CHOKING THE ECONOMY

The LOTRO economy is currently in the equivalent of a deep recession, at least in the sense that economic activity is virtually frozen. Why? Because most l.65 players are awash with money, and have nothing to spend it on. The one single item that players might still be willing to shell out for is the Symbol of Celebrimbor, the essential ingredient for the forging of l.65 Second-Age items. It doesn't come up often in the AH, and when it does, the asking price ranges from 60G to 150G - though I seriously doubt that it actually sells for much over a hundred. However, the drop rate in Sammath Gul is said to be improving, and more to the point, given the depressingly limited shelf life of LIs, many people are beginning to wonder whether investing that kind of money in a weapon which will almost certainly be superannuated two months or so down the road is a smart move. LOTRO's economic czar has clearly screwed things up here, if the entire economic model is teetering, so to speak, upon the demand for one single product (and a rapidly crumbling demand, at that).

REVISE THOSE ESTIMATES!

Anybody rash enough to venture comment on matters financial should be prepared to eat their words, which is what I must do today. In my previous post, I said, referring to a l.60 Second Age Hunter's Bow on offer at the Laurelin AH that "just under 75G is way over the top for an unidentified item", gratuitously adding that 100G would most likely "represent both an actual and a psychological price ceiling" for some time to come.

Well, pride goeth before a fall. My conclusions held true for about 24 hours at best. Last night, with under two hours to go, that self-same bow reached a price of 140G, 175S, 98C - and for all I know, some lunatic may well have slipped in yet another bid at the last minute. This, remember, is for an unidentified item, which may well turn out to be an absolute lemon in terms of legacies.

It is small comfort to realise that I am not entirely alone in my mortification, since 99.9% percent of economic commentators in the real world have also had to eat their words in recent months...

PRICING LEGENDARIES

The price of top l.60 Second and First-Age legendaries is a matter of consuming interest to most advanced players, but the market is still extremely unsettled; sellers tend to be wildly optimistic, but buyers remain cautious. Apart from anything else, we still don't know enough about drop rates. The first image in this post, taken from the Laurelin AH, shows prices for three typical Second-Age legendaries (I am considering l.60s only; anything else is a stop-gap). The cheapest item is an identified Rune-Keeper' stone with five legacies, offered at an opening price of 15G with no offers as yet. In my opinion, this is far too expensive in view of the very limited demand for top-end RK and Warden equipment - after all, how many of these classes have reached l.60? Next is an unidentified Loremaster's staff, opening price 45G, buyout 70G - ridiculous on the face of it for an unidentified item, but a rich LM might just possibly take a flutter with a first bid. Finally, an unidentified Hunter's Bow, with no buyout and a current bid of 74.5G. This is the highest price I have yet seen offered for a Hunter Bow, and merely confirms the widely held belief that top-end Hunter gear continues to fetch the highest possible prices. I would argue that just under 75G is way over the top for an unidentified item (remember I acquired mine for 30G), but at least two Hunters disagree with me, and the market is king.

Turning now to Firs- Age items, which are beginning to appear on the AH with greater frequency, the first thing to strike one is the apparent preponderance of RK and Warden items. There could be two reasons for this: one is that the drop tables really are badly skewed in their favour, which would be bad news. The other, and more likely, is that if rolling for a First-Age item after a Watcher defeat is limited to players of the same class as the dropped item, then the great majority are hanging on to their prize. Whatever the reason, this does not make RK and Warden items with a 150G buyout very likely to move before hell freezes over; on the other hand, a first bid of 25G on the Warden's club, despite its poor legacies, is a distinct possibility. Finally, there is that Loremaster's Book offered for a first bid of 150G and a buyout of 180G, and once again no bids. This is a marginally more likely sale, but I somehow doubt it. My gut feeling, based on posts here and there on various forums, is that the small percentage of seriously wealthy players have savings which average around 100G, and that at least for some time to come, this sum will represent both an actual and a psychological price ceiling.

LOTRO ECONOMY UPDATE

The appearance of new content usually provokes rumbles in the LOTRO economy, and Book 14 has been no exception. One major new factor has been the ring lore quests - 70,000 of them per server before the gates to Eregion are opened. Each of the 70,000 quests is rewarded with a chest containing a item of some kind; these range from second-tier rep items all the way up to (or so rumour, or a single post on the Codemasters forum would suggest) a Helchgam's slime - one example of which was sold on the AH about a month ago for 20G. Don't hold your breath, though.

The vast majority of rewards are third-tier rep items, and this has definitely impacted on their price in the AH. Luistins (Lossoth rep items) which were selling for up to 475s in early July are now averaging 150s, and War Dispatches are down to around 300s from 450s. In general, the best-selling rep items are still those for the tougher or more useful factions, namely Lossoth, Council of the North and Elves of Rivendell, and while the price of these has all dropped, the demand is still there.

Interestingly, though Beryl Shards are now dropping (though not very often) from more mobs than before, the price of this perennial market indicator has remained surprisingly firm throughout July, and still averages about 750s. Exceptional Hides, most easily farmed in Forochel, are also maintaining their price, averaging about 400s for fifty.

Slightly more recipes seem to be dropping from mobs. Though down by about 25% on a couple of months ago, top prices can still be achieved by recipes for polished weapons and engraved beryl jewelery; recent examples were 1G, 500s for a Polished Ancient Steel Dagger recipe, and 2G, 100s for an Engraved Beryl Earring recipe. The new woodworking recipes and scholar's dye recipes are also in demand at the moment, but the market for the commoner recipes, including many that are single-use, has sagged badly.

STOCK EXCHANGE LATEST

Time for another look at LOTRO's stock exchange, a.k.a. the Auction House prices. Overall, the signs are that the economy has slowed down somewhat since early February, a steady decline which the introduction of Book 12 did nothing to affect. That perennial economic indicator, the price of Beryl Shards, currently averages about 900 silver, down from just over one gold. Etched Beryl Rings, of which only a few are being offered, range from 12.5G to 15G, with no takers at any price, at least today.

The biggest price drop has affected exchange items from two of the major questing and raiding areas, the Rift and Anuminnas. Battered Arnorian Armour pieces are currently on offer for an average of 200 silver each (800S for 4 pieces, with a buyout of 1,200S), a full 50% down from the February price of 300S each. Rift-Iron Coins average 180S (one lot of four is currently on offer at a starting price 0f 725S with a scarcely larger buyout), again a large drop from an average price of 450-500S two months ago. Not surprising, really, as more and more players are venturing out into the Rift and gathering the coins for themselves - and also, of course, realising that there's not all that much they can exchange them for, anyway. I foresee Rift-Iron Coins hitting a new low of about 80S or so in less than a month. Meanwhile, the Laurelin AH does not offer so much as a sniff of Helegrod armour items at any price whatsoever. Now that would be a good short-term position to take...

AUCTION FRENZY

Action at the Auction House is normally sedate, even soporific; the great majority of items on sale never attract so much as a single bid, and bidding wars are as rare as beryl shards. The only exception occurs when somebody posts one or more items for sale with a ridiculously low opening bid and no buyout. Sometimes this can happen when the poster genuinely has no idea of the value of an item, at other times it may be from nothing more than curiosity, a sense of fun or the desire to stir things up. When one of these unique opportunities is discovered, most players wait until the last moment possible before putting in their bids, so as to avoid being outbid. A degree of uncertainty is provided by the fact that the AH indicates the duration of a sale in hours only, so that the indication "1 hour" could mean anything from 60 minutes to one second to go...

Usually, when the seller's intention is to provoke a bidding war, he or she will arrange for the sale to time out sometime in the early evening, when most players are online; this morning, however, saw a sharp bidding war on three items posted by Robinn on the Laurelin AH at a time when most players were fast asleep, some recovering from Friday-night excesses and others from overlong Rift raids. The principal item concerned was a single-use Engraved Beryl Earring Recipe; currently fetching an average 2.5-3 gold at auction, the recipe (when critted) yields an Etched Beryl Earring which brings around 13 gold at the moment. Yesterday, it was being offered at the unbelievable starting price of (I think) around 18 silver. The same player had posted two Engraved Beryl Necklace Recipes starting at around 20 or so silver (average AH price 1.2 gold).

The items had certainly been noticed, but by late last night only a handful of bids had been posted on all three; the real bidding war, as expected, began this morning during the last hour and ended up as shown above: a total of 66 bids brought the earring recipe to 1.96 gold and the two necklace recipes to 525 silver each with 53 and 51 bids respectively. I don't know whether 66 separate bids on an item constitutes any kind of record, but presumably both the seller and the final winners went away satisfied: the seller because he walked off with 3G (less commission) having presumably enjoyed the whole process, and the winners because they had secured what was still a relative bargain, even though the initial prices had been driven sky-high. In my case, having acquired one of the necklace recipes for 525S, I was able to sell it on for 1G within five minutes. Not as heroic as killing drakes, but moderately profitable, and should take care of the rent for a few months...

LOTRO: HOME OF THE WHITE MICE?

It seems to me that a successful MMORPG represents, amongst other things, an almost perfect microeconomic model – and what’s more, one based on the responses and reactions of real people, rather than computer algorithms. All the elements of classic market economy theory are present: supply and demand, gluts and shortages, self-interest and a very moderate amount of altruism, love of novelty and brand loyalty - and of course, determined efforts to influence, manipulate or subvert the market…

This conceit is reinforced by the frequently violent fluctuations of LOTRO’s economy as expressed though Auction House prices. Among the reasons for such fluctuations are changes in the supply of specific goods as implemented by the designers (i.e., price control by the government) and the introduction of new and hence more desirable goods (i.e., innovation and marketing by manufacturers). At the moment we seem to be going through a mild depression, with prices for many goods set high while demand is falling. The current price for that perennial market indicator, the Beryl Shard, is floating just above 1 gold, up more than 40% from early January. Scarcity drives up prices, needless to say, but sometimes it does so to the point of also driving out buyers. Bits of the highly desirable Armour of the Aurochs set, for instance, which have the great market advantage of not being Bind on Acquire (BoA), are found almost exclusively in Helegrod – but as we know, Helegrod requires 24-man raids which are difficult to organise and, as far as the individual player is concerned, offer a very poor return on time invested. The result is that not many players bother to raid there, and Armour of the Aurochs pieces are correspondingly scarce; a Helm of the Aurochs may be the most expensive item on the Laurelin AH, offered at 70G with an 80G buy-out.

Not surprisingly, the current scarcity of top-quality single-use recipes has also driven up the price of the very best crafted weapons, armour and jewellery; Etched Beryl Necklaces average 5-6G, Etched Beryl Bracelets 12-14G and Etched Beryl Earrings 15-16G. On the other hand, the general disdain in which Annuminas armour is held by most players and the extreme difficulty of assembling complete sets (is anybody still bothering?) means that the market for Arnorian Armour Fragments and Battered Arnorian Armour has almost collapsed; current prices are as low as 10-20 silver for the former and about 300S for the latter, with no takers. Rift-Iron Coins are on offer for 400-500S each, again with no takers at that price – probably a reflection of the fact that there’s not much of value to buy with them. In general, it can be taken for granted that irrespective of what the developers intended, the price of poorly thought-out or unimpressive goods will quickly go though the floor – another perfect concordance with real-world economics.

Come to think of it, how do we know that LOTRO’s economy isn’t already being manipulated by economists from the Harvard Business School running arcane experiments? Maybe those infamous gold-farmers are really MBAs, and all of us are nothing more than white mice running through a sophisticated economics simulation. A chilling thought.