play money
DIARY of a dubious proposition



(And you can buy it at Amazon.)

Monday, June 30, 2003

A Change of Plans  

Thirteen days ago, the day after my wife and daughter left town for a three-week absence, I set myself a challenge: To parlay my existing UO assets into $1000 (or the equivalent in gold pieces) by the time they returned.

Today I'm going to have to amend that slightly. It's not that my net worth isn't growing apace. With $70 in my PayPal account, 26 million gp socked away in my various UO bank boxes, and another 36 milllion gp worth of inventory scattered around, I'm already worth over $1000 -- and well positioned to have that much in cash on hand come next Tuesday.

So no, it's not the money I'm having trouble with. It's the waiting. That part I've pretty much failed at, actually, having broken down finally, last Friday, and bought a plane ticket for the sad, minor Midwestern city my girls are currently holed up in. I'm surprised but not ashamed to have discovered that I couldn't handle the solitude after all. I leave on Wednesday, and when Jessica and Lola return to San Francisco, on Thousand-Dollar Day, I will be returning with them.

What exactly this means for the challenge is hard to say. Though I'll still be online where the girls are, my work hours will be curtailed, as they always are when the obligations of domesticity, joyful and otherwise, assert themselves. If I consequently fail to meet my immediate financial goal (a goal all the more urgent now that my last-minute travel arrangements have put me nearly a thousand bucks in the hole), there may be ominous lessons to be drawn regarding my longer-term prospects in this business. As the player demographics generally suggest, UO is not a family man's game -- and milking it for cash may not be either.

That said, as I come to the close of this strange, lonely interlude, I must note that it has not become quite the spectacle of bachelorish dissipation many expected it to be, myself included. Though there have been mornings where I sat down to the trading day in my underwear and stayed in it till dinner, I have somehow found time every day to bathe. I have shaved regularly. I have even left the house on non-UO-related errands. And though I suspect some near and dear to me may have laid wagers to the contrary, I have never -- not once in all this time -- eaten cereal for dinner.

11:57 PM

Thursday, June 26, 2003

The Return of Dr. Castronova  
He's back -- and blowing your mind like never before!

Well, he's back, anyway. And while the latest installment in Edward Castronova's single-handed creation of the field of virtual economics doesn't deliver quite the paradigm-twisting jolt his famous analysis of the EverQuest economy did (see Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier), this new paper does have a cooler title (The Price of 'Man' and 'Woman': A Hedonic Pricing Model of Avatar Attributes in a Synthethic World), a great lead sentence ("This paper explores a unique new source of social valuation: a market for bodies"), and an intriguing thesis, which is that by rigorous statistical sifting of the economic data on sales of EverQuest characters, it can be established that female characters command a lower price than male characters, all other factors being equal.

What this says about the state of gender relations generally remains elusive. I can attest, in any case, that a similar phenomenon obtains in my neck of virtual reality, where only last night I was forced to turn down a perfectly functional lower reagents suit simply because the one item of female clothing it contained rendered it essentially unmarketable, this despite the fact that any male character could easily hide the offending article under a manly wizard's robe (I guess the fear there is that he might come to like the feel of women's undergarments against his virtual skin?).

On the other hand, how does this square with the fact that women's clothing in the real world notoriously costs more than men's, even when the materials are cheaper?

Whatever the answers, Castronova's method of asking the questions suggests rich material for social research to come.

11:59 PM

Wednesday, June 25, 2003

Market Watch  
A weekly series of UO eBay market snapshots, based on average sales figures for the preceding 14 days:

Total sales: $159,078 (+41 from last week)

Total sales, annualized: $4.1 million

Exchange rate: $16.72 per 1 million Britannian gold pieces (+0.18)

Price of an 18x18 house in the new Malas region: $162.39 (-35.93)

Gold pieces in my bank box: 29.2 million

Dollars in my PayPal account: $38.95

Total cash holdings, dollarized at current exchange rate: $527.17

(Numbers crunched with help from HammerTap's DeepAnalysis, an eBay market research tool.)

2:06 PM

Monday, June 23, 2003

If You Take a Walk I'll Tax Your Feet  
OK, so I realize I'm getting ahead of myself here, but what exactly do I tell the IRS next April?

I'm not talking about the amusing but ultimately trivial question of what I put down as my job category. (Gold Farmer? Vaporware Vendor? Merchant of Dreams?) This is a tougher one, with rather more substantial implications both for me and the Ultima Online economy in general. It's the big question, in fact, the heart of it all, the only datum, finally, that the tax man is really interested in: What, precisely, is my income?

This is a question much easier posed than answered. You might think it's a simple matter of counting the dollars in my PayPal account, but you would not, in that case, be thinking like the IRS. The IRS, it turns out, doesn't just want to know how much sovereign currency I've acquired in a given year -- it wants to know how much value I've acquired. Fair market value, to be precise.

This means that as a matter of law it matters not whether the payment I receive for services rendered is in dollars or in doughnuts. Either way I have been paid, and no amount of pleading the incalculably particular ding-an-sich-ness of a given doughnut will undo that fact. The doughnut's dollar value is easily enough established by a visit to the nearest Krispy Kreme -- and will be, if push comes to audit.

More to the point, this means that while you're free to live outside the cash economy if you so choose, the taxable economy is not so easily escaped. The IRS is very clear about this. Please see IRS Publication 525, "Taxable and Nontaxable Income," in which a brief but thorough section on the cashless exchange of goods explains that "[y]ou must include in your income, at the time received, the fair market value of property or services you receive in bartering."

Helpfully, the section includes various real-world examples, among them the hypothetical case of an artist who gives you, the owner of a small apartment building, a work of her own art in exchange for six months' rent-free use of one of your apartments. This sounds like a lovely arrangement, doesn't it? Rather glamorous -- possibly even amorous. Here are the IRS's feelings about this lyrical situation of yours:

You must report as rental income on Schedule E (Form 1040) the fair market value of the artwork, and the artist must report as income on Schedule C or Schedule C-EZ (Form 1040) the fair rental value of the apartment.

I assume you see where I'm going with this. If I am obliged to declare as income a work of art -- that is to say, an object of highly subjective value that may never do anything more for me than hang in its frame on my bedroom wall -- then how in the world am I not also obliged to declare the readily salable Britannian gold pieces I am piling up, whether or not I ever do sell them for eBay's fair market value?

The case, it seems, is clear: I must declare those gold pieces as and when I receive them, quarterly if possible, and never mind how many of them I have managed to convert into U.S. dollars. And to be honest, I don't really have much of a problem with this. Already I am keeping close track of the gold as it comes in, mentally converting it into dollars long before I get around to doing so.

But here's where things start to get weird: What about all those people who are actually just, you know, playing the game? All those teenage boys and stay-at-home moms and hard-working weekend warriors who are buying and selling their silver vanquishing katanas and their south-facing polar bear rugs outside the West Britain bank without any intention of ever cashing in the gold they make, without even a shred of respect for those who do -- are they also required, under federal law, to report as taxable income the eBay market value of the imaginary riches they are thus acquiring?

What about the gold and other valuable goods they acquire without ever entering into exchange with anybody else -- the stuff they get by killing monsters and stealing treasure chests? No barter there, but the IRS would seem to have that one covered nonetheless. Pub. 525 again: "If you win a prize in a lucky number drawing, television or radio quiz program, beauty contest, or other event, you must include it in your income.... Prizes and awards in goods or services must be included in your income at their fair market value." (Emphasis added.)

OK, well what about the fact that OSI, the company that produces UO, can make a fairly defensible claim that all the goods to be found in the game remain its property, and that the eBay market is thus at best a form of mass delusion and at worst a collective trafficking in stolen goods? The IRS, apparently, could not care less. Here, in my very favorite section of Pub. 525, the IRS gives voice to tax law's serene indifference to certain aspects of property that lesser forms of the law can get so uptight about:

Illegal income. Illegal income, such as stolen or embezzled funds, must be included in your income on line 21 of Form 1040, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.

It gets weirder. Pub. 525 makes repeated mention of a phenomenon known as barter exchanges -- organizations set up to facilitate the trading of goods and services among large groups of people, typically issuing barter credits in the form of scrip to help streamline the flow of trades. And if you think about this description a bit, you begin to realize that it rather nicely fits OSI itself (for scrip, read: gold pieces). Does this mean, then, that OSI is required, like every other barter exchange, to send out yearly 1099-B forms to all its members and, in certain cases, even to withhold taxes on the fair market value of goods exchanged?

Please, if anybody reading this is a tax lawyer, say it ain't so. Until I hear otherwise, however, I'm going to assume the IRS means just what it says -- and that sooner or later some clever IRS functionary is going to read Prof. Castronova's paper on the $143 million GDP of EverQuest, put two and two together, and start initiating some very interesting audits.

7:09 PM

Friday, June 20, 2003

To Market, To Market  
Busy, busy, busy -- and my busyness seems to have taken most of the edge off my loneliness. I awake now and only briefly mourn the emptiness of the house before jumping to my computer to check for new ICQ messages. There are always at least a few.

My days and nights, these days, are spent filling orders for Mr. Big, let's call him (the buyer I mentioned a couple entries back). Horned runic sewing kits, +120 power scrolls, 100% lower reagent cost suits of armor -- whatever he needs, I scour the shards looking for. I bid at UO-Auction, or I post at Tradespot, and sooner or later the desired object makes its way into my hands. Mr. Big will eBay it at a profit, but he pays me enough that I can almost always meet the local market price and still turn a decent profit myself.

And the people I buy from? The people sending me their ICQs full of sullen, teenage reserve or motherly, :-)-filled cheer, offering to meet me at this or that bank on this or that shard to pony up the products of their late-night dungeon hunts and crafting sessions? I suppose they make out all right, too, though we really don't get into it much.

It's grinding work, but I must say I'm still sort of high on what I have to call, for lack of a less improbable word, the grandeur of it.

Take the 100% lower reagent suit, for instance. This is a suit of armor consisting of eight pieces, each of which must be individually crafted or hunted (that is, taken from the body of a slain monster) at great expense of time, and all of which together form an outfit that permits the mage character who wears it to cast spells without using up any blood moss, black pearl, mandrake root, or other magical reagents normally required for casting. A wonderful thing, in a geeky, gadgety sort of way. But that's not the wonder I'm talking about. What thrills me about the 100% lower reagent suit, rather, is not the thing itself but the process by which the thing becomes a commodity: the network of transactions that connects the warriors and smiths who produce the pieces to the hustler who puts the pieces together to the broker who buys the assemblage to the eBayer who buys from the broker to the player who pays, finally, $30 to own and actually use the suit.

It's a supply chain, in short, and there's nothing unusual about that except for this one very unusual thing: I'm right in the middle of it, where I can see it whole, from end to end. You businesspeople, who live your days in this same, central region of the economy, do you realize what a foreign place it is to the rest of us? I don't think I did. But I can see now just how incomplete the consumer's perspective on economic existence is -- how infantile it is, really, to go through life expecting products always magically to arrive on the shelves, never seeing and therefore never quite acknowledging the enormous social machinery that connects the jobs we do to the things we buy.

Which isn't to say it can only be illuminating to inhabit this space. The deeper I plunge into the markets of UO -- the more time I spend moving through them, as through water, studying for shifts in the currents of desire and supply -- the stranger it seems to me that people do anything else in this game. Or that they can conceive of their silly, nonproductive activities -- their guild wars and their chit-chatting and their home decorating -- as anything but ancillary to the all-encompassing activity of the markets.

Marx or Adorno or Foucault or some such person probably said it more authoritatively in something I had to read back in college, but somehow reading about the market's famous reality-distortion field pales in comparison to finding your head enveloped in it. And so I'll say it now with my own new found, first hand sort of authority -- beware: start playing the market for real, and you may start to believe the market's the only game in town.

6:57 PM

Wednesday, June 18, 2003

Market Watch  
Update, 9:29 PM: Figures given earlier today were miscalculated (and depressingly low) and have now been corrected. We apologize for any inconvenience.

Another in a weekly series of UO eBay market snapshots, based on average sales figures for the preceding 14 days:

Total sales: $159,037 (-6,834 from last week)

Total sales, annualized: $4.1 million

Exchange rate: $16.54 per 1 million Britannian gold pieces (+0.20)

Price of an 18x18 house in the new Malas region: $198.32 (+16.99)

Gold pieces in my bank box: 16.8 million

Dollars in my PayPal account: $11.81

Total cash holdings, dollarized at current exchange rate: $289.68

(Numbers crunched with help from HammerTap's DeepAnalysis, an eBay market research tool.)

4:31 PM

Tuesday, June 17, 2003

A Momentous Day  
Yesterday I put my wife and my two-year-old daughter on a plane and watched them fly away for what will be three weeks apart. I haven't had real solitude like this in a while, and I like my solitude in general, but to my surprise this has so far been as much fun as a punch in the gut. I ended up crying off and on all day, missing those girls.

Today, though, I'm resolved to make the most of it. Family and work have, to date, been the only things keeping me from throwing myself body and soul into this project, and as of this moment I am constrained by neither. Today the project begins in earnest.

Let it begin, then, with these two concrete resolutions, in token of my seriousness:

1. By the time my wife and daughter return, July 8, I will have amassed $1000 (or the equivalent in gold pieces) from UO transactions alone.

2. By the time the IRS comes calling next year, April 15, I will be able to report that selling UO goods is my primary source of income, and that I earn more from it, on a monthly basis, than I have ever earned as a professional writer.

That is all.

Ahead warp factor 5, Mr. Sulu.

11:33 AM

Wednesday, June 11, 2003

Liquidity Crisis  
Uh oh.

I've been on a bit of a buying spree, and it seems to have caught up with me. In the last week, I've been snapping up bargains on the UO-Auction site (gold transactions only) and then selling them at around 50% profit to a reliable buyer, who deals in quantities of this stuff that I can only dream of handling. After months of struggling to grow my bank balance from 2 million to 3, I got it up over 5 in just 3 days of spare-time hustling -- and began to see light at the end of the tunnel.

Now it looks like there might be a train behind that light.

Yesterday, after I'd reinvested the whole 5 million in runic sewing kits and lucky suits of armor, my buyer didn't log on. And since then I've won about 1.3 million gp worth of auctions I am now unable to make good on. I figure I have about a day or two before the sellers start getting antsy, and I'm sure I'll hear from my buyer before then. But now I can't help wondering: what if I don't like what I hear? What if he's all stocked up on the stuff I just gorged on? Or what if he can't get gold cheap enough to give me the prices he's been giving? Yesterday I was on my way to riches; today I'm wondering if I already washed out.

OK, Dibbell, deep breath, and concentrate on coming up with that 1.3 million. You still have 460K in the bank box. You've got a million coming to you from Radny. And you've got 200,000 boards stashed away that could sell for as much as 6gp per.

So. Plan of action:

Distress call to Radny.

Put the boards up for sale on Tradespot.


Update, 12:54 PM: Fortunately my buyer reads this site and came to the rescue. Liquidity crisis over. He did warn me to go easy on the buying, though, and I guess I'd better heed. (Sold the boards, too, though at a fire-sale price of 4gp per.)

12:13 PM

Tuesday, June 10, 2003

Market News  
The first in a weekly series of UO eBay market snapshots, based on average sales figures for the preceding 14 days:

Total sales: $165,871 ($4.3 million annualized)

Exchange rate for the Britannian gold piece (per 1 million piece lot): $16.34

Price of an 18x18 house in the new Malas region (prime piece of real estate): $181.33

Gold pieces in my bank box: 5.6 million

Dollars in my PayPal account: $11.81

(Numbers crunched with help from HammerTap's DeepAnalysis, an eBay market research tool.)

4:56 PM

Friday, June 06, 2003

Corrections, Corrections  
Folks over at UO Stratics are understandably agitated about the info in my recent reports on Ingotdude, a/k/a the 20 Billion GP Man. Unfortunately, amid all the agitation some mis-info is getting tossed around, much of it my fault. Those of you not thoroughly immersed in the details and dramas of Ultima Online may now go for a coffee break while I sort this out:

1. The photo of the gold farm that ran below is not a photo of any operation Ingotdude -- or his Black Snow collaborators -- had to do with. It's similar, in all likelihood, to whatever setup produced Ingotdude's gold, but it ain't the one. Thought I made that clear -- but not clear enough, it seems.

2. I said a setup like the one in the picture could be running 20 instances of UO or more on each PC. Wrong. Persons in a Position to Know tell me 10 is really the maximum number, with a really good machine, and that even then it's more hassle than your average gold farmer wants to deal with.

3. On the other hand, Persons in a Position to Know also tell me that the loophole that produced most of Ingotdude's gold was not in fact the 350k/hour cloth-cutting scheme I was assuming but the infamous deed-smelting bug, which I'm told could be milked for a million an hour, with the right macros running.

4. My math on how much that gold farm could produce, therefore, needs some tweaking. With the 20-client-per-machine, cloth-cutting formula, I had a potential haul of 3 billion gp per day. But let's be conservative and say there was only one UO client running on each machine, smelting deeds. That's 20 x 1 x 1 million x 24 hours a day for a new, and rather humbler, total of 480 million gp per day. That's still over 3.3 billion a week, which I believe is still enough to pile up 20 billion gp in the weeks before the deed-smelting bug was patched.

But I could be wrong. As I believe we've established.

Keep those cards and letters coming!

3:14 PM

Wednesday, June 04, 2003

Conversation with My Broker, Part 3  
"hey bud"

"hey radny what up"

"man, back in the day, were you a player? -- i need some advice"

"a player? lol"

"ah, you don't even know what that means"

"sure i do -- like with the leh-dehs?"


"um. not rilly"

"so i went to the prom on saturday with this college freshman -- had a blast afterwards -- but now--"

Wait a minute. Why am I telling you about Radny's girl troubles?

I mean, the kid pours his half-broken teenage heart out to me -- not so much for advice really but just because he "needed to talk to someone about it" -- and now I turn around and put it all on the web for your entertainment? Screw that. Go watch a John Hughes movie, you soulless voyeurs.

Meanwhile, what am I to make of the trust Radny has placed in me? I marvel at it, and at the trust I place in him. But mostly what I marvel at is that the currency of this trust turns out to be, by and large, not emotional -- not the sort of unexpectedly intimate personal revelations chat rooms have become famous for -- but economic. The most significant token of Radny's trust in me is not that he tells me about his love life but that he keeps his every virtual possession in my house, from which I could at any time, if I so choose, banish him bereft of all his stuff. In turn I show my trust by placing 2 million gp ($34) with him for safekeeping, and I would have to reveal some very personal stuff to him to top that for intimacy. I'll stick with the money, thanks.

I would say, then, that this has led me to a discovery about the importance of economic systems in strengthening virtual communities -- except that the discovery has apparently already been made, and somewhat more pithily, by sociologist T.L. Taylor and her colleague Mikael Jakobsson, in this nice little paper on the role of social networks in EverQuest and their similarity to the workings of that other essentially economic virtual community, the mafia.

As for my 2 million: "i'm still working on it. i got a million back. have to sell the rest of my powerscrolls to get the rest. give me a week."

Do I trust him for it? I do. Whatever else Radny may be, he's what Tony Soprano would call a good earner.

10:41 AM

This page is powered by Blogger.