Slashdot Mirror
Legitimizing Real Money Trading In Games
MMOGamer interviewed Andy Schneider, co-founder of Live Gamer, a company working with several major game publishers (including Acclaim, Funcom, and SOE) to legitimize the real money trading (RMT) industry in online games. Schneider expects this method of customer service to grow much more popular in the West over the next few years, especially after the success it's had in Asia.
"It started in the very earliest MMOs, if not back in the MUD days in a very grassroots sort of way, but then obviously got into a more opportunistic and nefarious industry. When I talk about legitimate RMT, it's about a publisher supporting the notion that people want to buy and sell virtual items for real money, and they have decided to proactively support that notion and give their player-base a way to do that. ... It takes the manual process out of the equation that most players are engaged in with the black market, and reduces the fraud considerably, which is good for players. ... The reason there are gold farmers out there, the reason why there is nearly a two billion dollar secondary market for virtual items, is because of consumer demand."
You already have to pay tax on any cash you earn, that fact that you're selling something virtual doesn't matter. If you accumulate a lot of in-game currency but don't sell it for real currency you wouldn't be taxed on it.
I've been playing this MMO for about 3.5 years (Entropia Universe, shamelessly) which was based on Real Cash trading/economy. There has always been a fixed exchange rate between U.S. Dollars and ingame currency (PED). Therefore everything you own in game has a real dollar value and can be sold in game. Real life funds can be transferred into the game, and withdrawn back to real life funds. This MMO has been around ~7 years with no 3rd party, nothing new here to me. In fact the parent company Mindark has just been granted a Swedish banking license. Yes maybe soon you can pay your real life bills in ingame currency. We aren't talking peanuts here either, we're talking real cash related to everything you do, so the best items in game fetch a pretty penny. The best healing tool in the game today you can fetch about 40,000 U.S. dollars for. You can buy plots of land in game for about the same that you can tax for real cash. Point is there are games that are based on real cash, and those who aren't. Those who arent it doesn't matter which way you go, private sales, E-Bay, Live Gamer, it's still all 'Black Market'. I'll stick with secure, non 3rd party solutions.
It works for Second Life. Almost too well. In 2007, Ginko Financial, an in-game bank, went bust. Then Midas Bank went bust. This drew the attention of The Wall Street Journal. In 2008, Linden Labs introduced bank regulation. Most of the Second Life banks were actually Ponzi schemes, with huge interest rates. It's still possible for a real-world bank to open branches in Second Life, but nobody has bothered.
there must be something out there that can be stretched into precedent for this. what about internal accounting systems, where a company's departments "pay" each other for services, but the government only cares about money which crosses the organization's boundary?
Media that can be recorded and distributed can be recorded and distributed.
-kfg
They think they can profit because they have (or at least intend to have) an exclusive contract with the game company to do the legal transactions.
Players would have an incentive to purchase from an official third party rather than a black market source as the likelihood of all sorts of different fraudulent activities would be reduced. What assurance are you given that you will receive the item advertised, or any item at all? Do you think the back alley item salesman would think twice about selling your contact information to spammers? How convinced are you that your financial information will be handled in a secure manner, if not outright sold on the black market?
The big question might be why the game publishers don't get into the action themselves rather than having a third party perform the transaction. There are foreseeable problems with the developer running an in game real money trading economy, primarily in customer perception. Redirecting the ire of irate "purist" gamers to a third party is a win for the developer. Additionally, specialization and economies of scale could possible make combating fraud more reasonable. Same for handling a sale between people who use different currencies. Developing both the game world and the transaction system could be tricky tax-wise and could even present expensive edge cases of legal liability.
In the end, some developers will decide to use a third party to handle player/player transactions. Some game companies will decide that handling financial transactions internally is worthwhile... likely those under the umbrella of a larger publisher that can devote the developer expertise to creating a fairly robust market system (parts of which can the be reused in other games) as well as the legal muscle to not get in too much trouble with it. Other in-game economies will still prohibit all real money sales... and those games will always have a prominent, annoying black market element. The developers can do their best to stamp out the gold-farmers, but any time there is a profit motive roaches will come out of the woodwork to try to get a quick meal. And once they are there, they reproduce quicker than you can stamp them out.
I'll never make that mistake again, reading the experts' opinions. - Feynman
Personally, I find real games boring for precisely this reason.
Even so, all the sports you mentioned require a certain amount of skill. In a game, to a certain extent, you can buy skill.
A company has a decent plan to try and level the playing field and get farmers out of games
I fail to see how this "levels" anything. In fact, it creates exactly the same problem for "fairness" -- it ruins the in-game economy for attempting to sell things to other players (since other players can simply buy those items outright from the in-game store), and it creates the same problem of newbies buying their way to the top, while a legit player struggles.
In fact, it brings the whole class system in the real world into the game, which just sucks. What makes the game fun in the first place is that it's not the real world.
I have seen this happen, in a few limited ways. I play Nexus TK, which has only recently begun to follow the Korean business model of giving the game away (or at least, of keeping it at the same $9.95/mo), and selling other things. Most of these other things, I have no problem with, as they're purely decorative. A few are actually useful.
They do try, however, to prevent these from affecting the in-game economy. They cannot be dropped or traded in any way.
Even so, the very existence of that shop has impacted the economy in a few ways. The most obvious are the Equipment Restoration items. Some players can repair items, and they charge an arbitrary fee. This fee halved when people could simply pay a few pennies (of real money) to repair their items -- the demand had simply dried up overnight.
I've greatly simplified the above for the purposes of this comment, but the result is the same.
Don't thank God, thank a doctor!
How 'close' would a game come to being covered under gambling laws, if any and every item you randomly find/get given as a reward in a game, actually has official real-life monetary value?
'Stupidity is an often fatal disease' - R. A. Heinlein
No, because those futures investments are taking place in North America, so you'll have to pay North American tax on them.
Note that this may not actually be true. There are several tax treaties signed between the UK and USA, and between commonwealth countries (e.g. the UK and Canada) which give some quite complex rules. On royalty income paid by my US publisher, for example, I pay tax in the UK but for other kinds of income from the USA this specific exemption would not apply. Just to make life more fun, the IRS forms require you to state the treaty and clause that is relevant to your specific case, so you need to look this up yourself (or, if you're lucky, find someone else who has already done the research and blogged the answer).
I am TheRaven on Soylent News
CCP introduced Game Time cards that can be purchased with real cash and then sold in game. Player rich in game can play from their in-game profits and casual players who would otherwise fund the farmers get cash from them. CCP keep all the money within their system and have virtually eliminated gold-farmers from their universe, it's not worth their time or the consumers risk when compared to the system they've made available themselves. Granted there's no way for a player to get cash out of the system, but once we start doing that there's going to be alot of Treasuries taking an interest in people with tax-free incomes.
Which is all well and good, but like most things involving corporate and government abuse, it's just not worth it. 10k gold in WoW goes for something like $75. That's, what, ten bucks extra on your taxes? Are you really going to spend thousands or even tens of thousands of dollars trying to defend your point against the IRS?
There are lots of things that we shouldn't pay. I shouldn't have paid Bank of America when they screwed me on a credit card late fee by holding my check past the due date. But it was $39. It would have cost me $60 just to file a claim I had no guarantee of winning, so instead I swore at the guy on the phone, paid their theft fee, canceled the account and never dealt with them again.
Fighting on principles is too expensive in America, which is why few people bother to do it.