If something exists only as bits, is it any less a real part of the economy?
It's a less simple question than it may initially appear. Many of the products or services which one might think of as being bits-only can have a usable physical instantiation as well (such as burning a CD of MP3s or printing a web page). That said, most economists and consumers would likely be willing to extend a form of economic and social "reality" to bits-only products such as network software or flash animations.
But what about swords?
Massively-multiplayer online role-playing games (MMORPGs) are a huge phenomenon. Millions of people play them, world-wide; I know for a fact that some WorldChanging readers play them, too. And, to a degree which may even surprise veteran players, MMORPGs are crossing over into the real world. Millions of dollars worth of sales of game objects take place every year outside of the games themselves. In-game economics are starting to affect the real world. Could the game identity one creates through words, actions and skills be far behind?
If you're not familiar with MMORPGs, here's a quick summary: massively-multiplayer online role-playing games are games played on the Internet allowing thousands of simultaneous participants co-existing in a shared virtual world. MMORPGs most often present a Lord of the Rings
In most of these games, players will spend hours exploring the online world, with the goal of (in the darkly sarcastic language of many gamers) "killing things and taking their stuff." Sometimes the items that the computer-controlled monsters carry are useful to the player; sometimes they're not, but can be traded to other players. Rare and powerful items can be sold for large amounts of in-game currency.
But the games exist in a larger context of player-player interactions not mediated by the game software. A person with particularly unusual or powerful items -- or just lots of digital gold -- to sell may choose (usually in violation of the game's license agreement) to offer them not for game currency, but for real money. The buyer may wish to avoid spending hours "farming" for the items or gold, may wish to become more powerful in-game quickly, or may even only be able to find a desired item through an out-of-game sale. This kind of commerce, crossing the boundaries between virtual and the physical worlds, happens more often than you might think:
According to data gathered by Advanced Economic Research Systems, a company that tracks eBay sales, through April more than $2 million was spent on World of Warcraft (WOW) gold this year. Most of the company's employees are dedicated WOW players, and CEO Anthony Sukow began to examine the statistics after making a questionable purchase of his own. [...] Sukow discovered that the top seller of WOW gold made more than $23,000 in April, just on WOW gold. And that wasn't even a good month--in January and February the number-one seller took home more than $44,000 each month.
World of Warcraft is one of the latest -- and currently among the most popular -- MMORPGs. It has been available to players since late November of last year. EverQuest, probably the biggest competitor to WoW, has been going since 1999. Sony Online Entertainment estimates that the world market for EverQuest items may be as much as $200 million annually.
Economist Edward Castronova, at Indiana University, has been tracking the intersection of virtual and real-world economies. His December 2001 article "Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier" opened the eyes of many scholars to the lively economies in these virtual worlds, and the ways in which they connect to -- and compare to -- the offline global economy. Castronova has joined with a group of other scholars, virtual world specialists and social observers on a weblog entitled Terra Nova, which dives deep into the implications of online gaming worlds.
Recent Terra Nova articles include: a discussion of how reputation shapes opportunity in the games, and how game company policies can enhance or undermine reputation as social control; estimates of the overall "gross domestic product" of the game worlds -- virtual economies now rank close to the size of the Estonia's or Cote D'Ivoire's economies; and an exploration of Sony Online Entertainment's recent decision to drop its rules against real-world sales of EverQuest gold and gear, and to get into the business itself.
What we see emerging from the growth of MMORPGs is the further development of multiple kinds of identity online. Only, in these games, one's identity and reputation -- and, for some, income -- is shaped not just by how one speaks, but by how skillfully one plays, how effective one is at finding the rare or powerful items.
Virtual game worlds can be fascinating experiments in social interaction and collective behavior. Some people use the games as kind of a chat room, focusing more on developing relationships with other players than on strict in-game advancement. Others treat the games as a variant of a "poker night," getting together with friends to spend the evening pushing for various in-game goals; rather than seeking to walk away with the most chips, the players seek to kill the dragon, beat the opposing armies, and "walk away" with the best new gear.
A few people even use these games as spaces in which to annoy others, an activity known as "griefing." Official rules against griefing tend not to achieve much; technological fixes (such making it possible to ignore or make oneself invisible to griefers) do a bit better; but the persistence of character identity, and the reputation that one gets based on behavior, tends to be the most effective moderator of griefing. It takes time to become powerful in these games, and it takes cooperation to get access to the best stuff. Someone who intentionally makes the game less fun for others very quickly finds himself or herself to be isolated, unable to find groups, and ultimately less effective in the game against better-behaved players. These games, which are often disparaged as promoting isolation, actually strongly encourage cooperative, collaborative behavior, and the emergence of community.
For now, negative reputations that one gains in a game tends to stay within that game, while positive reputations can travel. Griefers can move to a different game and start again with a clean slate. Skillful or particularly sociable players tend to attract groups with which to play, and those groups will generally migrate from game to game as a whole, where the group (or "guild") name will often be recognizable to other players. But just as the in-game economics have started to cross over into real world markets, we may soon see a world in which there is overlap between one's in-game reputation and real-world identity. As these games become more popular -- and Blizzard Entertainment, maker of World of Warcraft, claims over a million games sold in the US alone -- it will become more commonplace to meet people in the real world with whom one has already interacted with in-game.
We may soon see a day when one's game character name is as recognizably connected to one's real name as one's email address.
(And, to answer the questions that a few of you will have: Dalaran. Paladin (60). Ookino.)
