Andrew Busey: My Musings

This is a new thing I am doing.  I’ll track RMT (gold sales) and CRR (character sales) for World of Warcraft with weekly updates to see how the market is moving.  You will immediately see high variance (especially in gold) between servers and vendors.  I think the numbers for accounts and related information is pretty accurate, but I didn’t actually go count 259 accounts.  I’ll use the same searches every week for consistency - unless I spot a glaring error.

World of Warcraft accounts for sale on eBay:  259

High Price: $1,999 (0 bids, 7/9 T3 Mage)

13 Accounts with min bid / buy-it-now prices >= $1000

Highest Price w/Bid:  $999 (1 bid, 5/9 T3 Priest)

Accounts with Kel’Thuzad weapons:  4

Accounts with Legendary items:  33 (This number is somewhat inflated because it counts splinters of Atiesh and a lot of people have those - not too useful though unless you’re in a guild that can kill KT.)

Gold (1000g Tichondrius): $161-$199   (1000g Frostmane) $130-$212

(Gold prices from eBay, IGE, EZgaming.)

Here is an intereting article from Terra Nova called On Babies and Bathwater.  It does a good job of articulating the issues and the most likely outcome.   I like it because it provides more of an economics perspective of the issues.   (See my original post on this issue here.)

Wow, there is an interesting debate going on over there.

So this is an interesting post on how some Korean players are using a mod to enable bidding on items during a raid.   Interesting idea.   Frankly I’m surprised that no one has set up a commercial guild where you pay real money to go on the raids and get the items you want and the guild members split the cash (and still get the items they don’t sell).   Anyway, back the the point, this article points out that some items sell for as much as 9,000 gold which translates to about $270 (using the numbers in the article).  

In the U.S. the gold exchange rate is more like $100-$150 per 1,000 gold which would make this seem really expensive for a single item.   Also, the guilds in the U.S. that sell items (for gold) are selling them at much lower prices.  Here is a price list from Death and Taxes (one of the top guilds worldwide).  It puts the most expensive item at around $150. 

So, higher end items are between $50-$300 each.  These are items from 40-person raid instances so they are pretty hard to get.   Interestingly, these prices dovetail nicely with items purchased with the new honor system (discussed in several recent posts).   You can find an example of those prices here.  But basically, $200 gets you 21,000 honor points (not sure if this was before or after they reduced the honor generated).  But the best armor pieces and weapons in the honor system cost between 20,000 and 23,000 honor to purchase.   Amazingly all these prices align.

So whether you buy the items with gold or pay someone to get the honor for you, the prices are around $150-$200 per epic item.  You could also use that to calculate how much you are getting earning per hour played (although you cannot resell these items as they are all BOP - Bind on Pickup).  I don’t want to do that calculation though, because it will depress the crap out of me.

As I said in my recent post Buying Things in Games, there is a brisk trade in online games that typically operates outside the official rules of the game. This trade continues even though various companies make an effort to stop it. A few make it “legal” and provide infrastructure for it.

Many game companies, especially Blizzard, seem to be run by purists. A purist (my contextual definition) is someone that thinks that the game is the game is the game and nothing should interfere, in particular that there should be no “special privleges” or any bias. IE: you cannot buy gold, you cannot cut any corners. This is fine in many games, but MMORPGs have various characteristics which make this point-of-view suck.

I’ll generalize them into one bucket: The Grind. Anyone that has played an MMORPG is familiar with the grind. You grind for money. You grind for experience points (to level). You grind for honor. You grind to get items (repeat the same dungeon over and over and over until your eyes bleed to get that one item you need). Sometimes the grind is fun. Most of the time it sucks, but you do it because you are addicted, your friends need your help, you just have to have that item, you want to keep up with your friends, etc.

Sometimes though, you have real life. Real life interferes with the grind. Wouldn’t it be great if somehow you could skip the grind? Especially when it sucks. Well thanks to eBay, the web, and money, you can in many cases. You can buy gold, you can pay someone to play your character, etc. But some people view this as cheating. (And lazy, which, well that’s probably true.)

I have a different view. We’ll call it the Prince and the Pauper.

In real life, some people have rich parents and/or trust funds. Others don’t. The second group has to do everything the hard way. The first group gets through all the hard, boring, mundane crap with ease not due to skill or hard work, but due to the chance circumstances of their birth.

The same thing is true in most fantasy novels. (I use fantasy novels because that is the genre of many MMORPGs and everyone is familiar with at least some fantasy novels even if in many cases it is Harry Potter.) In virtually every fantasy novel one of the characters has some great advantage due to their birth - they were blessed by the gods, they have some special magical abilities, etc. Harry Potter is an obvious example. Somehow we love those characters even though they are not necessarily successful because of hard work and effort but because of luck (of their lineage).

So, how does this apply to games?

In games, the circumstance of your “birth” is really who the character’s player/owner is. Many characters in MMORPGs are played by high school and college kids. They have lots of free time and not lots of money. To get the things they want, they just play a lot and work really hard at the game. To them, the grind is ok. It doesn’t have a natural trade-off.

If you have a job, you might not be the prince, but you are further up the scale. You probably have some disposable income and you have at least one big time sink (your job). So you can’t play as much as you might like and you also don’t want to be playing a game that feels like a job (the grind often feels like a job). So you think, rather than doing something that I don’t want to do for 20-30 hours (roughly the time it would take to accumulate enough gold to acquire your level 60 mount in WoW) you might decide that spending $150 is better. On the other hand, you might think throwing that much money into a virtual item is a waste and instead grind out gold for 20-30 hours. The answer to this is pretty much determined by how you value your time. If you have a ton of money and not a lot of time it is an easy choice, the reverse is also true. In the middle it is fuzzy.

Getting to the point: this is not cheating or bad or evil. It is just like reality and fantasy (novels). Some characters/people are blessed with a lucky birth. Others are not. Some view it as unfair, but that doesn’t mean it isn’t reality.

This type of reality is certainly the case in social environments like Second Life. If I want to go spend a million dollars buying virtual real estate or anything else I want, that’s great. Other people might make a million dollars starting from virtually nothing by developing premium properties (which has already happened: you can read about Anshe Chung becoming a virtual millionaire.) I point this out only as a contrast to the generally held POV of this activity in games. I think game companies should remove that stigma and embrace it. Some are starting to do that, but not all of them yet.

This is an interesting article: IRS taxation of online game virtual assets inevitable.

What is funny is that people seem to jump over all the wrong things in these discussions.  I am firmly of the belief that virtual items (including currency) will legally be equivalent to physical property in the not so distant future.  I think you can write all the crazy EULAs (End-User License Agreements) that you want saying that the company owns it, but one lawsuit will put all that into question.  If you spend 100 days of actual time - ie: 2400 hours - accumulating stuff in a game and the publisher takes it away, you are going to be mad.  Right now, if you aren’t a serious gamer you are probably thinking 100 days? that’s impossible.  But it’s not, I know tons of people that have well over 100 days (in the game - 2400+ hours) played in World of Warcraft. 

Technically Blizzard owns all the stuff you do, according to their EULA.  But there is a brisk market for WoW stuff (most of which is against the rules of the EULA):

• RMT (Real Money Trading):  This is buying game currency for real dollars.  Right now in WoW the exchange rate is roughly 7 gold per dollar.  (This can vary some by server and faction, which servers.  Gold can be transferred between factions on the same server [with a non-trivial percentage take by the system] but not between servers [unless you transfer a character for $25].) 
• OSCD (Out-Sourced Character Development):  This is hiring someone to play your character for you.  (I can again here all the non-gamers going “why the hell would you do that?”.)  In MMORPGs like WoW there are a lot of things that just take a lot of repetition to complete.  Like gold - anyone can get 20-50 gold an hour - but if your time is worth more than $5/hr you are better off to buy it.  Especially since it is boring as hell.  But say you want a new level 60 character built to your specifications - you can do that too.  There are plenty of services that will do this for you and they typically cost around $2/hr and basically have someone in China (or a similar location) play your character to accomplish whatever goals you want them to accomplish. 
• CRR (Character Resale and Recycling):  This is someone selling there character on eBay or IGE because they either quit the game (broke their crack addiction, got a girlfriend, had a nearly flunking out experience, etc.) or because they need some cash (some people build characters up, sell them, start over, etc.).  If you search for World of Warcraft charcters you’ll see a bunch going for anything from $50 to $3000. 

BTW, I made up the term OSCD and CRR since I haven’t seen much talk about this.  If there are terms already in use, let me know.

 All of these things would seem, at least to me, to indicate all this virtual stuff is worth real money to people.  I mean, how is this any different than owning a digital copy of a song you bought on iTunes?  That is a virtual asset too.  I paid for it because I wanted it, but have nothing physical to prove it.  I’m also at the mercy of Apple since their DRM traps me in their world (not unlike games).  So clearly, Apple is paying taxes on the sale of these virtual assets.

The same will happen in games, but there are two distinct differences:

• In RMT and OSCD most of the commerce is transacted overseas via various instant payment mechanisms (like PayPal).  The work is done overseas.  I’m not sure what there is for the U.S. to tax here.
• in CRR and very rare RMT cases (like people I know sometimes sell a few hundred gold, but most of the transactions are through farming services that accumulate large amounts of gold - again overseas) are small.  Most people aren’t selling a $500 character every month, it is usually a single transaction.  If it were taxed you could exclude the costs (subscribtion, probably broadband, maybe computer depreciation) from the income and you would probably get to $0 profit pretty quick.  ($15 month subscription, $35 month broadband = $50/month x 10 months = $500 and there aren’t many characters selling for $500 that don’t have ten months of time into them.)  So there isn’t much to tax there.  Besides if this were taxed they’d need to go chase the tons of other people who have eBay businesses that are shirking taxes - all of these things (including the sales of WoW related stuff) really should be taxed already, people just don’t report them in many cases.

I’m sure now this will become some big political issue now and we’ll have to read about it all the time.  Someone who is a big Second Life player will die and there will be some feud over their virtual estate and the IRS will get involved.  It will be interesting to see it play out.