FLEEING TO VIRTUAL WORLDS

I like to think that some of my readers are interested in what goes on behind, and beyond, games such as LOTRO, and I'd like to point those readers at a fascinating online essay by Edward Castranova, who teaches telecommunications at Indiana University. Entitled "An Exodus Recession", it's posted here, on Castranova's equally highly recommended blog, "Terra Nova: A Blog about Virtual Worlds". It's a relatively long text, so I'll just quote the opening paragraph:

"The economy continues to move slowly and economists seem as uncertain as ever about the causes and what to do. Months ago, I began to wonder – could this possibly be the first “exodus recession”? In my first book I sketched out the idea. Suppose economic activity moves from the real world into the virtual world. Human happiness is unaffected or even goes up, however, the goods that produce the happiness are now produced and consumed in a virtual environment rather than the real one. Measurements of economic activity, being all based in the real economy, would begin to show weakness. I argued that contemporary political and economic control systems do not tolerate much weakness, thus, there might well be some sort of crisis in the real world, for no good reason, simply because production and consumption was going “off the books” and into virtual environments. One term for this would be an "exodus recession" - an economic downturn caused by the movement of human attention and energy into virtual environments. Are we in an exodus recession right now?"

"The movement of human attention and energy into virtual environments" - ring any bells? Read the rest of the essay.

RADIANCE: GOING, GOING...

From the latest Turbine news release, this: "Radiance & its removal in Q1 – We’ve received a lot of feedback on Radiance gating since its introduction and are pleased to announce that Radiance gear will no longer be a requirement for any of our instances or raids. In fact, with the release of our Q1 update next year, we will be removing Radiance from the game entirely. It will not be present in the new Instance Cluster or Epic Book and will be removed from all current instances. You should get your first look at a Radiance-free LOTRO on Bullroarer in early February of next year."

You have to love corporate double-talk. A solid year's firestorm of complaint, grumbling, reasoned argument against, violent objection and outright abuse, reduced to a nicely bland "we’ve received a lot of feedback". I'll say you have... Corporations are like governments; they would rather die the death of a thousand cuts than ever, ever have to admit, in so many words, that they were wrong. Given sufficient outrage in the population, they may eventually take action ("we will be removing Radiance from the game entirely"), but god forbid they should admit to error.

Oh well, never mind. The main thing is that the issue has been conceded and that there is to be an unqualified retreat. I can't help wondering, though, what the actual mechanics of removing radiance will be. Obviously, the simplest way of dealing with it is just to remove that particular parameter from the game, so that armour no longer has a radiance rating. The problem with that approach, however, is that it will introduce a serious imbalance: the two rarest and hardest to acquire armour sets, Dar Narbugud and Barad Guldur, are notoriously poor in everything but radiance. Remove radiance, and at a stroke you will have completely devalued the game's most valuable assets. Perhaps the designers will compensate by increasing or adding stats to these items - but economic history teaches us that devaluation is never pain-free...

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.