Jonathan Steinhauer's MMO ColumnGetting off the Gold StandardJonathan Steinhauer's MMO Column - RSS 2.0
One great appeal of MMOs is that they are so open and versatile for gamers to do what they want. Players can choose to participate or ignore just about every facet of a game: PvP, crafting, lore, exploration, and in some cases even PvE. Gamers can play individually or in groups, they can choose to roleplay or not. But one aspect that can never completely be ignored is the economy. In a sense, this is an accurate reflection of reality. After all, people in the real world can hold many professions, yet regardless of what we do (or don't do) we are still bound by the price of food, rent, and clothing.
Game designers face many challenges, and one of the largest of these is balance. Classes must be balanced in both PvP and PvE, races must be comparable with each other, trade skills, weapons, and armor all need some form of equity. Yet curiously, one facet that seems to garner a much smaller degree of balance is the economy. That isn't to say that it doesn't get a great deal of attention. Designers struggle to provide and sustain a manageable amount of profit and loss through all aspects of the gaming experience. It is a massive challenge because the economy is, by its very nature, pervasive. Yet the current solutions that game designers use to keep their economies in balance are peculiar and more reminiscent of a band-aid than any real resolution. It almost feels like they are saying, "The economy isn't exploding so don't tinker with it or it might spin out of control." Whatever the reason, the economic basis of the majority MMOs are built on very similar systems.
Before moving forward, I'm going to give a little background on where I'm coming from and where I'm taking this article. For starters, I am writing this from the perspective of a non-mercantilist gamer. That is to say, I am not a person whose ambition in game is to amass great personal wealth. I use the auction house system only moderately to get extra spending cash or to purchase rare crafting resources or gear that I am either incapable or disinclined to collect myself. In approaching the question of game economies I will be coming from two perspectives. First, I believe that games should have a strong basis in reality as put forth in my last article. The second standpoint is a simple gaming one. Games, by their very nature, should be playable and fun. For simplicity, I will only be looking at fantasy games. Sci-fi concepts provide a whole different perspective and, while in many ways similar to fantasy, can be very different in terms of economics.
The first step to investigating new possibilities is to look briefly at the current state of MMO economic systems. With minor deviations, these concepts hold true for most recent fantasy games. Economics is based on the principle that supply and demand drive price. Wealth is introduced into a gaming world through interaction with the environment. Completion of quests yields cash rewards while monster slaying provides cash loot and items that can be either sold to NPC vendors for money (vended) or traded to other players for money. The amount of money a player has generally increases as the player levels. Likewise, the amount of money in circulation increases as the player base levels. This increase in wealth drives prices up because players have more money to spend so traders can charge more. Designers attempt to control this type of inflation by providing arbitrary money sinks to pull cash out of the player economy thereby keeping prices under control. Popular money sinks include leveling costs, trade skill costs, purchasing mounts or housing, quick transport fees, and equipment repair.
The problem is that these sinks are in many ways arbitrary, often intermittent, and most importantly ineffective in the face of endgame play. I've always found it interesting that the concept of an endgame has become so natural. Isn't that when the game is over? I recollect when I was playing AC that the designers set the cap at 126 and expected it never to be broken. Of course, it was. More recent games see avid players hitting the cap within weeks (if not days) of the release. You simply have to take a look at the Plaguelands of WoW to see the effort that designers have invested in order to keep capped players happy. More to the point, though, there really hasn't been any major advancement done concerning the endgame and its impact on economics. This is significant for two reasons. First, when a player cannot level any higher, he can no longer be rewarded experience for successful quest completion. Instead, the game increases the volume of cash rewards. Second, and quite naturally, the highest level regions will have the highest level loot worth the most money. So this means that endgamers become very wealthy with few money sinks to moderate the cash they introduce into circulation. After all, a capped player no longer has leveling costs. They may have put off a trade skill which may cost a little cash, but other than that, they're pretty much just saving up for an epic mount or fancier house. Once that's done the major expenses are over. The costs of quick transportation and equipment repair are minimal enough that they hardly put a dent in player wealth at any level.
Endgame wealth also has a major influence on MMO disparity of wealth. New players start out markedly poorer compared with endgame player rerolls or other low levels with wealthy benefactors. Because a rerolled character has much greater wealth, they can afford to go into an auction house and pay top dollar for all the best gear. In fact, new player wealth diminishes over time because, for example, a Level 1 WoW quest will have the same cash reward in 2009 as it did in 2005 but the value of a copper coin in 2005 was much greater than it is four years later.
Some may argue that disparity of wealth is a natural economic phenomenon, and that is true. The problem is two-fold. First the disparity increases inflationary problems in the economy and second, it can reduce enjoyment of the game. An MMO is sustained by two things: keeping old gamers happy and continuing to bring in new ones. If the new ones are so far behind the power curve that their game play is inhibited (or perceived to be inhibited), they are much more likely to leave. Naturally the same problem would occur on the opposite end if high level players' wealth meant nothing, but the current system is clearly out of balance in their favor.
Now that we've had this overview of current MMO economics, per my standard methodology we'll look at what history has to say about this topic. Given that the Middle Ages provide the basic inspiration for fantasy MMOs, the economics of that era should provide the best information for this analysis. From about the 3rd to the 15th century, Europe was predominantly in a barter economy. That is not to say that currency didn't exist. It certainly did in some places but was far outweighed by barter. Even when it was present, the value of the money was not typically based on the principles of a money economy, but rather on the weight of the precious metals in the money.
One of the best examples may be the late Roman Empire as it descended from a money system to a barter system. There are many theories on this murky era of history, but it is known that Roman currency was heavily debased. This probably had multiple causes including precious metal mines producing far less gold and silver than previously and also greater quantities of money leaving the empire than entering it. This occurred both due to trade with the Far East which was a predominantly one-sided arrangement (money leaves the Empire and goods flow in) and tribute paid to keep the various "barbaric" peoples pacified. Regardless of the causes, emperors began debasing currency by shrinking the size of gold coins and reducing the amount of silver vs. alloy in silver coins. A natural effect of devalued money is that it becomes less important than the goods and services it represents. Even Roman soldiers began to receive in-kind payments such as leased farmland.
MMOs do not suffer from this sort of debasement. There is no limit to the amount of virtual money that a game society can create. The monetary debasement in games occurs in a more modern way. Because there is a perpetual increase in money as more players reach endgame, the money loses its value over time. Yet whatever the cause of such debasement, the end result is the same. A real-world economy in such a crisis will naturally shift from money to barter as medieval society did. It makes sense that MMOs do so as well. It is interesting that most games use terms like gold, silver, and copper rather than dollars, sesterces, or some other form of currency. This implies that trade is even now being achieved through weights rather than some kind of modern guarantee on the currency.
Medieval economics weren't based on capitalist principles. Indeed, capitalism is a system that didn't begin to emerge until the Renaissance era and, ironically, received its name belatedly from Karl Marx in the 19th century. In the Middle Ages, it was not supply and demand that drove the economic engine. Instead, it was the idea of Just Price. The insular nature of the medieval era meant that competition was largely absent. Just Price meant that every item had an absolute value based on the cost of production. A person could lawfully raise the price of an item when he either improved it or had risk and expense from transferring the item from one place to another.
I wouldn't expect the Just Price concept to be successful in MMOs because it is such a far cry from what players are accustomed to, both in game and out. It would need a world society much more highly developed than what exists today to establish the authority necessary to hold prices. Even then it would be so close to price-fixing that I expect it would be highly unpopular. While Just Price might not transfer over well to MMOs, a barter economy would. In fact, it's been done already with great success.
Being part of the first generation of MMOs meant that Asheron's Call was forging into unknown territory. One of the things it never fully accounted for was the natural market that would emerge. AC didn't have any methodologies to deal with the demands of a player economy. The currency of the game was nearly valueless with the only things worth buying being cast-off high grade equipment at Ayan Baqur vendors. There were no leveling costs and no mounts. It had a few basic trade skills which required minor expenses and later introduced housing with only small monetary costs. In the early days of the game, money had weight and that limited player wealth as well. The natural outgrowth of this society was a flourishing barter economy. It centered around coveted objects such as pyreal motes, crystal shards, singularity keys and other similar items used to create high quality arms and armor. Yet the market remained highly limited with gamers having to shout their wares locally. There was no long distance trade channel or auction house. But the economy went through a revolution when plug-ins were developed and a resourceful individual came up with the "Trade-Bot."
In basic terms, the Trade-Bot was an avatar that was turned on when a player wasn't actually playing the game. Their account remained logged in but the bot behaved in an automated fashion. The player assigned point values to certain barter items. For example, a pyreal mote might be worth 1 point while a singularity key was worth 5. Depending on what the trader wanted, he could shift the values around to his own liking and then assign point values to items he sold. If he valued a certain sword at 10 points, another player could purchase it for 10 motes, or for 2 keys, or for 5 motes and 1 key. Of course, this system had two major weaknesses. First, the trader had to be logged in to use his bot and couldn't actually play the game while the bot was active. Second, buyers had to peruse each bot one-by-one to look for items they wanted to buy and only one buyer could interact with one seller at a time.
As I did research in preparation for this article, I saw that the idea of bringing back a barter economy is far from rare. It is bandied about on various boards, often with mixed results. One of the major problems that gamers cite is the requirement that a player remain ingame to barter like in AC. Yet I don't see why this must remain necessary given modern MMO design potential. Why can't an auction house be setup for barter using the same guidelines as AC's bots? In that way, sales could be done just like they are in money economies with players not having to be logged in to sell and buyers able to see all available goods at one time.
Similar to this question is the statement that certain bartered items will simply become the new currency. Instead of gold being money, pyreal motes would be (to continue my AC example). I would consider this an argument in favor of a barter economy, rather than against it. Pyreal motes have value because they are sinks in and of themselves. They can be converted into powerful weapons and thus disappear from the market thus allowing them to serve both roles well.
Another major argument I've heard is that most players would be turned off by a barter economy. This statement is hard to prove one way or the other. To my knowledge, there has been no poll done to see what economic systems gamers prefer or if a barter economy would be a "deal-breaker" causing a player not to buy a game. I suspect that those gamers who play with the goal of accumulating massive monetary wealth would generally be opposed to a barter economy. After all, barter items are harder to store than cash and are harder to measure in terms of overall wealth. On the other hand, I suspect that those players who game like I do (that is, use the economy to acquire items for use) could enjoy a barter economy just like they would a money economy, if not more. After all, in a barter economy, money sinks are both more controllable and more natural. Also, inflation could be moderated by the introduction of new valued barter items (much like pyreal motes gradually devalued in AC as newer items appeared). What is unknown is how many players fall in to which category. I suspect more players would fall into the latter rather than the former, but that conclusion is only based on gut instinct. The fact that the AC economy was an accident unforeseen by the developers and actually enacted by player base seems to me to be a resounding positive response for barter economies rather than a negative.
There are many theories and recommendations that have been put forth on how to deal with the economic issues of MMOs. No doubt many of them are practical and this article only touches the tip of the iceberg. The reason I would argue for a barter economy are three-fold. First, I've seen it in action in AC and believe it has the potential to enhance the auction house experience. Right now, players just throw their items up and give it a base gold value and a sell-out price like eBay. Economics could be much more compelling if the value was based on varied barter items instead. Second, due to the natural sinks of barter items, it is a very realistic and practical method to deal with the inflationary problems plaguing game economic systems. Finally, it fits in with the genre. In a fantasy world where everything else is pseudo-medieval, a pseudo-medieval marketplace would be ideal.
Armstrong, Christopher. "Do the Laws of Economics Apply to MMO's?" GameRates. 8 Aug 08. <gamerates.com/posts/show/do_the_laws_of_economics_apply_to_mmos>
Delbruck, Hans. The Barbarian Invasions. Lincoln: University of Nebraska Press, 1980.
Lewis, Sam. "Advanced MMOG Economics." Flying Scythe Monkey. 13 Sep 06. <www.flyingscythemonkey.com/new_page_1.htm>
"Value and Just Price." Theory of Economic History and Thought. Nov 08. <www.economictheories.org/2008/11/value-and-just-price.html>.