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What’s the difference between working for money and playing for money?

posted by Jason Kottke   Jun 09, 2003

I missed Julian Dibbell’s The Unreal Estate Boom in Wired last November (I was in Frizzance), but I recently rectified that oversight. Too many interesting bits in the article about virtual spaces and economies to exhaustively list here, so here’s a short one:

“The minute you hardwire constraints into a virtual world, an economy emerges,” explains Castronova, the Adam Smith of EverQuest. “One-trillionth of a second later, that economy starts interacting with ours.”

Some thoughts:

1. I’m not sure if that’s always true. Slashdot has an economy (with karma as currency) but as far as I know, no one is selling their karma to less karma-rich folks. But, it’s close enough.

2. Back when ICQ was still popular, people sold low ICQ numbers on eBay. #163896 went for $41.

3. When MetaFilter was inundated with new users, Matt throttled new user signups to 15 people a day. But he also let in anyone who donated $5 toward server upkeep and bandwidth. Many people joined this way.

4. And just in case you didn’t think they were smart, the folks at Ludicorp recognize that virtual economies & real world economies are tightly coupled in the way that Mr. Castronova describes above. Expect The Game Neverending to let people play extensively with the intersection of the virtual and real world economies.

ps. Julian Dibbell is keeping a weblog called Play Money in which he’s documenting his attempt to make real money in the virtual world of Ultima Online.

Reader comments

Jon GalesJun 09, 2003 at 4:48PM

I was the first person to sell out on BlogShares. I sold my fortune (26 million) for $100 US in real money. Pretty neat for me as I’d rather have the $100. Since then I have grown my portfolio back to $16 million…. Yes—I’d sell out again :)

jkottkeJun 09, 2003 at 5:09PM

Someone paid $100 for BlogShares? Wow. Have you worked out how much that is per hour?

I think one of the major modern human achievements is the ability to create something out of nothing**. Think of inflated real estate prices, the dot com bubble, the stock market, U.S. currency (which is nearly worthless paper), couture clothing, etc. Hmm…probably a pretty good book in there somewhere.

** Not something out of nothing exactly, but you know what I mean. (Actually, if you do know what I mean by that, could you explain it to me?)

GarethJun 09, 2003 at 5:16PM

I think the most interesting post I’ve read on Julian Dibbell’s blog was this one. Here he describes how someone exploited a bug and caused a huge shock to Ultima Online’s money stock. The effect was just what you’d expect in the real world: inflation. It was Germany, 1923, only in an online game.

So the results were very realistic, but the problem in this case was that the game wasn’t realistic enough - it turned out to be far too easy to make new money. As virtual worlds become more realistic these unexpected glitches may become less prevalent, but if the online economy becomes just a mirror of the real world, if the same rules will constantly assert themselves, why do it online? Is Nozick’s experience machine argument relevant here?

jkottkeJun 09, 2003 at 5:25PM

Back to the BlogShares thing for a sec. Right now, the richest player on the site has a $3.7 billion portfolio. Using Jon’s sale as a guide, that portfolio is worth ~$14,000 in real cash money.

GarethJun 09, 2003 at 5:30PM

I think what you’re describing with the stock market bubble, real estate etc are all the product of expectations. As long as you expect an asset’s value to rise, it’s worth buying. But in certain situations, it’s those very expectations that determine the path that the value of an asset will take. But expectations are subject to sudden, massive change. Hence boom, bust, boom again.

Money is a really tricky one, but again it comes down to expectations. It’s only worth anything because we all expect to be able to convert it into other things. It exists as a common unit to make things easy to exchange (imagine an economy without it - a barber would have to go round shaving farmers to get his food) but the only reason it has any value is because the government says so, and we all expect the government to be fairly consistent in its behaviour.

Jon GalesJun 09, 2003 at 7:25PM

Jason, for more info on the BlogShares deal, check out the buyer’s website. He bought out another guy that had more cash ($100 million) for the same amount. At the time I think I was top 5 which is pretty good considering the number of players.

Per hour was pretty high as the bulk of money was made with index funds. I had enough clout to buy up a ton of bonds at the bottom of the barrel and ride them up to the top. Sell and do it again. The 26 million was all cash from the sale of bonds, I kept all stock (at that time about .25 million).

I figured the utility of $100 US was greater than the utility of $26,000,000 BS (side note, it’s ironic that the acronym is BS and we’re talking about fake money). I dumped a chunk of it back into the economy so my duty to the Bush administration is done.

About something out of nothing… Interesting topic. Kind of makes you question what worth really is. I’m dabbing away at an essay on the silliness of money in the digital age, and this is a returning question I have had. Is a server with a few hundred HTML files really worth big money? To the right buyer. Kind of like how a few characters in a row of a MySQL database over at BlogShares was worth $100 to someone.

I was offfered a buyout offer for another site of mine**, MobileTracker.net. It didn’t work out but it made me realize how hard assessing value for digital stuff is. Does MobileTracker have years of archives? No. Does it have a huge brand name? No… You probably never heard of it and almost guarantee anyone outside the closely knit circle of mobile geeks doesn’t know about it. What does it have? Potential.

It’s not publically known how much Google paid for Blogger, but I bet we can all agree is was a lot. For what? Google could write a betterBlogger in a few weeks. It’s not all that complicated, especially when you have a few extra CS PhD’s hanging around and tons of server power. They paid for Blogger’s database and brand name. Those are very hard to gauge the worth of.

** I am a sellout 100% :)

Michael S.Jun 09, 2003 at 9:57PM

I’d be very wary of putting any real money into BlogShares. BlogShares is a bit like a real share market, but not enough like it that strange market anomalies aren’t possible. (That is, I’m pretty sure it’s possible to cheat. I’d really like to see an economist’s analysis of BlogShares.)

One difference: the price of a share is determined by at least two things: the price people are willing to pay for it *and* the number of links a site has. (I think the wild p/e ratios can also trigger a share price adjustment.) Another difference: the price of an outgoing link is determined by:

f() = ($100 + Value of Blog) / (Total number of outgoing links)

which would seem to indicate that the total market capitalisation increases by at least $100 x number_of_blogs every iteration.

Also, what are the implications of money being printed every time a player enters the system?

(The BlogShares “Market Observations” forum has examples of all sorts of strange things happening, if you’re into this kind of thing: cycles in stock prices, feedback loops, the share price increasing faster if you buy shares one at a time, etc.)

Eric J.Jun 09, 2003 at 10:33PM

Jason, a money maker to add to your list is Habbo Hotel. I’ve been “playing” it for almost three years now and dropped close to $100 U.S. purchasing virtual furniture.

However, Habbo differs than other sites in that it’s NOT a game. Unlike Sims, Game Neverending, etc. Habbo Hotel is simply a tricked out, glorified chat room (powered by ShockWave/Flash) with a cool retro-pixel interface. I remember Joi Ito mentioned it a while back and it’s surprised me that more people in the web design/blog community haven’t “discovered” this space.

What is fascinating to me is the way things are valued in Habbo. People create jobs, businesses, hold contests, pageants, trades, etc. for virtual furniture which is used to deck out personal hotel rooms.

Also, to answer Michael, it is very possible to “cheat.” I’ve exploited a couple of weaknesses in the past but like the real stock market there are always ways around the rules. Yet BS has now implemented an SEC style board to help investigate and catch cheaters and Seyed is working hard to strengthen any weaknesses in the system. My point is that it’s not perfect but neither is Wall Street and if someone enjoys playing AND paying then more power to them.

jkottkeJun 10, 2003 at 12:15AM

Aren’t all MMORPGs just tricked out, glorified chat rooms? Or the business world? Or sports bars? I think one of the themes in Julian’s writing and what Ludicorp is doing with GNE is that there are certain things that humans do no matter where they are or what they are doing. One, we talk to each other (language developed because it was an advantage to be able to speak to one another, but it’s hypothesized that language flourished due to gossip). Two, we like to play (in a broad sense). If you make it possible for people to do both of those things in an online environment, you get something full of life like GNE, Habbo Hotel, or fotolog. And people have created environments and activites for talking and playing in the real world: organized sports, the stock market, politics, dating, etc….you might even say we can’t help but create those spaces.

GluttonJun 10, 2003 at 5:28AM

The best part of the virtual economy is how it differs from ours. In an online game, you can have a worthless diamond ring, and a pile of poop worth half a castle.

Jonas!Jun 10, 2003 at 8:26AM

i think everyone missed something from the guy who bought blogshares’ website — he didn’t pay $200 for blogshares, he paid $200 for publicity, for advertisement. in that sense, it really is no different than the existing “real world economy” of text ads, banner ads, et cetera, except with a dash of creativity and guerilla tactic.

i don’t think the unreal estates are exceptions to the running principles of economy, as they appear to be simply another manifestation of supply and demand. in that sense, it also could be a bit odd to say the richest player on blogshares has a portfolio worth approximately $14000.

kimmieJun 10, 2003 at 5:03PM

As for icq #’s, I have a number in the 100,000’s and it was hacked and put on Ebay. The idiot failed to change the email in the details and I soon had the new password emailed to me, and the details changed. Ebay then got a nice letter from me about auctioning stolen accounts.

Reminds me of when people were selling Ultima Online houses/castles/other stuff on Ebay for $100’s of dollars.

travJun 10, 2003 at 6:22PM

Actually, several people have sold their high-karma /. accounts on eBay. I’ve seen at least one. There’s an article making fun of it, actually.

Gunnar LangemarkJun 11, 2003 at 4:15AM

The blogshares subthread is quite interesting. I once pitched a concept a little like it to a couple of VCs in Denmark.
The basic idea was to build a currency for “knowledge” bits on the Internet, create an addictive game around it (this was the trick) and connect it to real world value by sponsor gifts which could be traded for the currency (or karma points).
Blogshares has a lot of this - and then some.
If blogshares goes real (There was a lituanian guy trying to get someone buy him the 15$ premium membership for 2 mill in BS) - then what about the blog owners? I claimed my blog, but this woman Morgiane owns most of the shares (not that I mind it - she apparently traded it up, to my advantage too).
And what about those getting the advantage of being there first?
Lots of questions arise.

This thread is closed to new comments. Thanks to everyone who responded.