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Rumble in the economical jungle
By:Melinda Jacobs


Lots of things affect the stock market and the value of monetary currencies. For example, politics, current events, the rise and fall of various companies, or how much gold a mob of elves are able to get from a murloc all effect … Wait a minute, half-fish, half-man murlocs? Elves? Seriously?

You'd better believe it.

What started as a little ripple has slowly become a great disturbance within the already turbulent waters of the economic market. There's now another fish in the lake, and so far it appears that this lake isn't big enough for two.

Who is this new intruder that obeys only the rules of environments that don't even exist physically? Welcome the new age of the digital economy.

The digital economy, also known in the gaming world as Real Money Trading (RMT), involves the trading and selling of virtual items, items that exist only in virtual worlds such as World of Warcraft, for real life currencies or other physical items of value.

That's right, selling virtual items for physical dollars. This is a practice that organizations such as Swagvault Internet Gaming Services Co. Ltd focus their entire companies around. Swagvault collects and sells items collected within virtual markets, such as items, in-game currencies or even gaming characters of high rank, in the physical markets.

Mr. Power Kong, CEO of Swagvault, explained that his company simply offers services to players who wish to enjoy the game further, but do not have the time to invest in the games.

"Our mission … is to allow them [the items] to be enjoyed freely in the virtual world instead of simply being 'virtual assets' within themselves," Kong said.

And like most similar companies, Kong and his company procure their products through the currently controversial method of "gold farming." Gold farming is where a company pays players to play the game and acquire objects or characters of which the company then later sells.

"The services we offer our customers are fulfilled by professional online game players, most of who live in China, and some who live in other developing countries," Kong said. "They log in the North American and European game servers, and farm the in-game items or level up a character manually, just like other common players."


And just like in the physical economy, there are economists, such as Sam Smith, owner of gameprice.com, an impartial price comparison site for gold prices in online games.

While running his comparison site, Smith noticed that there was a gap between prices per unit of gold on the European servers as opposed to the American servers. Curious, Smith decided to investigate the substantial gap through comparing gold prices on the two servers.

According to their findings, the price difference within the American servers could be as much as 14 times the cost of gold was in the European ones.

"This just goes to show how much the game owners can influence things," Smith said. "Blizzard [World of Warcraft Developers], at the time, was obviously doing a much better job in cracking down on farming and exploits on the U.S. realms, while not trying as hard on Europe."

However, beyond even the controversies of selling digital goods within a physical market, there's still another huge debate going on between game owners and these virtual sellers. Who owns the digital products within a game? The game owners or the players who acquired them?

In games such as Second Life, the company actually gives away the rights to people at the beginning when they sign up in the user agreement, however, in other games such as World of Warcraft this is not the case, which causes difficulty for peaceful relationships to form between the gold farmers and the game operators - and has resulted in banning the sale of virtual objects via sites such as eBay.

"It's the operators who have the copyright for the online game programs while the players possess the property rights of various 'game scores' they got during the gaming process. They do not contradict to each other," Kong said.

Personally, Smith agrees that gamers should have the option to do whatever with the objects they collect within the online worlds.

"People have different work and game balances," Smith said. "I have bought gold, and I am not ashamed of spending a little money to get more enjoyment from my hobby."

With all of these various twists and turns within the virtual world, it is not surprising that it has created its own environment that has begun to bleed over into the physical world.

"This same factor is what makes virtual worlds so interesting for economists," Smith said. "Games can have hyperinflation, just like real economies, and it's interesting how the exact same economies can have such variation from realm to realm."

But how does one compensate for a digital item? Does it really have the same standing as its physical counter parts?

Teresa Regio, a lawyer in Portugal, is one of the many people who are attempting to answer that question while dealing with cases that come up from time to time, involving virtual, and not physical, goods that have forced the legal industry to adapt.

"In one case we saw come through, a boy bought some ammunition in a game to use at some specific level," she explained. "But after he bought it the Webmaster, or game owner, changed the level, and he couldn't use the ammunition anymore. According to our law, he should get his money back."

However, despite the translation of the law allowing persons to seek compensation for digital goods when applied to physical good principles, as to whether or not a person can consider virtual items as physical items, is a difficult question to answer.

"You can own something that doesn't have a physical existence," Regio said. "We don't have specific law that predicts this type of situations, and we have to adapt it. The theory here is the same whether the item has a physical existence or virtual."

As the virtual economy inches closer and closer to merging even deeper with the physical economy, it is apparent to all sides that more specific laws will need to be decided upon, in order to control this new breed of economy.

"Without protection of state law, rectifying the market is an impossible mission," Kong said. "As a result, all transactions will be conducted in a disordered environment."

Whether the world is ready to embrace it or not, the virtual and physical economies are on a collision course to an end of which no one can currently predict the result of. Will this destroy the physical markets like some fear? Will this open so many legalities the digital world becomes a legal nightmare and not the playground for creative minds it currently is?

Or perhaps the most important question to consider: when all is said and done who will remain? How many elves and murlocs will it take to fight the digital economy's way into acceptance of the real world?