In-game cash marketplaces and Napster -- the arbitrage of time-rich and cash-rich users

The Guardian's just published my latest column, "Developers still finding that it pays to get in the game," about the increasingly prevalent online game practice of selling items to players, and the parallels this has to the download wars:

Official, game-sponsored exchanges for real-money trades (RMTs) are more than places where players can swap goods for money. Fundamentally, these exchanges act as an honest broker between two extremely different types of player: cash-rich/time-poor players (people with jobs, for the most part) and time-rich/cash-poor players (retirees and young people). Seen through this lens, a "game" is just a bunch of applied psychology that makes kids work long hours to earn virtual gewgaws that adults are trained to desire. In this "Free to play, pay for stuff" world, kids are alienated from the product of their leisure by a marketplace where the game-company skims a piece off of every transaction.

The psychology of this is fascinating, since it all only works to the extent that the game remains "fun". One key element is that skilled players (eg kids) must not feel like the rich players are able to buy their way into positions of power. Game devs are advised to sell defensive items - shields, armour, dodging spells, but not offensive ones. A skilled player will still be able to clobber a heavily armoured rich player, given enough time (and skilled players have nothing but time, by definition), but may quit in disgust at the thought that some rich wanker is able to equip himself with a mega-powerful sword or blaster that gives him ultimate killing power. No one wants to play in a game where one player has an "I win" button.

For me, the most fascinating thing about this is how it can be seen as the application of the business model that downloaders have been advocating since Napster: "Don't sue the kids who download your music or movies, rather, see them as the marketing that sells the same media to cash-rich adults who lack the time to use P2P software."

Developers still finding that it pays to get in the game

• [Aloisius]

  The state of semi-brokenness only exists because of RIAA and related entities. We complain about their tactics but they are partly successful, at least with time poor users. Had Napster allowed to thrive illegally, I doubt iTunes Store would been as successful.

  This is simply not true. We did many studies and found that a large percentage of users on our service would have paid for Napster and paid enough to fairly compensate the music industry.

  Napster provided access to a vast collection of music far beyond what you could obtain commercially.

  Also, Napster had no interest in remaining an (allegedly) illegal service. We were in the middle of building a for-pay service.

  The idea was that we were already the music hub on the Internet with over 80 million users and converting a fraction of them to paying users would have drastically changed the music industry.

  We really wanted to let labels charge for tracks they owned and allow everything they didn’t claim to flow freely. The everything else pile itself was vast enough to keep a lot of the cash-poor/time-rich people on the service simply because you couldn’t find it anywhere else.

  This is *very* similar to the model being proposed as the technology to identify music was never perfect and allowed time-rich people to find stuff if they really really wanted to.

• [weatherman]

  That’s interesting analysis, but I think it falls apart a bit when it’s extended to the music download problem. The reason it breaks is that it is already very easy to download music illegally, so the thing that actually stops “adults” from downloading music is not the time but the ethics and law. If music companies simply allowed music downloads, there would no longer be the incentive for adults who only pay for music because they feel like they should, not because it’s any easier.

  Of course there are ways to design a contained system, like a video game does, that weighs time and money and other factors so that those with time can put in as much as those who have money and everyone benefits from the economy. But the cat’s out of the bag for music, and the gray market for illegal downloads is already the dominant market.

• [sirdook]

  I’m afraid Weatherman is right. As you very ably point out elsewhere, Corey, pirated versions are often, all things considered, easier to use than purchased versions, since they aren’t laden with DRM. It may be that the initial jump into P2P is a bit much for some people, that’s a contingent generational fact, not one that you could build a long term business model around.

• [Antonio Silva]

  “Don’t sue the kids who download your music or movies, rather, see them as the marketing that sells the same media to cash-rich adults who lack the time to use P2P software.”

  Kids will be grown ups. And they are likely to continue getting music/films/media the way they way they are used to (illegally).

  “This business model has a certain attractive stability to it, in that it relies on technology being in a constant, perpetual state of semi-brokenness, which is a fundamental characteristic of the information age, where constant change ensures constant chaos”

  The state of semi-brokenness only exists because of RIAA and related entities. We complain about their tactics but they are partly successful, at least with time poor users. Had Napster allowed to thrive illegally, I doubt iTunes Store would been as successful.

• [Anonymous]

  Actually as a long term wow player I disagree.

  Even though the servers are now down for the new patch I had a run in with a goldfarmer earlier today and it served to reinforce my dislike for the entire breed.

  What outside observers like Cory don’t get is that buying in game items is cheating and no players like it. First there is the fact that buying gold (or in reality weapons/armour and mounts) cheapens it for people who have worked hard to make/buy these things honestly.

  Second the act of farming is pretty dire as well. Farmers spam the trade and LFG channels… I imagine spending 1h30mins running a dungeon, just killing the boss and having your victory soured by a goldfarming ad. Or trying to complete a quest and having the area overrun by goldfarming bots.

  I’m fed up with the whole cash rich/time poor bull. Imagine if this was a game of football and you have cash rich/fitness poor people is it fair to help them cheat there way to the top?

• [Antonio Silva]

  @alouisius
  What I meant was if Napster continued to operate as it was, allowing sharing songs with no revenue stream to rights holders. As soon as Napster or any other service adapts a paying service a lot of users will to move a free one.

  I agree with Cory that the state of semi brokeness of illegal download services is an important reason why people use legal download services, but that state only happens because of the RIAA, etc that we so much criticize. Take away that, and illegal download services would be as good or better than iTunes store.

• [Anonymous]

  EVE Online pits large self organizing alliances of players against one another. Presently, one faction GoonFleet is threatened by the -A- and ROL alliance, who are bankrolling their invasion via one extremely rich russian aluminum magnate buying in game assets to provision an alliance of over 5000 players.

  These kind of topics get really interesting when theres larger social systems and more hanging on the line in the player v. player contest.

• [Brainspore]

  I still say that if part of your game is so boring that people will pay others to play it for them then you did something wrong on the design end.

• [allen]

  “Kids will be grown ups. And they are likely to continue getting music/films/media the way they way they are used to (illegally).”

  You know- you are right to a degree. I grew up getting music illegally- I had hundreds of tapes that my friends made for me. There was no taint of illegality around it for me- music was an important part of my subculture, and it was meant to be listened to. And I’d never admit to allegedly downloading mp3s of dubious provenance as recently as last night.

  Where it all falls apart is that I also spend more than almost anyone I know on music. I average out around 3-4 albums a week. Because, in addition to liking music, I like supporting artists- and I have moderate means to do so. Furthermore, not only have I purchased music that I obtained as unlicensed mp3s, I have turned on other people to those bands. I know that at least 10 copies of Tin Hat Trio’s “Book of Silk” have resulted from an unlicensed copy that a friend gave me.

  But you are right. The way I grew up listening to music, I did not ever learn to conflate supporting a band with listening to their music. I view them as separate acts, and I definitely have a sense that I should listen to whatever I love, and pay for whatever I can. I’m not even saying it’s right- I’ve just learned to not experience a lot of remorse for being that sort of criminal. I view copyright law as a somewhat arbitrary philosophical argument in which another party is trying to convince me that they deserve as much of my money as I can be bullied into giving them. All I really know is that a mp3 downloaded is not the same thing at all as an mp3 not sold.

• [Anonymous]

  Because we all know that it takes more time to download something illegally than it does to buy it legally.

• [Anonymous]

  “I’m thinking it would be more accurate to say that game designers shouldn’t sell anything directly for cash that a substantial difference in skill and/or “earned only” items couldn’t overcome in direct player vs. player competition.”

  It’s worth noting that WoW doesn’t sell gold directly, but you can buy name changes, costume/hair color changes, server transfers, and a couple of other things that don’t directly affect your character’s performance in the game.

• [cha0tic]

  #10 posted by allen has it right:

  “a(n) mp3 downloaded is not the same thing at all as an mp3 not sold.”

• [Anonymous]

  One problem with this model is that it almost inevitably leads to ‘enhancement’ of the fun for those with cash at the ‘expense’ of everything valuable to the poorer group.

  Ladies & Gents, I give you Capitalism!

  After all, the only reason to make the game fun for the time-rich is to increase the profit for the developers when selling to the time-poor.

  This is why the ‘gold farming’ industry developed in the way it did. Of course you documented this well enough, even entertainingly, in “Anda’s Game”.

  If the gold farming industry can charge enough to ‘playas’ to support decent wages for gold farmers, then they will have recreated modern Western economies!

  Games as jobs, whodathunkit?

• [Moriarty]

  I don’t understand the offensive/defensive distinction. Better armor lets me defeat a more skilled player, just like better weapons would. I’m thinking it would be more accurate to say that game designers shouldn’t sell anything directly for cash that a substantial difference in skill and/or “earned only” items couldn’t overcome in direct player vs. player competition.