Why selling-in game content for cash is bad [repost]

I originally posted the following in a response to John Smedley's new blog.  Smedley, as many of you know, is the president of Sony Online Entertainment which is responsible for some of the worst MMO decisions a company can make.  He is, after all, the man responsible for the Star Wars Galaxies fiascos called CU and NGE.

Here's his blog:

http://feeds.feedburner.com/stationblog

And here is the repost of my reply from the original thread:

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Originally posted by deggilator

I'm sorry, but I find your criticism quite unfair.
When buying/selling virtual items when it's not allowed, in essence you cheat. You use an out of game resource to gain an in-game advantage, while the rules do not allow for this. However, in Station Exchange servers, it is allowed and everyone plays by the same set of rules.
Actually, it is a far better means of dealing with the problem than what other companies have done. Instead of spending valuable customer support time hunting down every plat seller, you just give them their own playfield. Those who prefer to buy virtual items can do so without cheating, the rest can continue playing in servers that have now a diminished virtual item market. Since Station Exchange, I've noticed that, at least for my server, the activities of virtual item sellers has decreased significantly. Actually, SOE is the only company that gave a damn and faced the issue in a satisfactory manner, instead of a futile cheater hunt.
Smedley may be money hungry (then again, which corp doesn't want to make as much profit as possible?), he may have done a lot of managerial mistakes, incl. the SWG: NGE that must have cost SOE greatly already, but he is not a morality-bender or a douchebag.

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1) An activity providing entertainment or amusement.

2a) A competitive activity or sport...

These are the two main reasons people play MMOs.  Not everything in an MMO is competitive (although some devs seem to think that's the only thing people want to do in them).  Simply chatting with friends isn't competitive, but it is entertaining and/or amusing -- although there are still some who will turn chatting into a competitive endeavor.

So again there are two main things players can take away from MMOs: competition and/or entertainment/amusement.

RMT (real money transactions as they are known) most directly affect the competitive aspect of play.  Competition in MMOs is much like any other sport.  It might not be physical like football or baseball, but it is competition nonetheless.  Instead of physical attributes being the determining factors, they tend to be more cognitive in nature.  Some FPS games are mostly hand-eye coordination bound, but most MMOs tend to be on strategy, organization, or other tactics.

One of the major draws of sports -- whether it's football, baseball, video games, poker, bowling, or whatever -- is that they are egalitarian.  By this i mean they aspire to have a competitive event on a level playing field.  People want to see person who is the best athlete win, not the one who took the most steroids, got paid the highest salary, or -- in the case of MMOs -- had the most realworld money to spend on ingame items.

There are reasons that we see salary caps in major-league sports (baseball), no steroid policies (various including again baseball), engine carburetor size restrictions (nascar), tournament buy-in restrictions (poker), and so on.

There are salary caps in baseball to to help keep a level playing field.  If they were removed, the best team no longer wins; it's the team with the richest owners who win.  People inherently dislike such "stacked" affairs.  Well everyone except those who are "cheating" to win in this case team owners.

The same is true with steroid use.  We remove the egalitarian qualities of the game by unleveling the playing field.  No longer is it about the person who trained hardest, but who used the most needles to win.

This is also why nascar has carburetor size restrictions on cars: To level the playing field.  It removes the "we have the most money to buy the best motor to automatically win" button, and replaces it with very closely power automobiles where the driver's abilities make the difference between first and second.

Again in poker tournaments have fixed buy ins.  As the main event at the world series of poker each player pays $10,000 to enter and gets 10,000 in tournaments chips.  That's all you get.  True there is luck involved with the eventual winner (as there is in all sporting events -- coin flip in football anyone?), but everyone starts on a level playfield. 

Imagine if we changed the WSOP such that each player's starting chip stack was determined by how much they were willing to buy?  The winner wouldn't be any of the standard poker pros, it would by people far richer than them.  If Bill Gates could wield his $40 billion stack in a game, he would surely win.  Not because he was the best player -- or even a good one -- but because he had the most money.

You can find examples of sporting events that suffer from the affect of lots of money skewing the results.  Take hydroplane racing.  I live in Seattle and every summer we have 1 weekend of hydroplane racing on a lake near seattle.  The hydroplane circuit consists of a number of sponsored boats that travel around the country racing on lakes and rivers to see who's the best.

The problem with it is that there are no restrictions on the boats.  Unlike nascar that regulates almost everything so that the outcome is largely decided by the skill of the driver, boat racing is determined by who can buy the best boat.  The darling of hydroplane racing was for many year chip hannour and the "Miss Budweiser".  AB being the marketing genius it is, poured as much money into their hydroplane as beer flows at a highschool kegger party.

The result was that every year chip and the Miss Bud would come to Seattle and every year chip and Miss Bud would go home with a hangover and a trophy.  The boats with the *insert ma and pa store name here* never had a chance.  In fact if you sorted the list of contestents by how much money they spent on their boats you would have a pretty accurate list of race outcome at the end of the day.  This is, of course, if the budwiser guys didn't knock too many back before the races began.

The result of all this is hydroplane racing in seattle seems less relevant every year.  How much of a sport is it when you can tell who is going to win a large marjority of the time based on how much they spent?  It's more like a dog and pony show at that point to get as much camera time of that the budweiser logos plastered all over the side of the hydroplane.  Sport: no.  Good advertising: yes.

And we come full circle:

This is why RMT is bad for MMOs.  Just as eliminating salary caps, allowing steroid use, or accepting any dollar amount tournament buy ins is bad for other sports, allow players to buy ingame content in competitive MMOs is ruins the egalitarian qualities of the game.  It's no longer about whos the best, but who has the biggest bank account.  In fact it's worse.  Now to compete a player must spend real-world money on ingame content just to compete.

Now Sony's solution -- and yours -- isn't to do things to help level the playing field, but to remove any restrictions altogether.  Are we really going to make baseball better by saying "steroids are ok use all you want"?  Surely more records will fall, but the game will become a bastardized version of its former self.  One things for sure, those who ply steroids to players will become much wealthier.  It will no longer be about who practices the most or has the best pitching arm and instead about who has the best pharmacist or access to the best new drug.

The solution to RMT in MMOs is to do everything possible to make it more difficult for companies such as IGE to sell ingame content for real-world cash.  Not, as SOE did, by joining the trade in illicit goods to make a quick buck.  It would be the equivalent to major league baseball announcing that steroid use is now "OK" and on the same day announcing the new "Official MLB pharmacy: the only place to buy your roids".  Oh, and they would also announce that players would be banned if they bought roids from any blackmarket/thirdparty dealers.  The message: it's ok to buy and use steroids, but only if MLB profits from it.  Thus MLB would line their pockets with even more ill-gotten cash while the players and fans are left to suffer.

SOEs entry into the RMT trade had nothing to do with giving players a "neat new option" and everything to do with lining their pockets with more of your cash.  For years SOEs and Smedley's public opinion on RMT was that it was bad for MMOs and that the vast majority of players do not want it.  Only after it became clear that there was a lot of money to be made did SOE change their political stance and decide suddenly the RMT was good for players.

I know this first hand.  I know someone who works at SOEs Bellevue WA office.  He's a programmer there.  We were at a game's industry meeting last year where an Attorney friend of mine asked him about why Sony decided to do their station exchange.  He asked the question because it was the same day back in 2005 when Sony announced it.  His response: "they were leaving lots of money on the table".  It wasn't about making trade safer for customers or cutting down on support calls from players who were ripped off, but because Sony felt they were losing money to companies such as IGE.  Money SOE wanted. 

The lawyer friend of mine bought EQ for cash stuff back in the day.  This is exactly the kind of "keep up with the Jones's" game that 18-year-old kids who are in school or work at the local taco hut can't afford to play.  It's fun for the lawyers because they get the "i win" button, and frustrating for everyone else.  Well except for Sony of course because they profit the whole way from it.  In addition to their retail box fees and monthly subscription rates.

The last fallacy is that creating special servers where RMT is ok, but others where it's not somehow fixes the problem.  It's about like saying it's ok to use roids in the majors, but no ok in the minor leagues.  By officially supporting RMT Sony does reduce the amount of scamming that goes on in the black market.  It also, however, lowers the amount that can be made because it lowers the barrier to entry into such a market.  Companies want to be in markets where there's lots of easy money to be made, not a little bit of difficult money.  Thus, IGE and others still sell stuff to those on non-RMT servers just as they did before.  They aren't going to compete against all the legal selling on the station-enabled servers, it is just business as usual for IGE.

And that is the problem:  It doesn't make IGE go away, and doesn't keep third parties from selling ingame items for realworld cash on non-RMT servers.  It does, however, make SOE more money.

It does also create a bad precedent for MMOs companies and especially SOE.  MMO companies put in their TOS's and EULA's that you do not own your ingame stuff;  you are in fact just paying for the game playing service.  Well when companies aren't involved in the RMT trade they have a legal standing.  They are just the game service and since they specifically forbid the trade of real-world cash for in game items they have a strong legal leg to stand on.

As soon as they officially sanction the RMT trades ingame, they are now through their actions assigning realworld value to ingame items.  It doesn't matter they their TOS/EULA says one thing but their policies and practices preach something completely different.  They have now given a value to the ingame content (separate from just selling a subscription fee) and lawyers love these kinds of double standards because they tend to lead to favorable rulings for companies such as IGE.

It doesn't matter that you click yes on the TOS and/or EULA every time you enter the game.  If a court finds parts of it unenforceable, then they do not apply.  Once again SOE has taken the quick route to money-making bliss, but in the long run by officially supporting RMT, they stand to lose much more.

~PD