Tobold posts today about money making in games. I’d like to focus on a particular set of statements:
…challenged me to try to earn 100 million ISK without firing a shot, and I refused that challenge as being pointless, due to the option of legally buying 300 million ISK in exchange for a PLEX game card….if I found a way to avoid PvP, and to play a trader instead of a miner, the fact that I could legally buy 500 to 600 million ISK for $34.95 would pretty much kill my motivation.
What interests me here is the lack of motivation to accumulate ISK because of its availability via RMT. Why would the relative ease of availability of ISK de-motivate acquiring it, particularly in the face of Tobold’s later statement that “the fun is in *getting* somewhere, not in reaching some destination.”? This seems roughly akin to saying that the ready option of painting the faces of a Rubik’s Cube devalues solving it in the conventional manner.
Isn’t it ultimately the case that ALL games are pointless endeavors? Aren’t achievements pointless? At the end of the day, what material change have you made in acquiring high-level gear on your WoW toon? What tangible value have you derived from being in a server-first guild upon achieving that sought-after goal? In that case, isn’t it equally fulfilling to merely enter cheat codes and beat games instantly? I suspect Tobold would answer in the negative. I am left to think that he merely feels no interest in playing a trader. That is fine, but then…what is the point of making money anyway? That seems to be the crux here: what is the point of accrual of wealth in Eve, or the accrual of high-end gear in WoW? Why does it matter if someone buys it? Is it simply that they bypassed the achievement? Is that all we care about? Or is something intangible gained in having the experience, something which may not necessarily be quantifiable but nevertheless is of value?
Let’s consider ISK in Eve. It is the case that one can purchase ISK via RMT. This is done by purchasing a PLEX card and then placing it on the market inside the game. Players will exchange in-game money for the game time. You come out with ISK and they come out with additional subscription time paid for with their time, rather than their money. Whether that’s a valuable investment is wholly dependent on the player. But what is the point of having ISK, anyway? Obviously, as with any currency, it lies in its exchange value: the value of the goods it can be exchanged for. ISK, or money period, is not of worth intrinsically. Instead, its worth lies in the opportunity it presents.
So what opportunity is afforded you by purchasing ISK? It’s not simply a score, it’s a means of power in Eve. What power have you gained? Well, that wholly depends upon you. The value of ISK, it’s leverage, derives from the fulcrum on which it is placed. What matter if you purchase ISK if you have no idea how to leverage it, or if it’s not intended to be levered at all?
The accrual of money has nothing to do with the money itself, which is a secondary artifact of the development of one’s opportunities. Money happens to be opportunity enhancing, so it is pursued. If money is pursued as an end, it is materially worthless. If there is no ultimate exchange end point for the money, if it is being acquired for an opportunity which can never arise, then it is worthless. The only way to be able to use money, to find worth in it, is to see the opportunities of its use: to understand the working of the system in which it arises. Money is a signal, a measure of information. It is an indirect indication of power. Following its movement, you can discern patterns wherein opportunity lies. Without that understanding, without grasping the system of money, your ability to lever that money is rather limited.
The point of acquiring money lies entirely in the skill gained at its use. As it is so often said, it takes money to make money. Capital investments are leverage, and to shift anything, leverage is required. But the only way you can put that money to good use is to know how to use money, and you only gain that knowledge by examining and understanding the system of money and wealth transfer. What better way to gain that knowledge…than to participate?
Ultimately, this is a question of goals. Talk of money usually speaks of two goals: the accrual of wealth wherein wealth is a score, and an end in itself, and the accrual of power. I will go ahead and trivially contradict myself here: acquiring money for itself, as a means of score, can be a valid end. In that case, it’s a means of quantifying one’s skill at the game of acquiring money. A game consists of a set of constraints. The challenge issued to Tobold, to acquire 100 million ISK without firing a shot, was implicitly constrained by the additional rule of doing it in the game. Tobold correctly feels that buying it via RMT would be a form of cheating, but then concludes that because it is explicitly allowed by the rules of the whole game of Eve, it’s allowed by the rules of any sub-game. That’s not a fair leap. He was being challenged to do so without RMT. That’s another game, a game within a game, and one that can have its own pleasure.
Beyond that, even within the broader game of Eve, being able to acquire wealth without the use of RMT provides a certain substantive edge over others. Presumably the ability to do so implies a knowledge of the internal economic system, a knowledge which helps amplify one’s existing capital base. That knowledge allows one to detect opportunities, and to rearrange the board to your advantage. Simply purchasing ISK does not confer THAT advantage, one gained through the effort of analysis of the underlying system.
As it happens, I have earned 100 million isk without firing a shot. After finishing the tutorial sequences, I gave up entirely on both mission running and mining, focusing my mind entirely on trade opportunities. One learns fascinating things by looking at the economics of Eve. The game encourages specialization, not merely through the skill system, but also because of the time investment any activity requires. Successful mining, for instance, requires specialized equipment, proper understanding of the various places to mine, the skills to use the equipment, and time. Let’s say I have found a very profitable field, chock full of asteroids and pleasantly free of pirates or competitors. This situation is time sensitive. I need to spend time harvesting the materials and transporting them to the nearest station.
Let’s say I manage that, refining the ore into a treasure trove of minerals. I am not an industrialist, so I want to sell my minerals. I have a few options. I can attempt to haul them out of this station elsewhere and then come back to mine more. In general, the highest bids for minerals can’t be found local to good mine fields. Industrialists congregate in high population areas, and haulers like to use trade hubs to move goods. High quality minerals can only be mined, sadly, in the lowest security sections of the galaxy, which are naturally not trade hubs. Here is where specialization comes into play: I have a comparative advantage in mining. I can effectively mine at a very rapid rate. By keeping my mining operation mobile and adaptable, I can avoid pirates and maintain a steady churn of new minerals at fields spread all over the galaxy. However, that severaly limits my ability to haul my own minerals. I can’t guarantee I’ll have minerals in the right locations to have nearby haulers. Instead, I’ll have to give up mining time in order to do hauling myself. The local station likely has bidders for my minerals, though they are likely priced well below the price I could get taking them to, say, Jita. Which is worth more to me: attempting to put together my own hauler and hauling operation to safely gather my minerals and haul them to Jita to sell, or sell them locally, using the saved time to mine more minerals?
The answer to this involves examining tangible and intangible costs and benefits. Tangibly, we can look at the cost of maintaining a hauler plus fitting, of training the associated skills, of the time spent hauling, and of the risk of loss (from, say, a pirate attack). That all needs to be subtracted from the benefit of the price premium gained selling at a trading hub. Intangibly, the cost is giving up mining in favor of hauling. Which do you prefer doing more? Obviously, which you prefer more adds an unquantifiable factor to this analysis, so I will leave it out of the numbers. Nevertheless, it is very important that it be considered, as it bears on how well you invest, how well you do your job, and how much fun you’re having playing what is ultimately a game.
As for the tangibles, the cost of hauler maintenance is likely some portion of the cost maintaining your mining vessel. Depending on your skill layout, you may literally be unable to fly a decent hauler, but even if you can, you may not be able to fit one for maximum efficiency. Because the amount of time needed to haul is function of your hauling efficiency and the amount being hauled, it will relate directly to how much time you spend mining between hauls (as that determines the amount of minerals you need to move). That means that time spent hauling can be considered a ratio of mining time. So let’s look at some equations: Let R be the ratio of hauling time to mining time, r be the premium gained from selling at a trading hub, M be the value of mining and selling locally per time, and C be some constant representing the cost of the risk of losing your hauler + mineral load. The benefit to hauling, then, is r * M. The cost is the time lost no mining, R * M minus the risk factor of hauling, C. The final equation is:
r * M – (R * M + C) = M * (r – R) – C
So the obvious points of concern here are C, which is always positive and non-zero, and the relative size of R and r. We assume that r is greater than 1, since the price you’ll get where you’re hauling the minerals is higher than the local price. It’s important to note that the value of C is also likely related to M, since the larger M, the larger C (the larger M, the more time hauling. The more time hauling, the larger the risk cost).
Without throwing in values, we can see this at least produces cases where the miner is better off selling locally at a lower price and spending what would be hauling time mining. This becomes more the case as the time spent hauling is longer than the time mining…in fact, unless the haul time is very short, it’s almost definitely in your interest to mine and sell low. That, essentially, is the principle of comparative local advantage. You don’t have to have a natural advantage in mining for it to be advantageous for you to invest there, especially when you already have momentum in that area.
Because of that, there exists arbitrage opportunities. A merchant takes advantage of people exercising comparative davantages, such as the mining example. If demand is higher at trading hubs, a merchandise mover can specialize in moving, selling, and purchasing merchandise in order to facilitate comparative advantage of producers. In this case, the trading hubs exhibit high demand because they are proximate to the consumers of distant goods. If the majority of goods producers need to take time from production to move the goods, prices must rise to justify that. We can also see this will happen due to the reduction in supply. Time spent hauling is time not spent mining. If the miners haul, that reduces supply compared to demand, tending towards a higher price.
Obviously the reverse is also true: if consumers of goods have to spend more time acquiring goods, for instance by hauling goods to where they can be consumed, then that lowers demand, decreasing the price. Either case lowers the final benefit of consumption along the chain, reducing total revenue. A merchant hauler, by developing a comparative advantage in hauling, purchasing, and selling, can facilitate producers and consumers maximization, because that ultimately benefits their margins. Consider: if the cost in time of purchasing a good for consumption is reduced; that is, if the rate of consumption is increased, that increases aggregate demand. That in turn boosts the price. Because the merchant facilitates increased supply due to more rapid hauling and allowing miners to continue mining, there is a downward pressure on prices. In this situation we see that, rather than reducing their margins due to oversupply, merchants can maintain them due to indirectly boosting demand. I won’t say these effects precisely offset one another, but it is obvious such a counter-balancing effect is in play. In this situation, margins become controlled by the ability of dedicated haulers to move goods and the number of such haulers compared to producers and consumers.
Learning all this by doing that sort of hauling was precisely what I enjoyed playing a trader in Eve. This is different from market specualtion; I was not beholden to the market rising or falling, merely to the margin between the lowest and highest buyers of a given good. Given the size of the Eve market, I was able to dabble in a number of good markets, all of which had different feels. While the mineral market was my bread and butter, ship resales also returned some solid value. In general, though, I found that goods which moved in high volumes were the easiest to trade, and that meant minerals.
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