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-style fantasy environment, complete with orcs, elves, wizards and swords, but games set in science fiction and superhero comic-book worlds exist, too. Virtual communities such as Second Life are sometimes considered MMORPGs, as well, to the extent that people connecting to the communities adopt new personae.
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.)
I've been following this work for some time. Castranova writes here:
Here's the latest SSRN paper I found off their blog:
Traditionally any party who wants to gain popular support in "liberal Democracies" has to be economically super sound. This in the past has implied using up the worlds resources, and of course it will actually imply this for the forseeable future.
Its interesting however that in terms of economic activity, some games rival Estonia etc. in a purely information based economy which which uses up a tiny fraction of resources per unit of aconomic activity. Obviously games are just one side of the coin, i don't play many a' them myself but am pretty content to sit with a game pad and some snes emulators. Since i haave had broadband though I've, well, spent all my money on drinks, lights, exotic intoxicants and life - not in the past month spending more than a few thousand pennys on manufacutred punch-able goods. I've bent the truth, I have scarcely seen thousands of pennye in the past month, those metallic disks bearing the insignia of a promise to pay the bearer on demand, but i know in a couple of buys and sells thousands of those disks could have, completely unnescasarily, slide hand to hand.
The metal that could be once described as clamourously, at some level, and to poetically imbue it with a personality I see as charming, see it as slowly vibrating waves. Slowly, so I said, yet speeding fast in 23 skidoo vision. 23 skidoo is, apparently, a 1920's, 30's expression for doing something quickish, godspeed, twidly thumb skidelidoo!
Since I have had broadband I have bought very little material goods, I am still playing off the computer but through that I get music, films, some games and other media on recommendation by people who've been looking for the same shite as muself. Notwithstanding this, anyone can scrawl writing all over their site, as I seem to have done whislt erstwhile youthful punk tunes to backdrop my prospects today of leaving with a freind in the country to go to camping. Skanking Racid fans do not know me very well of course, and I know inordinately.
Video conferencing now costs only 30 pence a minute or so over Spyoe's Voice over Internet Protocol, I daresay in some of these there very well could be team games played between Western habnackers and Japans, but for all the silly tactics going on if, cheap video conferncing for local businesses becomes a success, my dads been getting himself into a quite nice state, consulting to get broadband lines hooked up thru lots of the water pipelines.
I have to go, but the summarily end this lotta 'lectronic bollocks, the more information economy can keep National Income and other measures of economic well-being up there instead of relying on jett-setty un-taxed kerosene and other fossil fuels, assuaging some of the imtense danger of enviromental castastrophism, well - Obviously, the better!
Pally still needs to be nerfed =p
And shaman too.
On the matter of the real life money for these types of games, there has been a new innovation for the genre only in the last few weeks: Sony Online Entertainment (SOE) has announced a new program to officially sanction sales of in game items for EQ2 on certain servers (for now), effectively giving the players real life ownership of their items.
Typically in a MMOG (Massively Multiplayer Online Game) the game company that produced the game retains ownership rights over all items, characters, gold, etc. that players accrue while playing the game. All sales of items and gold on Ebay, thusly, are illegal, as per the terms of the games EULA.
SOE has changed this with their new system for EQ2. SOE gets a portion of the money from each sale, so they are effectively cashing on on the game sales.
The problem, however, with this is what happens when SOE decides that they have to change an item, that a player bought for several hundred dollars? If they make a change that makes that item worthless, then the player has wasted their money and could, feasibly, make a real life case out of it against the company.
Cory Doctorow's written a nice short story called "Anda's Game" showing (the?|a possible?) underbelly of this virtual-world/real-world crossover: