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AGC: Secondary Market Panel

By Laura Genender on November 05, 2005 | Editorials | Comments

AGC: Secondary Market Panel

SOE (EverQuest II) found their own solution: the Station Exchange
EverQuest II
EverQuest II
Sigil (Vanguard) have been one of the biggest opponents of the secondary market companies like IGE
Vanguard
Vanguard
From AGC – Secondary Market Panel Discussion

Laura Genender offers this report and editorial on what she saw

I’m not a fan of the secondary market. In fact, that’s putting it lightly; I’d feel comfortable saying that, could I change any single aspect of the MMO world, I’d flush IGE down the toilet in a matter of seconds. Thus I could not resist attending the panel on secondary markets: “I’m Bid Four Quatloos for the One Ring; Do I Hear Five?”

The panel consisted of four members: Edward Castronova, Associated Professor of Telecommunications at Indiana University; Daniel James, Designer & CEO, Three Rings; Steve Salyer, President, IGE; and Jeff Anderson, President & CEO, Turbine. Castronova was vehemently against the secondary market and Salyer, as one might expect, was entirely pro-secondary market. James and Anderson were somewhere in the middle.

The panel first discussed the pros and cons of the secondary market, and how it affected both gamers and developers. Daniel James went first, pointing out that the people behind the games make no money from an outside secondary market like IGE. James has actually solved this problem in his game Puzzle Pirates by adding two “Doubloon” Oceans (servers). On these servers players trade in two different types of currency: Doubloons and Pieces of Eight. Doubloons can be purchased on the Puzzle Pirates site, and players can trade with other players to exchange Pieces of Eight.Salyer went next. “A healthy secondary market improves the experience of the majority of gamers.” Salyer also claimed that the secondary market helps lengthen the life of the game by preventing players to quit of frustration. “Players don’t like obtaining wealth, they like the other aspects of the game.”

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Obtaining wealth, buying, and trading for desired items is a huge part of most MMOs. I feel compelled to point out to Salyer that, if players don’t like a huge part of a game, maybe they should go play another one. The secondary market hurts the life of a game, not helps it; much of the frustration at high prices wouldn’t be there if the secondary market didn’t drive in-game prices up. For players who buy, frustration quickly turns to boredom… after you have the best items and a power-leveled character, players get bored.

Back to the real panel. Jeff Anderson brought up the expenses that a secondary market can lead to. Take, for example, the Project: Entropia space station. This in-game resort was recently bought for 100,000 USD by a high profile player, Neverdie. Should the game be altered in a way that negatively affects the space station, Neverdie might expect compensation.

Focus next shifted to the topic of in-game inflation. This discussion was largely dominated by Castronova and Salyer. “One of the effects of the secondary market,” started Castronova, “is inflation. You wouldn’t have to grind so much if the farmers for the secondary market wasn’t driving prices up.”

Salyer responded, “Farming does not cause inflation. The first thirty days [that a game is live] the gold is most expensive, and as time goes on it gets cheaper.”

At this point Castronova interrupted, correcting Salyer: “That’s inflation.” Salyer responded, “May I please finish?”

Sparks were definitely flying by now. Castronova replied with the best quote of the night: “Say true things.” Salyer refused to rise to the bait and continued, “Everywhere we go we create commerce. When we came from the old world to the new, we brought with us commerce. When we go to the stars, we will bring commerce. People are commerce driven.” Salyer seems to overlook the fact that games are basically alternate realities, and have their own internal commerce. Killing monsters or crafting items produces money, and that money can be spent to buy new items. Bringing reality’s money into the mixture destroys the careful balance of supply and demand that game developers work hard to create.

“It’s a game play problem,” says Anderson. “The whole system is to make people do the same thing over and over for 50 hours. Some of us just don’t have 50 hours. I don’t think this problem could happen in an FPS.”

The moderator next asked the panel how the market has grown and where it is going. Salyer was the logical choice to answer this question. “This industry was created by gamers, not by IGE. Most people think the fun is in character customization. What better way to customize your character?”

Salyer continues, “You are buying the character, not the skill… a low level character played well can still beat a badly played high level.” Whatever game Salyer is playing, sign me up.

Castronova then proposed an interesting alternative for the future of the secondary market. Players could pay 500$ for “noble status” or something similar that would provide benefits such as land, access to special areas/items, etc. This better fits the back-story of most MMOs, and leaves the secondary market in the hands of game developers, as James touched on earlier.

James chose this opportunity to share some more information about the Doubloon oceans. Based on Doubloon (the currency that can be bought with real money and traded for Pieces of Eight) and Pieces of Eight (the currency that can be gathered in game and traded for Doubloons) prices, Puzzle Pirates players seem to value their time at 25 cents an hour. The average secondary market sale price, however, is closer to 3.42 an hour. When left in the players hands, it just isn’t worth farming. “People won’t farm; they just get money as they have fun.”

The entire panel agreed that, in some way or another, the secondary market is going to change within the next three years. Salyer believes that he will soon be out of a job when more companies follow the lead of Sony and Puzzle Pirates and bring the secondary market in-house.


Thank you to Laura for writing this up.

This is sure to inspire some debate. Have it at it!