[MUD-Dev] Wired Article on Reality Breakdown

[Dave Rickey]

http://www.wired.com/wired/archive/11.01/gaming.html?pg=1&topic=&topic_set=

Focuses on whether the distinction between "real" and "virtual" has
any meaning when people pay real money for scarce virtual goods.
Follows the story of a UO tower from the player who lucked out in
the Trammel Land Rush to place it, through the broker who brokered
his account on eBay and split it up for parts, ending with the
player who finally buys it giving a tour of his newly decorated
virtual home.  I think it's an important article, but it's also
fairly long and I'll leave it up to the moderator if it should be
included for archiving.

--Dave

<EdNote: Determination of my decision is left as an exercise for the
reader>

--<cut>--
Issue 11.01 - January 2003

		       The Unreal Estate Boom

  The 79th Richest Nation on Earth doesn't exist. The population is
  225,000, the hourly wage $3.42. Welcome to virtual paradise, where
  a carpenter can live in the castle of his dreams - if he doesn't
  mind an 80-hour workweek double-clicking pig iron and hoarding
  digital dung.

			 By Julian Dibbell

Not long ago, a 43-year-old Wonder Bread deliveryman named John
Dugger logged on to eBay and, as people sometimes do these days,
bought himself a house. Not a shabby one, either. Nine rooms, three
stories, rooftop patio, walls of solid stonework - it wasn't quite a
castle, but it put to shame the modest redbrick ranch house Dugger
came home to every weeknight after a long day stocking the
supermarket shelves of Stillwater, Oklahoma. Excellent location,
too; nestled at the foot of a quiet coastal hillside, the house was
just a hike away from a quaint seaside village and a quick commute
from two bustling cosmopolitan cities. It was perfect, in short,
except for one detail: The house was imaginary.

Equally unreal were the grounds the house stood on, the ocean it
overlooked, the neighboring cities, and just about everything else
associated with it - except Dugger himself, the man he bought it
from, and the money he shelled out. At $750, Dugger's winning bid on
the property set him back more than a week's wages and was, on the
face of it, an astonishing amount for what he actually bought: one
very small piece of Britannia, the fantasy world in which the
networked role-playing game Ultima Online unfolds.

Yet there was nothing particularly unusual about the transaction. On
any day you choose, dozens of Britannian houses can be found for
sale online at comparable prices. And houses are just the start of
it. Swords, suits of armor; iron ingots, lumber, piles of hay;
tables, chairs, potted plants, magic scrolls; or any other little
cartoon item the little cartoon characters of Britannia might desire
can be had at auction, priced from $5 for a pair of sandals to $150
for an exceptionally badass battle-ax to $1,200 for a well-located
fortress. A simple, back-of-the-envelope calculation puts the
estimated sum of these transactions at $3 million per year.

Which in turn is just a fraction of the total wealth created
annually by the residents of Britannia. For every item or character
sold on eBay and other Web sites, many more are traded within the
game itself - some bartered, most bought with Britannian gold pieces
(a currency readily convertible into US legal tender at about 40,000
to the dollar, a rate that puts it on par with the Romanian
lei). The goods exchanged number in the millions, nearly every one
of them brought into existence by the sweat of some player's virtual
brow. Magic weapons won in arduous quests, furniture built with
tediously acquired carpentry skills, characters made powerful
through years of obsessive play - taken as a whole, they are the GNP
of Britannia.

Literally. Last year - in an academic paper analyzing the
circulation of goods in Sony Online's 430,000-player EverQuest - an
economist calculated a full set of macro- and microeconomic
statistics for the game's fantasy world, Norrath. Taking the prices
fetched in the $5 million EverQuest auctions market as a reflection
of in-game property values, professor Edward Castronova of Cal State
Fullerton multiplied those dollar amounts by the rate at which
players pile up imaginary inventory and came up with an average
hourly income of $3.42. He calculated Norrath's GNP at $135 million
- or about the same, per capita, as Bulgaria's.

In other words, assuming roughly proportional numbers for Electronic
Arts' 225,000-player Ultima and other major online role-playing
games - Mythic's Dark Age of Camelot, Microsoft's Asheron's Call,
Funcom's Anarchy Online - the workforce toiling away in these
imaginary worlds generates more than $300 million in real wealth
each year. That's about double what the game companies themselves
make in subscription revenue, a fact that poses them a single,
nettlesome question: How - and whether - to grab a piece of the
action?

For the rest of us, though, the questions are a little more
philosophical. The traffic in virtual goods, after all, isn't just
another new market. It's a whole new species of economy - perhaps
the only really new economy that, when all has boomed and crashed,
the Internet has yet given rise to. And how poetic is that? For
years, the world's economy has drifted further and further from the
solid ground of the tangible: Industry has given way to
postindustry, the selling of products has given way to the selling
of brands, gold bricks in steel vaults have given way to financial
derivatives half a dozen levels of abstraction removed from physical
reality. This was all supposed to culminate in what's been called
the virtual economy - a realm of atomless digital products traded in
frictionless digital environments for paperless digital cash. And so
it has. But who would have guessed that this culmination would so
literally consist of the buying and selling of castles in the air?

These little economies raise big questions, therefore, and by no
coincidence, they tend to be the big questions of the economic
age. How, for instance, do we assign value to immaterial goods? What
defines ownership when property becomes as fluid as thought? What
defines productivity when work becomes a game and games become work?

And, of course, the question of questions - the one that in a sense
asks them all: How, exactly, did a 7-Kbyte piece of digital
make-believe become John Dugger's $750 piece of upmarket real
estate?

At a construction site in Indianapolis, Troy Stolle sits with a hard
hat in his lap and a Big Mac in his hands. Outside, the air is thick
with dust and the rumble of bulldozers. A hundred yards away, the
outline of a future Costco megastore shimmers in the heat, slowly
taking shape as workers set rebar and pour concrete. Stolle's job,
as a form carpenter, is to build the wooden molds the concrete gets
poured into. His arms and hands are flecked with cuts and bruises,
and at the moment he's got a pounding headache from the early stages
of dehydration. Or maybe from the two-by-four that smacked him in
the head earlier this morning. He's not certain which.

There's one thing he's sure of. Asked how this job compares to the
work of building a virtual tower in Britannia two years ago, he
answers like it's obvious: "That was a lot more stressful."

A lanky, bespectacled 30-year-old, Stolle looks less like the
third-generation construction worker he is than like the
second-generation sword-and-sorcery geek he also is. When Stolle was
10, his father, a union electrician, died of a heart attack, leaving
behind a cherished 1967 paperback edition of The Lord of the Rings
and a copy of the Dungeons & Dragons rule set.

It all started there. Through high school, on through his four-year
union apprenticeship, and well into his first years as a carpenter,
Stolle spent vast stretches of his free time immersed in the
intricacies of D&D, Warhammer, BattleTech, and other tabletop
role-playing and strategy games.

Then came Ultima Online. The first true massively multiplayer online
role-playing game, UO went live in September 1997, and by December,
Stolle had a character: a blacksmith he called Nils Hansen. The
business of bettering Nils' lot in life quickly came to absorb him
more intensely than any game ever had. In short order, he added two
other characters: an archer, who went out hunting when Nils needed
hides, and a mage, who cooked up potions to make the archer a better
hunter. "I had everybody interlocked so that they totally supported
one another," Stolle says. And to give this little team a base of
operations - a place to store equipment, basically - he paid about
40,000 gold coins for a deed permitting him to build a small
house. He found a nice, secluded spot in northern Britannia, placed
his cursor there, and double-clicked the building into existence.

The house worked out fine for a while, but in a game about
accumulation, no house stays big enough for long. Stolle's trio
needed new digs, and soon. By now, though, real estate was acutely
hard to come by. Deeds were still available, but there was nowhere
left to build. The number of homeless was rising, and the prices of
existing houses were rising even faster. At last, EA announced a
solution that could work only in a make-believe world - a whole new
continent was being added to the map.

Stolle started preparing for the inevitable land rush months before
it happened. He scrimped and saved, sold his house for 180,000 gold,
and finally had enough to buy a deed for the third-largest class of
house in the game, the so-called Large Tower.

On the night the new continent's housing market was set to open,
Stolle showed up early at a spot he had scouted out previously, and
found 12 players already there. No one knew exactly when the zero
hour was, so Stolle and the others just kept clicking on the site,
each hoping to be the first to hit it when the time came.

"It was so stressful," Stolle recalls. "You're sitting there, you
double-click the deed once and then click on the spot. And I did
this for four hours." Finally, at about 1 in the morning, the
housing option switched on, and as a couple thousand "Build"
commands went through at once, the machine that was processing it
all swooned under the load. "The server message pops up, and
everything just freezes. And I'm still clicking. Even though
nothing's happening, I'm still clicking - boom, boom, boom. For like
10 minutes, everything's frozen. You see people kind of disappearing
here and there. And then it starts to let up. And a tower appears!
Nobody knows for sure whose it is. Guys are like, Whose is it? Did I
get it? I double-clicked on it, and I couldn't tell. And so then I
double-clicked again - and there was my key to the tower."

Just like that. In a single clock cycle and a double mouseclick,
Stolle had built himself a real nice spread.

But of course there was more to it than that. In addition to the
four hours of clicking, Stolle had had to come up with the money for
the deed. To get the money, he had to sell his old house. To get
that house in the first place, he had to spend hours crafting
virtual swords and plate mail to sell to a steady clientele of about
three dozen fellow players. To attract and keep that clientele, he
had to bring Nils Hansen's blacksmithing skills up to
Grandmaster. To reach that level, Stolle spent six months doing
nothing but smithing: He clicked on hillsides to mine ore, headed to
a forge to click the ore into ingots, clicked again to turn the
ingots into weapons and armor, and then headed back to the hills to
start all over again, each time raising Nils' skill level some tiny
fraction of a percentage point, inching him closer to the distant
goal of 100 points and the illustrious title of Grandmaster
Blacksmith.

Take a moment now to pause, step back, and consider just what was
going on here: Every day, month after month, a man was coming home
from a full day of bone-jarringly repetitive work with hammer and
nails to put in a full night of finger-numbingly repetitive work
with "hammer" and "anvil" - and paying $9.95 per month for the
privilege. Ask Stolle to make sense of this, and he has a ready
answer: "Well, it's not work if you enjoy it." Which, of course,
begs the question: Why would anyone enjoy it?

But people do. And that's a curious thing. Throughout history,
whenever human beings have tried to imagine the best of all possible
worlds, they've pictured some version of paradise: a place of
abundance and ease. Not too long ago, people insisted the Internet
was just such an environment, with its effortlessly reproducible
wealth of data and light-speed transcendence of geography and
time. In the emerging online universe, it was said, scarcity had no
place. And what's not to like about that?

Yet scarcity has turned out to be a feature, not a bug. Sure, people
like the big, graphics-based chat arenas such as the Palace, where
talk was the only real commodity, and that commodity was, as usual,
cheap. But the worlds they actually want to be in - bad enough to
pay an entrance fee - are he ones that make the digital goods hard
to get to and even harder to copy. The addictive appeal of online
role-playing games suggests that people will choose the constraining
and challenging world over the one that sets them free.

Which in turn makes the fact that you can log on to eBay this minute
and buy 10,000 imaginary iron ingots for $4.50 seem not only a
little less improbable but in fact inevitable. Scarcity, after all,
breeds markets, and markets will seep like gas through any boundary
that gives them the slightest opening - never mind a line as porous
as the one between real and make-believe.

"The minute you hardwire constraints into a virtual world, an
economy emerges," explains Castronova, the Adam Smith of
EverQuest. "One-trillionth of a second later, that economy starts
interacting with ours."

On the border between Britannia's economy and ours sits Bob
Kiblinger's downstairs den - part of a nice split-level house
located in quiet Beckley, West Virginia. In the den sits a sofa, and
on the sofa, most workdays, sits Kiblinger. As sole proprietor of
UOTreasures.com, Kiblinger trades Ultima items for a living,
scanning eBay listings on his laptop in search of assets undervalued
and overlooked. One particularly lucky day, he caught sight of a
diamond in the rough: UO account, 52 months old, Grandmaster
Blacksmith, Large Tower. Not a single bid, he noticed.

Troy Stolle's account was definitely an opportunity. Kiblinger sized
it up at about $1,500 worth of stuff, possibly $2,000. He fired off
an email asking Stolle how much money he wanted to close the deal
and hand over the account. Stolle emailed back: $500. Minutes later,
Kiblinger was on the phone to Indiana, making arrangements to
finalize the transaction. Before he hung up, the two men chitchatted
a bit: Stolle got to talking about the unfortunate reasons he'd sold
the account - about how he'd been out of work since 9/11 and the
bills were piling up. Kiblinger could hear an infant crying in the
background, and he hoped the carpenter would never find out just how
much stood to be made on the deal.

But business is business. Kiblinger knew that to keep his income up
to speed he needed at least three or four fat, high-margin trades
like this each week, and they weren't getting any easier to come
by. Once upon a time, back when Ultima was young and most players
still hadn't gotten wind of the auction markets, his percentage on a
deal often hit quadruple digits. Players sold him thousand-dollar
accounts for a hundred, and Kiblinger just kept his mouth shut,
knowing full well that in their eyes he was the crazy one. Not long
before, he might even have agreed with them.

"I would have done the same thing," he says. "If I had an account I
was giving up, and you said you were going to give me a hundred
dollars for it - for something that's not real - I would have said,
'Here, take it.'"

That was four years ago. Kiblinger was 28 years old, married,
working for Procter & Gamble in Cincinnati as a chemist (he shares
two patents on the odor-busting fabric spray Febreze), and feeding
his Ultima jones at night and on weekends. Within a year, his
marriage was over ("Yes, it's true, an Ultima widow"), he had moved
back home to Beckley, and he was brokering make-believe products
full-time. Asked how much he was earning by then, Kiblinger smiles
affably and declines to answer, except to say that it was - and
remains - a lot more than he made at Procter & Gamble.

Kiblinger's caginess is par for the course. There are dozens of
people out there making a real living selling virtual goods, and
none are particularly eager to disclose their profits. A few will
talk off the record, and none of those claim to be netting less than
six-figure incomes or 15 percent margins. But those are fragile
numbers, threatened on all sides.

Hackers are among the biggest threats. To stay ahead of the latest
tricks for stealing players' hard-won property - and to safeguard
his own inventory - Kiblinger checks the Ultima cheat sites
regularly. Even worse are the dupers - counterfeiters who look for
software bugs that let them double and redouble their gold on
command, turning a single piece into billions with just a few dozen
mouseclicks. Not a bad deal for the dupers but deadly for the
Britannian economy: Some of Ultima's earliest duping schemes
inflated the currency to the brink of worthlessness. Even today, the
resulting monetary surplus keeps the game designers busy thinking up
gold sinks - expensive luxury items that can be bought only from
non-player merchant bots (neon-colored hair dye is an especially big
seller), thus taking large sums of money out of circulation.

Ultimately, though, the spookiest threat to the dealers is the game
companies themselves.

Well aware that his income exists at the sufferance of Ultima's
corporate overseer, Electronic Arts, Kiblinger keeps his inventory
as low as possible - even so, it often swells to tens of thousands
of dollars' worth of goods.

"It's scary to have that much cash tied up in the business," he
says, "when Ultima could just say, 'We deem this outside the
rules. You're done.'"

Sony did this very thing last year when it announced a ban on the
EverQuest auction market and got eBay to enforce it. But even
seemingly market-friendly moves can play havoc with the traders'
livelihoods. Recently EA announced that Ultima players could now,
for a mere $29.95, order their own custom-built, high-level
characters straight from the company.

At the far end of this line of thinking lie concepts like MindArk's
Project Entropia, a game still in beta in which every item will be
available for sale direct from the company - a move that could
finally make corporate peace with the auction markets by rendering
them completely superfluous.

Until then, though, Kiblinger remains relatively safe from
competition. To watch him in action once he finally gets his hands
on an account like Stolle's is to understand, a little, the uncommon
expertise it takes to make this business pay. As he logs on for the
first time and starts taking inventory, the casual once-over of his
initial appraisal sharpens to a laser focus. Wandering through the
newly auctioned house in the onscreen body Stolle previously
inhabited, Kiblinger becomes a value-sifting machine. He's equipped
with a massive mental database and can cross-reference the most
obscure imaginary item with its latest market price.

Houses are invariably the most valuable items, and the easiest to
judge. But almost as much money can lie hidden in a far subtler
class of objects known as rares - curiosities whose value consists
entirely, as the name suggests, in their scarcity. The original
rares were accidents, pieces of scenery that the game designers
misprogrammed or otherwise forgot to lock down - rocks, piles of
horse dung, patches of waterfall, even portable error messages. By
the time Kiblinger got into the market, these freaks of virtual
nature were hundred-dollar collectibles, and for a long time they
were his bread and butter. Eventually, the designers caught on to
their popularity and introduced semi-rares: decorative fruit baskets
and other knickknacks that pop into existence every month or so in
some remote backwater of the land. This took a lot of the economic
steam out of the rares scene, and Kiblinger shifted his focus to the
tight housing market.

But the true rares remain big-ticket items, and so he is obliged to
keep in mind, as he sorts through a new account, that an
innocuous-looking piece of horse crap still sells for as much as
$400. Such arcana make the job of sweeping out a typical account a
two- or three-hour affair.

In Stolle's case, with nearly 2,000 items locked up in the tower,
the job took even longer. But by the end of the night, the account
was stripped: Ownership of the house was transferred to one of
Kiblinger's characters, assorted rares were relocated to storage and
cataloged, and the rest was warehoused for future sorting. The messy
complex of characters and possessions that had been Troy Stolle's
virtual identity was broken down into parts far more valuable than
the whole. The priciest items were listed in California. Yet another
went to a woman in Virginia, who bought the house for her mother, an
Alzheimer's sufferer whose last link to reality was her Ultima
sessions with her daughter. Any of these bidders might have wound up
with the tower that Troy Stolle built.

In the end, of course, it went to John Dugger, a Wonder Bread
deliveryman in Stillwater, Oklahoma.

"A wage of $3.42 an hour is sufficient to sustain Earth existence
for many people," writes Castronova, in his report about the economy
of EverQuest. "Many users spend upward of 80 hours per week in
Norrath, hours of time input that are not unheard of in Earth
professions. In 80 hours, at the average wage, the typical user
generates Norrathian cash and goods worth $273.60. In a month, that
would be over $1,000, in a year over $12,000. The poverty line for a
single person in the United States is $8,794." Do the math,
Castronova suggests, and the bottom line is this: "Economically
speaking, there is little reason to question, on feasibility grounds
at least, that those who claim to be living and working in Norrath,
and not on Earth, may actually be doing just that."

Troy Stolle stopped living in Britannia months ago. And Bob
Kiblinger rarely logs on anymore except to inventory the remains of
somebody else's existence there. But John Dugger is another story.

Separated from his wife for the last four years, Dugger lives
alone. Most of the time, when he isn't working, he can be found in
what he calls his dungeon, a section of the garage walled off to
make a small, barely ventilated room, where he sits five hours a
night, eyes fixed on his computer screen and on the tiny,
make-believe self he maneuvers through Britannia's cartoon
landscape.

"People have told me I need to get a life," Dugger says.

And seeing him here in his dungeon, you might agree with
them. Follow him into Britannia, though, and you might think
again. Watch, for instance, as he shows a visitor around the tower
he bought just a few months ago. Note, as Dugger and his guest walk
their characters from room to room, just how thoroughly he's made
the place his own.

The first floor, once the austere workshop of a hardcore craftsman,
has become a bright, busy public gallery for Dugger's collection of
rares and semi-rares. "That bucket of water you see on the floor
there is a true rare," he says proudly, narrating the tour by
telephone. "It cost me 600,000 gold." Nothing much had been done
with the second floor, so Dugger turned it into an armory. Likewise
the roof, which came furnished as a kind of game room, complete with
playable chess and backgammon sets, has been buried beneath the lush
foliage of a rooftop garden designed by Dugger's in-game girlfriend,
the Lady Lickeretta.

"I did pretty much leave the master bedroom alone, though. I liked
the way they did it," says Dugger. As it happens, he has no idea who
"they" are. At first he thought the previous owner was a character
named Blossom. She handed off the deed. But Blossom turned out to be
one of Kiblinger's avatars - anut his cousin Eugene, who gets $10 an
hour to run around Britannia doing the deliveries that used to take
up most of Kiblinger's workday.

So now Dugger can only guess. "There's some stuff in the house that
the label says was made by a Lord Nils something or other, so that
might have been one of the characters on that account," he
surmises. "And to be a lord, that means he hasn't died in a very
long time, so that means he was pretty good at what he did."

Dugger excuses himself to run his character upstairs. In a minute,
he says over the phone: "Here it is. 'Nils Hansen.' N-I-L-S
H-A-N-S-E-N."

There's a further pause as Dugger seems to lose himself in
contemplation of whatever piece of Troy Stolle's handiwork he's
found. An "exceptional wooden armoire," perhaps, clicked into being
years ago with virtual saw and lathe. Or maybe a full suit of
agapite plate mail, hammered out at the forge downstairs.

Whatever it is, it's the same kind of puzzle the tower itself is. No
more or less than any chess castle or Monopoly hotel, John Dugger's
tower is a gamepiece, and yet it's also something more meaningful
than any gamepiece has a right to be. For if it's true that
economies are in many ways like games, and that the world's economy
is getting more gamelike everyday, there remains one defining
difference between the two: Games attract us with their very lack of
consequence, whereas economies confront us with the least trivial
pursuit of all, the pursuit of happiness. And while not even Dugger
himself can say precisely how much happiness he bought when he
bought that imaginary house, one thing was certain from the moment
Troy Stolle put it up for auction. The game was over, and something
as real as life was suddenly in play

  Julian Dibbell (julian at juliandibbell.com) is the author of the MOO
  memoir My Tiny Life. He wrote about e-gold in Wired 10.01.
--<cut>--


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