Guest article by Petteri Günther on EU regulatory issues in connection with real-money trade on digital items in virtual worlds.

Introduction

Virtual worlds, for example various massively multiplayer online role playing games (MMORPGs) are becoming increasingly real to many people around the world. This emerging field of digital economy within virtual worlds has made us to face the interdependence of those and “real” offline worlds. This occurs e.g. in form of real-money trade (RMT) on digital items, while the question on property rights over digital items remains basically unresolved in Europe, although the US and the rest of the world are pretty much in the same situation.

In December, the world's biggest teenager virtual world Habbo plugged into Facebook Connect. This week Linden, the operator of Second Life, announced the acquisition of Avatars United. Avatars United can be described as a sort of "Facebook for avatars", complete with a third-party applications ecosystem.

What does this mean? It's a sign of walled gardens opening up. Virtual worlds and MMOs are traditionally silos where users and data are locked in. Through Avatars United, Second Life users will be better able to link their SL profiles with the outside world: the whole universe of existing social media services, feeds and applications. It will also enable new kinds of third-party innovation in the way SL integrates with other services. All this will increase the value of having an SL account to a user. This is assuming that SL opens up some interfaces to Avatars United: as of yet there is next to no data flowing.

The January 2010 issue of Scientific American carries an article (by me!) that divides the development of gold farming into three phases (pre-history; golden age; and "backlash and beyond"), and examines the phenomenon particularly from a developing country perspective.

The article has been available online at: http://www.scientificamerican.com/article.cfm?id=real-money-from-virtual-worlds, though may get closed off behind a subscription firewall.

In a case concerning two "gold farmers" doing mark-up trading with Lineage's currency Aden, the Korean supreme court ruled that it is OK, because the profits were generated based on skill, not luck. The Korean Times says that this is a landmark ruling.

The virtual currency was obtained by buying it from websites (worth $200 000) and then re-selling it in form of goods and currency to players (profit ~$20 000).

In discussing the ease associated with having someone else do the work of gaming, more often than not large-scale services working to create offline profits like gold farming and power leveling operations are discussed. However, on a smaller scale the in-game economic systems of games like World of Warcraft can also provide players a way to avoid working for the things that they want, while simultaneously allowing other players the opportunity to profit from their in-world efforts.

This came out awhile ago, but Linden Labs has announced changes to the way it operates its online XStreetSL marketplace, a significant player in its virtual economy and source of a wide variety of virtual goods for use in Second Life.

The major change seems to be to the way in which XStreetSL will handle free items, or “freebies”. Despite being given to other residents for free, these items will now have a monthly listing fee of L$99, or about $0.40 USD each. At the same time, other costlier items will be subject to new rates for listing and commissions on the site.

Guest post by Jan Pontzen on a RMT free trade mechanism for MMORPGs and other virtual worlds.

The idea of developing transportable avatars – avatars that will be able to move both within and between different virtual worlds – has been raised in popular and academic forums for years. However, to date it appears that relatively little progress has been made on this front. While there are likely technical issues with developing such a large and complex project, it is also possible that some of the issues holding back this endeavor are likely to be economic in nature as companies seek not only to establish technical standards, but economic ones as well.

This came out a while ago already, but I missed it until now. CCP Games' Lead Economist Dr. Eyjo writes:

The 3rd Quarterly Economic Newsletter for EVE Online is now available. This issue has the standard economic indicator of population, ships flown in space, price level reports and market snapshots. The specific topic this time around is the latest news on "Unholy Rage," the Anti-RMT operation that has been ongoing for several months now.

I've published online a spreadsheet of data on the US dollar values of virtual currencies from eight different games, tracked over time from 2004 to 2009. And a Google Motion Chart also for those who like to look at pretty pictures (though this tends to draw attention to the two outliers more than the main deflationary trend).

To be found at:
http://spreadsheets.google.com/pub?key=ttEFy433f0C9bJSczaqGw0A&single=true&gid=0&output=html

Richard Heeks