Someone plz plz post this on the WoW forumFollow

Hello community of Allakhazam.

Living in Europe I still don´t have access to WoW unfortunately. And I am eager to play the game of course. I am monitoring the issues and of course the ebay currency plague that affects all MMRPG is developing as expected. I have an idea that could help this and I was wondering if someone believes it is true, could post this in their forums. Since the game is new, it could save the economy. Just my thoughts. It is lengthy but has what I believe a clear explanation of saving a fantasy world´s economy.


Thank you.

Please post under the title:


Blizzard! You CAN save the economy, Plz read this.



Hi Blizz team. As you are well aware, WoW is immediately beset, like any other MMRPG, by side companies offering Gold and later on items for dollars. You can very easily remedy this but you need to just think a bit about macroeconomics and take a radical but play enhancing step above all other games and change this new gaming area forever.

The short of it: Eliminate all currency transactions provided by the server/environment. No matter how big or small the transaction is.

Here is the long explanation of it, that if you read and implement will eliminate all incentives to have an outside economy.

First of all, the idea of having an economy is inherent to that of a fantasy world. A barter system is cumbersome and currency needs to be introduced. The selling of currency outside this environment is the product of only one thing, FIXED COSTS from items being offered by the server/environment. It doesn´t matter if only one item or a few are offered at fixed costs, the concept of a free market economy is destroyed by such. Period. Having even one item being offered at a fixed costs allows for the illusion/probability that more items, maybe later, will also be offered at fixed costs. Simply reduce all items that the game wants to offer from the s/e side to 1copper.

The original idea of the game developer is to provide items at a price higher than the minimum, as an incentive to players for having achieved the amount of money needed for this item. But this idea collapses immediately and side companies spring up to acquire money and provide it to other players for real dollars. Simply because one of the largest free market principles is completely ignored by the developers.

Inflation.

In effect, the currency of WoW is pegged to the US Dollar. The only reason this peg exists is because of the fixed costs for items in the game. Regardless of how many of them they are, once again the illusion/thought/belief that more will be offered is incentive enough for others to think of buying WoW currency for US Dollars.

In a real economy, there are these two issues which affect the money supply. One is enforcement. This is the battle you have to avoid having printing presses running around and playing the game in order to raise real cash. A side effect which I am sure is not of the first intent in developing such a game. But enforcement is a LOSING cause, completely. Reason being is that if a country was unable to adequately enforce the hunt down of printing presses, the effects would be felt by inflation. As a segment, large or small, of a population decides to focus on exclusively raising WoW currency, the money supply increases and this would and must lead to inflation. The spiral continues as long as there is an incentive to raise cash for FIXED COST items, remove this incentive and the need to raise WoW currency collapses, as prices rise as more cash is introduced but the value of this currency collapses in regards to the dollars used to acquire it.

Blizzard, you NEED to let the spiral of inflation run out of control in order to eliminate it. If you set all prices for s/e transactions to 1copper and let only players trade at whatever prices they want, the economy regulates itself and all the WoW currency side dealing companies lose their incentive. BECAUSE the currency is pegged to the US DOLLAR!

Easy example. You buy 100gold for 5 dollars and get an item. The item is worth 5 dollars. The side company keeps farming more WoW currency and competition sets in between other WoW side companies so that another offers 100gold for 2 dollars. Because there are no fixed item costs, the spiral would continue so that soon 100gold would be worth less than 1 cent. Why? because the item I acquired for which I payed 100gold, if I decide to resell it for 100gold later, is no longer worth that much, as someone just has to pay 2 dollars now to acquire that amount of gold.

The argument then becomes. Well, then this item is now worth not 100gold but 250gold to reflect the 5 dollars payed originally. EXACTLY, that is what should happen! Items get pegged to a real dollar value which is what is SUPPOSED to happen to reflect inflation setting upon the WoW currency. But this effect only takes place if FIXED COST items are removed from the game. That is, everything offered by the s/e is reduced to 1copper.

This means that players will now be BARTERING with each other to exchange items for their usefulness. Realizing that an inflation spiral has set upon the currency. This would still leave companies trying to sell items for dollars at they will be pegged to a real dollar value. BUT it will immediately eliminate the hunting of WoW currency for a better deal, so that someone looks to see if now a company is selling 500gold for 1 dollar. Simple. As this new offer is available then the price of the item is 2500gold to reflect the value of 5 dollars. But now these side companies start to realize that as they cutthroat each other for the WoW currency, it is meaningless!!! The price of WoW currency begins to collapse in relation to the US Dollar and the incentive to farm currency collapses.

These side companies, knowing then that WoW currency is subject to inflation because there are no FIXED COST items will turn to items themselves. BECAUSE they will retain their original dollar value. BUT once again, BECAUSE they have a real dollar value, as they flood the market with items and can´t deal with WoW currency anymore, the cost of the item worth 5 dollars at the start will start to collapse! The economy will start to regulate itself as the incentive dissapears. Soon the side companies will be acquiring these items that in dollars will be worth pennies as more and more people acquire them.

Blizzard it is so easy!!! Think macroeconomics and you will revolutionize the gaming experience. You will lead to the disappearence of side companies that trade on your game and elimate the players using your game to make dollars.


The original developers idea of MMRPG is a noble one in relation to creating an economy. But it is flawed as I have stated above. Just fix it by implementing a simple economic principle called inflation. You want to offer a mount for 100gold to reflect the effort it took the player to raise such amount of cash. This idea doesn´t work because it is not possible to regulate the money flow of the economy and adjust it for inflation. Thereby people use this to buy the game, raise WoW currency and sell it on the internet. The original thought of a mount being worth a fixed 100gold only leads to that amount being offered later on for 20 dollars. So then, why not just offer it at 1copper and drop the incentive for side companies to offer WoW currency. How long before the side company offers 1000gold for 5 dollars? So then, why feed this?, if there is no real way to monitor the money supply to reflect inflation so that fixed cost items just stimulate side companies that trade in WoW currency?

Just drop the price of all items offered by the server/environment side to 1copper and see how the entire economy begins to regulate itself gradually. The noble idea of offering items at fixed costs as an incentive to players DOES NOT work. And leads to everything I have just described. So, so easy to fix.... just drop the price of all items offered at fixed costs to 1copper. No more incentive to buy/sell WoW currency on the internet, and you guys will have revolutionized the gaming industry.


Thank you.


-m

Actually yes. The perspective is not that of a power gamer but from an economic perspective.

Just take one Fixed Cost item as a perspective. For example, a 100gold mount. Knowing that a mount costs a specific amount of gold always, allows someone to farm that amount of gold and offer it for a price in dollars. So people and companies can buy the game and just play it to sell mounts for a fixed amount of dollars. Blizzard could also setup to let players know that if they pay $1 dollar they will get a mount. Why not then just sell the mount for 1copper and remove the incentive for other companies/people to sell gold.

When you read the entire post, I explain why if the system just allows players to give value to items, inflation takes care of selling outside of the game.

My post is simply meant as an illustrative way to show howcome fixed item costs develop an outside economy. Which if you want to get rid of, you can only do so by eliminating such fixed costs or monitoring the money supply (applying inflationary pressures).



-m

The only problem I can see here is that WoW is unlike it's brethren FFXI and EQ in that money can't buy you happiness. In FFXI, and to a lesser extent EQ, you need horrendous amounts of money sometime, but from what I've seen so far, there is no need for that in WoW. Yes, there are some expensive things like your mounts, but they are a one time thing. All the uber armor/weaponry needs to be found or made specifically for you, not just bought. While you could buy a huge bushel of cash online, you'll quickly find out you still have quite the bushel of cash later on in the game, as you've made most of the money you had to spend.

In the Open Beta I played an Undead Rogue, and I was geared the best I could get, and I still carried around more money then I knew what to do with. I blew it on getting the new skills I had no intention of using, like Sap; and training myself in weapons I wasn't likely to ever weild. So say I bought 10 gold online, what the hell would I do with it? Buy high end armor ahead of time? By the time I could wear it, I'd have the money back again.

You catch my drift. Hopefully I wasn't an anomoly when this happened to me, and other players have seen that the economy so far is pretty damn self sufficient.

grrr, I am not in the mood for intelectual thought this morning.

This argument is flawed. I'm basing this assertion on my experience playing and participating in the market economy of EQ 1 for a few years.

It is not fixed price, vendor sold items that drive demand for money, as you have asserted. Rather, it is a combination of classical supply and demand issues, late starting or otherwise slowly developing players, and varying in-game and real-world income rates.

An item's value in money (in-game or otherwise) is determined by three factors, namely how useful the item is, how hard it is to get one, and how quickly a player can make money (both in-game and out-of-game). I'll discuss each of these factors individually, and then address why they contribute to the external markets for in-game money.

Item Utility

There are several aspects to item utility. First is the degree to which the item increases the power of the character that holds it. Second is how close the item is to being the most powerful item that the character can hold/use. Third is the size of the population of characters and classes that can derive value from the item, which is somtimes further subdivided by the level of character that can hold it. Fourth is the lifetime of the item, or in other words how long the item lasts (e.g. Food will have lower value than weapons because it's only good for one use). Finally, there is a soft value from having a 'cool' feature, usually related to changing the character's appearance, that can contribute to or sometimes even totally explain the value of an item (think mechanical squirrel here).

Procurement Difficulty

Again, there are several aspects here. Generally speaking, the harder it is to obtain an item, the more that item will cost in cash terms. Specific factors include whether the item can be soloed, the rate at which it drops, and if it can't be soloed how many people are needed to produce it, and how 'uber' those people need to be. Soloable items will be cheaper than group only items. Commonly dropped items will be cheaper than rarely dropped items. Rarely dropped items that require very large groups of the 'uberest' players will necessarily be expensive. Vendor sold items, of course, have an unlimited supply at a fixed price.

Income or Cash Earning Rate

Just like the real world, making money in-game takes time and effort. There are a variety of ways to do it, including farming tradeskill items, farming vendor trash, trading with other players for profit, tradeskilling and selling to the player market, etc. Each of these yield some amount of game money per game-hour, with varying degrees of variability. For example, trading with other players can be very profitable in short bursts, but with long periods waiting for those blockbuster deals to be struck, while farming vendor trash for sale can have a more regular but substantially lower income rate.

Most players also make real money in the same way, by exchanging their time and effort for real-world dollars. Again, different people have different incomes, so will usually value their time differently on that basis.

Why the external game money markets exist

Quite simply, they exist to enable the late starting or slowly developing players to obtain items that they are unwilling or unable to procure on their own. They are further made possible by the varying income rates of the people who play the game. To see how this works, consider the following example:

Player A is an 'uber' player, who is able to earn say 10gp per game hour, and it costs him about 1gp per game hour to play. Player B is a mid-level player who has collected, or is in the process of collecting equipment that is 'uber' for lower level players. Player B earns at 2.5gp per hour, and it costs him 250sp per game hour to play. Player C just started playing the game, so is substantially behind the majority of players in terms of equipment and game money. Player C earns about 250sp per game hour, and it costs him 25sp to play.

Player A already has the best equipment available to him, so his in-game cash earnings are, or have been, accumulating over time. He's game cash rich. There's really no incentive for Player A not to sell his game cash savings for real cash. The only question is how much he should be paid for it. Let's say that Player A is a college student, so his real-world earnings are low, call it $8.00/hr. Let's say he's willing to sell his game cash at $2.50 per game hour, or $2.50 per 9gp.

Player B wants to turn his items into game money, and wants to maximize the value he gets in return for them. He has one item, call it Item X, that is the 'uberest' item that can be had by Player C's character at its current level. To get Item X, Player B had to level to his current level, find a group of sufficient level and skill to kill a special mob, then win the roll to get the item. To get another one, it might take him 4 or 5 groupings. Altogether, it takes 10 hours of 5 people's time, plus another 5 hours of his time assembling group, in order to ensure that he gets the item. Of course, he wants to make a profit, so he prices the item in the player market at 40 gp, which is 2.5 gp more than it would cost him to produce.

Player C wants to be 'uber' for his level. He wants Item X. Let's say that Player C values his time at $50/hr, because he's wealthy or has a high paying job. To get the item for himself he must invest the time to level up to the point where he is able to kill the mobs that drop it, figure out where to find those mobs, assemble groups, and then spend the 15 hours himself to get the item. Let's say this would take him 150 hours to accomplish. At the rate that his time is valued in the real world, that amounts to $7,500. Put in those terms, the roughly $12 that Player A would ask for the game-cash is cheap.

Add to this that by the time that Player C is able to get Item X on his own, it won't be the 'uberest' for his character anymore. The prime utility of Item X is closer to where Player C is now. So sourcing it on his own isn't really optimal in that sense either. Maybe it makes more sense for him to just farm for the game money to pay off Player B for the item. But here, again, it doesn't. For him to make the 40gp needed, let's say he would have to spend 15 hours farming. Again, the $12 that Player A wants is cheap, because 15 hours of C's time is valued at $750.

But how does Player C find Player A? Answer: the game money brokers. They provide liquidity for both the sellers and the buyers of the money in return for a fee. The fee is expressed as a price hike between what A sells for, and what what C buys for.

This is one example of why the market exists. There are many variations on this, of course. It could be that Player A is a third world worker whose annual income is measured in hundreds of dollars, which appears to have happened in the Lineage II game. Or, Player A could be a time-rich, cash poor person who is looking to supplement their income. A variation on Player C might be a kid who spends his allowance, in full expectation that he'll get more money later from Mom and Dad, so doesn't value the real world cash. Or Player C might be someone who doesn't have a lot of time, may not be wealthy, but still wants to have the best gear for whatever reason. Or maybe Player C is just lazy. Or wants to show off. Whatever.

Deflationary pressures

The example above is limited to just the three players involved a single transaction. In reality, there may be many players involved in the player market. Even though it may cost 15 hours to produce Item X, that doesn't necessarily mean it's worth 15 hours of effort. This is because there may be a glut of Item X's on the player market. This will tend to drive prices down below production cost, discouraging people from investing the time to farm the items. Alternatively, the market for Item X may be limited. Perhaps there aren't many players low enough for it to be attractive to them. This means the item stays on the shelf, taking up space, potentially for a long time. This will also drive the price down as the seller makes it more attractive in order to get rid of it. Finally, new expansions and game content constantly move the bar of what is and isn't 'uber'. When +2 swords are dropped commonly in the new expansion zones, the +1 swords of the old world naturally drop in value.

Because their supply is unlimited, and their utility is usually lower than that of the dropped items, vendor sold items prices will generally drop to zero fairly quickly in the secondary market. It just doesn't make any sense to pay 2sp to a vendor for a 2 dps sword with no stats when you could be paying about that price for a +2 sta 5 dps sword from the new expansion in the player market.

Inflationary pressures

Meanwhile, thousands, perhaps hundreds of thousands in WoW's case, of players continue to farm and play and generate game money. As they level up, each player's earnings potential in game cash terms increases, and over time the excess cash builds up globally. Consequently, items that are in short supply, because they are new, unique, or very difficult to obtain (e.g. requiring 72 top level, top geared 'uber' players on 5 raids to get one item), will steadily rise in price. Prices for these items will also rise in line with the external game money markets, until the scenario talked through above becomes less attractive for the higher real-world income players.

Conclusions

- The price of vendor sold items has very little to do with the external money markets viability. In fact, vendor sold items have close to zero value, except for those items that are needed for tradeskilling, or for character maintenance.

- There is already price inflation in player markets. It's created by excess game cash generation, and is in part exacerbated by the external game money brokers.

- Dropping the prices of vendor sold goods won't stop the external brokers at all.

- The only way to stop the external money markets is to prohibit trading of items for game cash.

I see all your points, and they are all valid. I just have one question. How would they prohibit the trading of items for game cash? Are you speaking of player to player trades? Whereas, I give you an amazing rare staff and you give me 2 gold for it? If I'm following you right, you're then saying that I should just give it to you for free, or am I missing the point?

Basically, if I'm following your logic correctly, you want to get rid of auction houses all together. That's the solution for stopping the external money sales problem? Personally, I don't see that helping at all. Furthermore, I don't understand why Blizzard doesn't put in the EULA that selling in game items (cash, in-game items, or characters) for real world money is not authorized and could end up with your account being terminated (or suspended). I did a search on Blizzard's site and it says nothing about 'not' selling stuff on eBay, just that if you do so, you do it at your own risk. Blizzard doesn't support it, but they don't condone it. I think Blizzard needs to step up and say 'No' to selling items for real world money.

That's just my two cents. (Let the flaming begin!)


From the FAQ on Blizzard's website:
http://www.worldofwarcraft.com/info/faq/support.html

I don't really like the idea you told :(

But just my opinion, i think its good as it is now

The only problem wth all of the above arguements.... is that selling the game money for real money cannot be stopped. It has been around since the first MMORPG, people will always find a way.

FFXI's economy is player driven. It totally sucks as well.

Prohibiting it in the EULA isn't even going to faze the people who do this to make real world money. If you think it is you are sadly delusional for beliving that everyone always play by the rules.


You can beat a dead horse with your arguements, I have seen multiple debates across multiple games about selling online cash for real life cash. It will NEVER end, EVER. If you want to believe otherwise you go right ahead, but you will never be able to stop it. Some weasel always finds a way to make money off these things.

Just my 2 cents sorry if this sounded like a flame. >< Red your arguements were well thought out and a very good read. Sadly it won't work for the sole fact that as soon as the economy switches directions whether it be items or cash, so will the sellers. Regardless what that does to the game, the sellers will ALWAYS have a buyer, it's human nature.