Virtual Trading, by Steve Ellison

(... posted up here because I used to be a fanatic Neopets player, and because it gave me a strange sense of familiarity when I read it in the suffocating blanket of heat and humidity in a US$0.25/hour Internet cafe, more than a thousand miles away from home)

My children, ages 12 and 10, are devoted to interactive online games such as Neopets and Runescape. These games have elaborate imaginary worlds. In Neopets, a player can earn units of an imaginary currency, Neopoints, by playing games. Using Neopoints, players can buy and sell imaginary items within the game. The items may rise or fall in value over time. Interestingly, the trading of items does not always remain virtual. Some items are sold on eBay for real money. As Edward Castronova explains in the Harvard Business Review:

Say one player needs a breastplate, but the game's developer has made this armor difficult to obtain within the virtual world. The player can go to an auction site, find someone selling a breastplate, and send that person a check for $50. Then the two meet online and simply click 'trade'. EBay category 1654, 'Internet Games', comprises thousands of auctions for digital gold pieces, daggers, ray guns, and robots--accounting for $30 million worth of business in the U.S. alone. In Asia, the real-cash virtual-item market exceeds $100 million annually.

Neopets itself was recently sold by its founders for $160 million to Viacom.

[dailyspeculations]