User Generated Economies (= real money)

From time to time I’ve blogged on about the industry revolving around buying and selling virtual items on eBay. No-one has got a good grasp of what sort of impact this industry is going to have, least of all companies that ban trading of accounts and items and currencies.

The Escapist makes a great point about the pejorative labelling of avatar clothing or gaming weapons as “virtual” products and how we are not as dismissive of purchasing dvds or online newspapers which are also virtual products. The article then exposes exactly why companies only send cease-and-desist letters to online traders (an industry known to be worth a billion dollars but probably double that a year) – “they don’t want to go to court and have an actual value assigned” (Eikenberry, MarkeeDragon).

MarkeeDragon does a million dollars a year in pixel transactions. And I am sure they know that there is now a whole industry in farming for items as well as hacking accounts to sell items and avatars for in real life dollars and pounds and yen. Is organised crime involved in this industry… you better believe it. Virtual World companies are running scared – China now has a precedence for re-imbursing users for lost items with in real life money. South Korea has a special police task force for investigating game fraud – stolen accounts, hacked items. Angry ex-girlfriends have been fined/jailed for deleting straying lovers game avatars (the ultimate revenge – kill the one who took his time away from you!). An online community has the exact same issues as an offline community. We are only (human) avatars after all …

If in economic terms there is no difference between the “real” dollars and the “virtual” currencies, then we will see mirrors of real world market economies. When Gaming Open Market closed earlier this year, this was typical of farewell responses in the community forums:

I found the career I want to pursue because of GOM: forex trading. Before GOM I had never considered investing. I ran across GOM back when it first opened and got bitten by the investing bug. Now I’m trading forex as a hobby. Given another few years I hope to be able to do it for a living. I’ve been interviewed by magazines because of trading on GOM, and my family delights in telling their friends that I’m a virtual currency trader, making money buying and selling “nothing”. It’s a lot of fun to be able to claim to be one of the world’s experts in a ridiculously obscure field of study. We’ve pushed the bleeding edge of the virtual world industry and the field of economics at the same time.

Well kiddo, there’s still a lot more of bleeding to do as you keep pushing that edge! Why did GoM close? One(bitter and twisted) theory is here:

As for other currency exchanges in SL, we’ve got a multi-national, heartles,s inefficient company (IGE), and a home-grown SL success story who is probably the second most important force on the grid (Anshe Chung), not including the lindens of course. IGE has been doing some major profiteering lately, dumping tons of money into GOM to crash it, and so on. It’ll be interesting to see what happens to in-world commerce after this.

Hmmm, consipiracy theories regarding heartless conglomerates breaking the backs of smaller market leaders while a homegrown success story turns on a dime to make a profit… sounds kinda familiar? Heh.

Man, I have some serious ideas on how a New$Dollar or a Yahoo!Yen! could be implemented. But should I encourage them? Whatdyathink?

Laurel Papworth

Named by Forbes™ Magazine in the Top 50 Social Media Influencers globally, named Head of Industry, Social Media (Marketing Magazine™) and in the Power150 Media bloggers (AdAge™). CERT IV Training and Assessment certified trainer (Diplomas and Certificates etc) Adult Education. Laurel has manager Facebook Pages for Junior Masterchef, Idol, Big Brother etc. and have consulted on private online communities for banks Westpac, not for profits UNHCR & governments in SE Asia. Lecturer, social media, University of Sydney for 10 years and Laurel has 11,000 online students. Laurel Papworth personally connects to 6 million followers online and has taught around 100,000 people in the last 10 years how to be social media managers.

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