibbel chronicles his time acting as a broker for virtual goods after detailing how he himself became addicted to the game. The title claims he tried to make “millions trading virtual loot”, but his goal was just to earn enough of a salary selling virtual goods in order to earn as much as he could writing. It turns out he did, but at the cost of a big part of his “real” life. The book is interesting because he interviews many people involved in the “real money trade” aspect of virtual economies, and really explores just how big that market is.

Again, I’d love it if people could post comments letting me know what they think of these books as well as the names of other books that would be of interest.

What’ll be interesting to see is if anything changes in the game in the coming months. Like others have commented on my previous posts, there are other bots besides Glider, including many private ones. Additionally, many of the characters who are doing the “botting” are physically controlled by Asian farmers, who some argue constitute much of the “botter” community.

Will we see a rise in prices of WoW commodities on the auction house as a result of this ban? Were Gliders really producing a lot of the commonly-traded goods, and the economy is seeing a contraction of supply as a result of their termination? Not likely. World of Warcraft has upwards of 12 million players worldwide, and I doubt that there are enough people affected by this decision to make a noticeable impact on the game economy.

If anyone has any accurate data on the prices of major WoW trade goods across multiple servers, please let me know. I’m considering writing a script that will pull data from WoWEcon.com and show a graph of price changes along with major WoW-community events (bots getting shut down, WoW patches, etc.). Would anyone be interested in seeing something like this?

You can see my post here. Let me know what you think!

While no official statistics could be found, I’d be willing to bet that the majority of botters use Glider. After all, it’s the most widely used bot that has sold a few hundred thousand copies (according to information that came up in court). On the other hand, many of the gold farming operations in Asia do everything by hand with extremely cheap labor (see this preview of an interesting documentary). So, if Glider has been deemed to be infringing upon Blizzard’s copyright whenever it’s in use, does this give Blizzard a right to shut down the sale of Glider? If so, would this drive supply of gold down and shoot prices up? Or will the hard-working Chinese prevail and keep prices down for us lazy players?

This is an interesting development. To what extent will characters/avatars/data be transferable between worlds? Will your 70 Tauren Warrior be able to hop in a car and drive around a virtual town? Will he be able to walk to the end of Azeroth and into Second Life? Probably not. More likely, you’ll be able to communicate with players of other virtual games…. even people playing your game, but on a different server. In the future, anyone playing any sort of online game will be able to communicate with everyone else. This is a cool proposition.

An important thing to keep in mind is that content from other games may ruin the feeling that I’m immersed in a world. When I’m slaying beasts in Azeroth I don’t really want to see some guy from Second Life flying around. It’ll be interesting to see how companies make use of this cross-platform technology without hampering upon the immersion and culture of each individual game.

The question is: why hasn’t Blizzard moved in this direction? They’re a for-profit company, so shouldn’t they do what makes the most sense financially?

Blizzard’s stance has always been against RMT. I think their reasoning is that it undermines the hard work many people have put into the game. Why should I grind this character when I can just buy one from a botting site? Similarly, if people could just buy items/gold from Blizzard directly, there would be no incentive to keep playing the game. They would get bored very easily. Again, there’s no reason for them to spend countless hours defeating bosses to earn an epic item when some kid next door can whip out his credit card and achieve the same status in-game. Many gamers might be inclined to cancel their subscriptions, leading to losses for Blizzard. Maybe this is their argument?

Overall though, I think Blizzard’s stance is more on “moral” grounds than financial ones. They’ve always been dedicated to creating awesome games that are fun to play. The passion is there. While of course profit is one of their main goals as a company, I don’t think it’s their only goal. I think the Maple Story article makes this obvious. If their main priority was to seek revenue, they would have already started to sell goods directly to players.

Thoughts?

Botters usually accumulate valuable in-game items which will sell to other players. They trade the items to the other players in exchange for gold, the currency in the economy. They can trade the gold to yet another player in exchange for real-world currency. The problem comes about because there is an endless supply of virtual currency and valuable items in these virtual worlds. As botters hack and slash away at their digital foes all night long, the computer creates more for them to fight. Each of these creatures drops a supply of gold and occasionally a valuable item. In effect, there is a creation of money and value each time a mob is slain. In the real world, money is never created. When the treasury needs to print more money, it slowly injects it into the economy as it destroys the old bills. No extra money is created. When the Federal Reseve wants to stimulate the economy, it buys back Treasury Bonds from citizens and companies. Money is again not created – it just changes hands.

With the constant creation of value in virtual worlds, inflation is inevitable. There is an unlimited supply of valuable items and very few sinks. Sinks are a way for money to be destroyed in an economy. In World of Warcraft, some sinks include mounts and item repairs. These are very effective sinks because they scale as a player levels – a mount is unnecessary at level 1 when it would be way too expensive, but it becomes feasable to purchase as a player levels. Similarly, repairs scale with a character’s level. Virtual economies constantly deal with inflation – dubbed mudflation in virtual economics.

When botters constantly farm gold and items, they contribute to the inflation of the economy. Money is created at a much faster pace than would ordinarily be possible with humans playing the character. Because people have more money, they’re willing to spend more on goods and services. As a result, prices of all goods and services rise. This leads to a demand for more money, which leads to more botters. This again leads to more inflation. It’s a downward spiral that is difficult to stop.

However, botters in WoW also create another good – items. This is very interesting because while more money is being created, there are also many more items being created. The law of supply and demand tells us that a greater supply of items would lead to their average cost lowering. So, what’s the intersection of these two effects? Does the act of botting counter itself?

To be honest, I’m not sure. It’ll be interesting to monitor WoWEcon.com over the coming weeks to see if the price on commonly botted items (Primals mostly) changes. This may tell us what the equilibium price of these goods would be in a market that’s not affected by botters.

Kind of an interesting post on the results of Arden, an academic MMO. “At stake here is the entire idea of using virtual worlds as a Petri dish. If fantasy gamers behave in ways that violate our most basic assumptions of economic normalcy, then it makes no sense to use virtual worlds to study large-scale economic behavior. If, conversely, fantasy gamers seem to be normal economic agents, then perhaps some of the behavior in virtual worlds does indeed generalize to the real world. If so, then we can consider using virtual worlds to conduct controlled experiments at the macro scale of society, where our most pressing problems seem to live (natural resource management, intercultural mistrust, information security, disease).”

That’s why the study of virtual worlds is so interesting! It allows us to poke and prod at a society of people without causing them any harm. They take the world seriously and thus make normal economic, social, and political decisions.