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The Virtual Black Market

Posted by Killercod , in Video Games 10 April 2011 · 465 views

Source Material

Came across this website talking about how selling virtual goods in games is more profitable that the real economy in some cases. Basically it said that gold farming and power leveling generated revenues in the region of $3 billion in 2009 and was serving as the primary source of income for an estimated 100,000 young folks, primarily in countries like China and Vietnam. It also mentions that most of the revenue from such transactions ends up in the country where the virtual value is produced, which contrasts starkly with some of the more traditional international markets, such as that for coffee beans, where the study estimates only $5.5 billion of the $70 billion annual market value ever makes it back to the producing country.

Some would argue that such services cheat the system, the game publishers, and the players by giving an unfair advantage to those who would use them and returning nothing to the company that makes or maintains the game, while others see it as an acceptable capitalistic venture of providing goods or services to those who have less time to grind and wish to pay for them.

Being a long time gamer, I've had varying opinions on this subject. I, like many of you, absolutely hate gold spammers in game and report them religiously, yet I have purchased virtual currency for games from these sources on occasion. I've never paid for power leveling, or for specific in game items however.

I've had mixed feelings about game companies punishing the players for taking advantage of these kinds of services on a limited basis, it makes them look greedy...because they did not think to take advantage of this revenue stream. One could argue that the current wave of FTP/micro transaction games is borrowing a page from the virtual black market, lending credence to how popular and profitable this activity is! If you can't beat them...

Either way, this will long be a debated topic...my only fear is that the government will at some point try to assign real value to virtual holdings and tax you for them. Don't say it can't happen here...

http://www.slideshare.net/vlehdonv/knowledge-map-of-the-virtual-economy-an-introduction

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Hello Killercod,

Nice find, here's a link to the white research paper around 75 pages as a PDF by: Dr. Vili Lehdonvirta & Dr. Mirko Ernkvist on "".

The game industry blog site of Terra Nova".

The game industry blog site of [url=http://terranova.blogs.com]Terra Nova is another good bell weather barometer about stirrings and trends from the developer and academic perspectives.

The day the IRS starts to demand taxes be paid is when Internet sales tax is commonplace. How many hundreds of billions of dollars have occurred as potential sales tax revenue on the Internet?

That would be the linchpin trigger if virtual game wares become taxable here in the States. Otherwise i would fore see virtual game items become personal property similar to your operating system. Owning a limited use license to your copy of the game currency, game items, and virtual game property. Already the Swedish MMORPG developed by "MindArk" allows the real life ownership of personal property in the game world. Which they made it into the "Guinness Book of World Records" a couple years back to back. When a fellow from Miami paid $100K (thousand US dollars) for an orbiting asteroid to the main planet. Which he converted to a nightclub, and his money back within the first year from the in-game surcharges the players were making on his virtual property.

Albeit this is similar to what the game developers did out of "Second Life" allowing players to make a real income from their virtual creations. Once more game publishers permit by Fiat that players can own their virtual copy of items and virtual property in-game. It won't become standard for the industry and then perhaps challenged legally in courts. Although the Chinese State beat us to that a few years back when a gamer had his phat lewt game sword stolen by a guest on his account. The Chinese Court awarded him the equal monetary value of what that virtual game sword was worth. (a few hundred to thousand in US dollars)

I wouldn't be surprised in a little more than a decade from now just like the US Supreme Court will declare its decision this July. On the the California State wanting to restrict the sale of games to minors and how it would affect the sale of games overall to adults as well. That in a decade or so another dispute about virtual game items or property heads to a high Federal US court. Making it all the rage in terms of being news worthy to gamers.
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Sorry about that the forum coding markup didn't work in my above post.

Here's that White research paper link:

"Converting the Virtual Economy into Development Potential"

http://www.infodev.o...ation.1056.html

Besides the "Terra Nova" game industry blog link:

http://terranova.blogs.com
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Thanks for the info here...this kinda stuff interests me.

Related...or maybe not, is the recent battle between Amazon.com and states over it's associates having to collect sales tax. Amazon is taking the hard road and ending it's associate programs in states that keep pushing the issue. While that may be unfair to the retailers, I'm glad to see Amazon standing up to Big Brother.

Despite my working for the government, I see alot of these taxes overbearing and unfair.

We get very little representation for the amount of taxation...
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