20 December 2011

Play Money - Dibbell 2006

Play Money, Dibbell, 2006

Notes from the book, re-organized in sections by myself for easier summarizing and reading. Below, UO stands for Ultima Online, and OSI stands for Origin Systems Inc, the game company who developed and ran UO. OSI was owned by EA.


Players keep playing because they want to go up the player ladder the same way RL people want to go up the social ladder. At some point, you have to decide either to leave the game cold-turkey or to give the game a point: make it productive. Giving the game a point is easier because the game is addictive. Although flow happens 3 times more often at work than during leisure times, play makes flow more enjoyable.

Huizinga: play has always been part of society. Weber: the Protestant Ethic of Puritans considers productive activities as recommended by God, and sports and leisure as wastes of time. Capitalism principles come from Ethic of Puritans, hence a capitalist society considers play shameful. Dibbell: Games are symptoms of post-modern rampant abstraction and transformation of wealth creation. Marx: solidity melts into air. Dibbell about games: production is melting into play.

Troy Stolle is a RL carpenter who played a grandmaster blacksmith. When fired IRL, he decides to sell his 52-month old account on eBay for $500, when the account is going to be resold for $2k. He thinks it's all fake anyway and does not realize there is demand for virtual items.

Being part of UO's virtual economy

Virtual economies require and implement constraints and scarcity. Castronova: in MMOs, scarcity breeds market, and markets cross realities at their onset. Dibbell realizes there's a complex supply chain of warriors who drop, artisans who craft, hagglers who buy/sell IG, brokers who buy/sell on eBay or on their own website, and finally the clients. Example of a client: a Mum buys a $25 virtual item for her kid's Christmas. Why people sell for so low is the mystery that lies at the center of market economics: it generates profits at all levels of the chain.
Lesson: Theory of ludocapitalism, where play is a latent force waiting to be tamed the same way steam was the energy of the industrial revolution.

Julian Dibbell: born 1963, starts playing UO in early 2003. Weekly play time: 20 hours per week. First step in the economy: farming and selling batches of leather suits to another player. He Starts a blog in March 2003 to track his business adventures. A journalist VIP pass grants him earlier access to maps of the next update; he uses it to avoid the rush on new houses and buy 2 houses. Why keeping an uber house worth $600? I wanted to be envied. He accepts to share his house with a 17 year old kid, who sells IG some items for him and brings him a small profit. Unusual/weird "friendship". He plans to sell the other house for 30m gold, but a famous player on his shard asks for 20m and he accepts, honored and intimidated.

IG runebooks let players memorize places to teleport to them later on. Memorize all the mining spots in that book. Once the spots have been written in the first book, duplicating that book takes little time. Dibbell sells each book $3 on eBay. He quickly realizes this is too little profit for too much time spent. Some "rares", on the other hand, can sell on eBay for $75. Rares, along with other luxury items such as hair dyes or houses, are often only sold by NPCs to implement gold sinks.

Although virtual economies enable players to bond, when you get too deep into it, you're not a player anymore. The social aspects and the fusion with fiction disappear. Yet vendors of virtual gold are still immersed in some ways: Dibbell has no idea what he's doing at DiGRA or State of Play, talking about virtual economies and law, because he's more eager to live in [MMOs] than to understand them. He has self-doubt and wonders if the study of virtual economies has an intellectual substance about as substantive as pot smoke.

Scams and (lack of) protections:

  • Kids buy from their Mum's PayPal or credit card and receive the item within 15 mins. After a day or two, Mum reverts the transaction, but the player still has the item in his inventory, or even sold it to someone else.
  • Scammer advertises selling an item for half its market value. When buyer comes, the scammer sends him a link to a Paypal-looking phishing website in an email, and then empties the buyer's Paypal account.
  • A seller advertises a rare item. Using a thief character, another player goes to the seller's house, steals the item, and sells it IG or on eBay. Dibbell knowingly buys from the thief: in-game robbery is part of the game.
  • eBay and Paypal do not provide insurance over "intangible" goods. They provide insurance for soccer match tickets, presumably "tangible". Still, they say they can't insure a real paper ticket with a code written in real ink for virtual gold.

In 2004, the IRS said:

  • Declare as income anything you receive IRL, be it work of art, real dollars, or virtual gold. Illegal income such as stolen or embezzled funds must be included [...] if from your self-employment activity
  • For normal players, prizes won in lucky number drawing must be included in your income at their fair market value
  • Organizations that facilitate the trading of goods and services, such as OSI with virtual gold, should send tax forms to and withheld taxes from its players.

In 2005, an IRS specialist on the phone said there's no legislation yet on Internet barters or virtual economies.

UO vendors

IRL, dozens of monetary startups create "fake" money. E-gold backs their virtual currency with real gold stored in private vaults. An artist draws custom dollars and sells them, as art pieces, for more than their face value. Dibbell: We live in an age of money hackers. Make-believe [is] required to establish monetary value.

Blacksnow Interactive is located in Orange County. Business model: gold farm of 8 Mexicans in Tijuana, Mexico, paid $19/day, generate $30k profits per month. They play according to scripts given to them daily by their on-site supervisor. $800k sitting in inventory. Blacksnow trialed Mythic after they asked eBay to shut down Blacksnow's DAoC's gold auctions. Too bad Blacksnow vanished after being trialed by another game company, because justice would have had to determine who owns the IG wealth: players who spend the time, or companies who make and own the games?

Bob Kiblinger used to work as a chemist with decent pay. After playing UO nights and weekend, his wife divorced him. He bought and resold Troy Stolle's tower to Dibbell. Bob is a popular broker with 10k+ ratings on eBay. Has list of furnishers for each shard on IM. Spends 14 hours per day trading accounts and items. Belongs to the Markee Dragon conglomerate of the top 7 UO brokers. Markee Dragon provides server transfer, lets you pay your game time by gold instead of real dollars (they own the account and pay it for you), and brokers IG gold. Markee Dragon's ethics say: don't buy from bot farmers because they cheat. In 3 months of 2003, Dibbell bought $3700 of discounted gold from bot farmers, so he felt kind of unethical. Later, Rich the bot farmer gave him the list of his top 10 clients for 2003: Dibbell is 10th, all Markee Dragons belong to the top10, and number one is Bob who bought a total of $35k of gold in 2003.
Lesson: you need to buy from bot farmers to make a living in the US as a gold broker.

Using DeepAnalysis, an eBay market research tool, gives the market state and the list of vendors in a particular eBay category:

  • Weekly sales of UO items and accounts: $160k
  • Yearly sales of UO items and accounts: $4.2M
  • Change rate: $16 for 1M gold

And there are other sources of revenue for vendors that are not visible on eBay:

  • buy whole accounts for $300 and sell all the items in them for a total of $1200 = 400% profit
  • IG gold suppliers run big malls
  • A Guild has the monopoly on mining spots in a shard. Its guild leader sells gold to his broker.
  • Camp houses that will soon be re-opened for sale because their owner has not logged in for a long time. Can be done with a bot. Then resell houses for a lot of gold or dollars.

Working for Bob, in a solitary and obsessive interlude of 3 weeks in mid 2003, Dibbell made $1100 of sales by taking his share on buying and delivering suits on his shard. In the next 3 weeks, he only dedicated 2h/day selling packs of 100k or 1m gold and suits on eBay or to Bob. His sales remained around $850 per week. On average, brokers make 20% profit from their sales. After 3 months, Dibbell made $800 profits and ranked 65th out of 800 in terms of sales of eBay UO vendors. Bob is ranked first with $8k sales and $2k profits per week. Dibbell compiled those results thanks to the DeepAnalysis tool.

Gordon, a Cantonese exec, just opened a 10-man gold farm. He asks for partnership with Dibbell and Bob: his farmers would bring items that Dibbell and Bob sell to clients, and they all share profits. Predictions of $1600 sales per week. Gordon says he pays his farmers $1.5/hour and they can generate $5/hour. However, a NYTimes article in 2005 revealed that Chinese farmers are usually paid $75/months in 12-hour shifts, ie less than 30 cents/hour. Anyway, Gordon never generated the profits he mentioned. However, Dibbell, on a road-trip from Indiana to California, reached a max of $1k/week of profit for 4 weeks, mostly only selling 1m gold packs.

Bot Farmers

The game allows the use of a macro API provided players stay in front of the screen. Bots use macros on exploits such as 1) buy clothes from NPC 2) tear down clothes into tissue using basic tailoring skill and macro 3) sell tissue for more than the clothes. This technique generates 350k gold per hour. A Georgia man used it and amassed 20b gold, ie $300k. The total wealth of UO on all English shards was estimated at 35b, hence huge inflation wave coming up and detected by GMs. OSI fixed the exploit and wiped the extra gold by banning the bots.

Richard Thurman: 30 year-old software engineer. Leads the hacker group who developed EasyUO, a UO bot program. Rich's bots on 20 machines brought him 60k gold per hour using cartography exploits. Competitors denounced him to GMs and he was banned. Came up with a more defensive strategy: 1) eBay is too risky, hence build network of IG wholesale gold buyers. They get gold for 40% less than the eBay price. 2) to check for bots, GM wear a colored stick and ask the player "what's the color?". The bots would IM or SMS Rich when they were faced with a GM, and receive text to say to the GM by IM or SMS from Rich. 3) Plug A.L.I.C.E so that bots talk by themselves.

Blacksnow's leader and Rich meet in October 2003. Blacksnow proposes to agree on gold prices in return of receiving a dll used by EasyUO. Rich says it belongs to his group and refuses. Blacksnow discovers the hacker group had been blackmailed in the past by a player and had had to give the dll to the blackmailer. Pissed, Blacksnow reports Rich's bots to GMs.

An updtate from OSI on the merchant NPCs implements an offer-and-demand scheme, but assumes that players won't buy more than 500 items. Rich and another bot farmer find the glitch: buy 2k items at a time, the NPC believes you only bought 500 so the price does not increase as much, then resell the 2k items for small profit. Bot farmers use the exploit for a while, making millions of gold per hour. Blacksnow finds out they're making a lot and blackmails them for their technique against not denouncing them to GMs. The 2 farmers decide to stop their scheme and tell OSI about the exploit so that no other benefits from it. They made a total of $150k profit from 20b gold.

PS: Dibbell thinks that designing a single-shard MMO for 100k players is an impossible dream, and that's why MMOs stay sharded.

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