2004-02-10 The Future of Cyberspace Economies http://conferences.oreillynet.com/cs/et2004/view/e_sess/4632 Edward Castronova Weblog, Terra Nova http://terranova.blogs.com Synthetic worlds, massively multiplayer online worlds, roots in MUSHs/MOOs. 10-20 million users in 2003 compare: attended basketball game 21 million (US); played 27 million (US) trade is natural in these games, gold pieces etc, then the next natural thing is markets and there are interesting spillages: people selling their gold pieces on eBay. but if we're trading these things and liquidating them for real dollars, at what point is this a real world issue? property rights. if the server goes down that's, say, $1200: what do you do? your property is gone. maybe you sue. a couple of years ago, Castronova did an economic report on these economies, just like people go into Cuba and check it out (there are methods to figure out what the dollar pricing of something even if it isn't traded anywhere). levels as a form of capital in Everquest. $2000 annual GDP per capita in Everquest. per capita GDP in China in <$1000. [so what's going on here? are these people actually making anything? um.] $20 million dollars per year in fantasy items traded on eBay. This doesn't include Everquest. Nor Asian games. [it's like buying computer game add-ons, I guess. why are these things being bought? because you can't copy them I guess. how does it compare to pyramid selling schemes in terms of the affordances of the objects being bought and sold?] include the asian games, this is $50m worldwide real dollar trade. inside the games, that's $1 billion trade, in-world (not real dollars, just inside the game). onto scarcity... there are loads of choices. you go to a talk, you have to choose not to go to the bar. scarcity is rubbish, right? but all the games where there's no scarcity are really dull. the virtual economy: - synthetic scarcity. misery is fun - users create all good, including money (but if you're a craftsman, you craft stuff just according to a ruleset) - grotesque inequality, but based on time investments alone. not skill, not ability -- just do you have the time to connect with other people and make stuff - MUDflation: because users can create money (by killing monsters and making gold pieces). - intense player interest in markets, prices and trading [trading activity as smell? deep structure.] - urban locations appear at trade nodes - the out-world trade is between time-holders and money-holders - frequent exploits [of loopholes] - no taxes, storage fees, transportation fees, etc [but for how long?] 20% of the people who play everquest prefer to think of themselves as living *there*. Declaration of the Rights of Avatars: saying you should be able to take some stuff from game to game. Sounds interesting. This is a difficulty on property rights: as an economist he says yes. But as a gameplayer he wants the game to be a fun fantasy world. [is it this? http://www.legendmud.org/raph/gaming/playerrights.html -- it hasn't got the right title.] on the question of how big these places will get, - they're fun - they're really good for communication [that's interesting if you think of sms as being adopted to compete in manipulating your peer network -- could online gaming move onto mobiles and you *have* to be in there as a way of keeping your friends. game as the mobile phones of 2020.] - play is a really deep human drive - the economics of post-industrial cultural decline. for how many people is a fantasy tolkien world an *improvement* on the lives they live now? for how many millions or 100s of millions of people is that true? [wow.] internetfantasygaming.com -- sweatshop in hong kong that employs 20 people to kill dragons, get gold pieces and make real money. exploiting the low wages there. they bought out a competitor for $10m. [*wow*. this is the arbitrage that joshua was talking about: taking advantaging of the regime difference in hong kong vs virtual world. like electrocoupling.] Implications of growth: - for the Earth economy: negative - much well-being is not material - GDP is not consumption - a country is not a person a dictum in economics: you cannot make people worse off by giving them a choice. they can always just not take that choice. and if they do take that choice, they're better off. [i'm not sure i agree with this. what if by giving the choice everyone is worse off, on average? or something. like my uncomfort at M6 Toll. there's an argument about car colour nature which works, but i don't agree in general.] political theory, commons, once the world gets big enough will there be parasites?