Virtual Economy

"The nature of job in 2020" is one of the most important consideration when I first started this exploration of the learning need now in order for our next generation to cope with life in 2020. Here is an economic activity which may develop into an interesting possibility in 2020.

In the article Real profits from virtual worlds, Telegraph reporter Andrew Murray-Watson described how John Jacobs, a music producer from Florida, bought a piece of virtual land in an online game world with real life money and planned to make real life money from the virtual land. This is within a game world known as Project Entropia,

which was set up in 1995, is unique among MMORPGs because it has a currency that is pegged to the US dollar.

Participants in the game change their real money into the game currency called PEDs at the rate of 10 PEDs for every dollar. They then use their PEDs to buy clothes, weapons and even houses and mining and forestry rights. Players who make a profit in the game can then convert the imaginary money into real cash.

...

Project Entropia, which has over 200,000 players, has its own stock market and auction house where players can trade services and commodities. The markets also allows gamers to determine the supply and demand of a host of other virtual resources that can be accumulated through long hours sitting in front of the computer.

(MMORPGs stands for Massively Multiplayer Online Role Playing Games) [my emphasis]

Globally, there are about 350 active MMORPGs, with dozens having over 100,000 subscribers. ItemBay, a Korean company specialising in trading virtual goods such as magic battleaxes or laser carbines, has 1.5m customers and revenues of $17m per month.

To put all this in context, it is possible to calculate the gross domestic product of a virtual game world based on the value of its total assets in real world terms. Using the time it takes for gamers to gather those assets also means that other economic measurements such as an hourly wage rate and GDP per head can be calculated.

In 2001 Edward Castronova, an economist at California State University, was one of the first to realise that the largest MMORPGs had economies greater than most African countries on a per capita basis. But real world trading of virtual goods and services comes with a health warning for gamers looking to make a quick buck.

With this background, here comes a post from Nine Shift: "Intangibles key to our economic future" which comes to the conclusion that

Intangible products and services:

* Can and must be the primary business of American companies.
* Can be sold without a manufacturing intermediary.
* Can be sold internationally.
* Create high paying jobs for knowledge workers in the U.S. and other post-industrialized nations.
* Lower the trade deficit and restore a balance of trade.

I am not necessarily looking from an American viewpoint. However, I think this remark holds true for all developed countries. We should constantly look for opportunity of high value job in order to keep the living standards in these countries.

Andrew from Telegraph quoted some economists suggesting that Project Entropia resembles pyramid selling

the only way for players to make a profit is at the expense of others who are less successful in the game.

I don't necessarily agree. I am no economist nor lawyer. So my understanding may not be correct.

Pyramid selling refers to a marketing technique where the "goods" being sold is the membership of the scheme. There is no intrinic value of the membership except by selling more to other people. The game world in MMORPGs has real value - the value of experience, be it entertainment or learning. The creation of virtual objects involve "labour" and when someone wants to enjoy other people's labour, they may pay for it. This is the fundamental driving value of the economy of MMORPGs. Of course, once the interest (or the experience value) of the whole MMORPG is lost (for whatever reason), the virtual economy built around such virtual world will disappear as well. This is a real risk in investing your real resource (effort or money) in such investment. Again, this is quite similiar to other investment in the real world.

Is working for the virtual work a real job? I would say "yes" as long as the demand of the service is there.