The Real-World Economic and Ethical Problems in Virtual Worlds

In the Economist:

Real-world trade in virtual items is allowed in virtual worlds that are intended to simulate reality, such as Second Life and Entropia Universe. And it has been going on for years among players of “massively multiplayer online” role-playing games such as “World of Warcraft”, “EVE Online” and “Lineage II”, even though such trading is banned in many game worlds, since it upsets the competitive balance if some players buy weapons or armour rather than earning them in the game. “We don’t allow real-money trades in our games because we think it creates an unfair advantage to those who are trying to play the game as it was created to be played,” says a spokesman for NCsoft, the maker of “Lineage II”.

In practice, however, preventing trade in virtual items is difficult, and several dedicated trading platforms have emerged to enable players to buy and sell in-game items. One of the biggest, IGE, based in Hong Kong, is now being sued by a “World of Warcraft” player who claims it has spoiled his online fun. Mr Kane says the value of virtual items traded hit $1 billion in 2006. Dan Kelly, the boss of Sparter, a trading platform based in Menlo Park, California, says that figure will double this year.