On the Economy and other musings of a new player

[etrusan]

This is day 5 of my free trial. I have 62 in forage, 23 in melee, and 15 in mage. I have 500K dappers in my wallet with nothing to spend it on and frankly, I’m not sure what dappers are even used for.

A little introduction is in need. I am a fourth economics student at Bard College specializing in urban, land and public sector economics. One of the great things about principles is they can be applied to anything, everywhere, with the same results. I’ve been following this game for a long time, since I was in closed beta, and recently decided to give it a go.

I have played and Beta tested many games, from being an officer in an EQ guild, ATITD, Eve online, and others. Ryzom is a game that is truly thinking outside the box and recognizes the one thing that is near and dear to my little economist heart and that is choice.

However, this post is not about all the great things Nevrex has done (and there are many). I would like to talk about the failings in the marketplace of Ryzom. The economy, is of course, a critical element to most MMO’s and especially so to games which are less loot / mob drop oriented and more craft based (like Eve, for example). Ryzom fits more into the later then the former, and thus, having a fix for the economy is critical.

I’ve read nearly every post I could find regarding the economy all the way back to March. Most posters identify what they perceive the problem to be. This is a short list of what I have found what others have noticed (rightly or wrongly).

1.) There is nothing for sale in the market
2.) Nothing is for sale because we are afraid the enemy will purchase said goods
3.) The population is too low to sustain an economy
4.) The user interface is bulky when it comes to trade
5.) Dappers have no value
6.) The game only allows for buying and not ordering. Or the trade mechanism is only one way and not both ways.
7.) People give away high value items to newbies and they never learn the “true value” of items.
8.) People give away high value items in general, thus negating the need for trade.

Firstly, trade will occur in an economy as few as two people so long as the transaction costs are sufficiently small. The second half of that sentence is the critical part of that message.

Secondly, currency has no intrinsic value. It is merely a medium of exchange. What it represents is value and this is also what it represents in the online world. What you value in an online world, however, is slightly different but the principle remains the same. Currency is to facilitate trade and make it easier.

Barter, is also a form of trade. Much of the trade taking place in the world of Ryzom is barter. The trouble with bartering is there needs to be a coincidence of wants and with currency; presumably, this eliminates one of those elements because everyone is in demand for currency. Thus, when currency looses so much of its value where it becomes valueless consumers will no longer demand this good. Consumers will instead turn to barter. This can be seen in the real world as much as it can be seen in the online world, take world war II Germany or Mexico pre-peso revaluation for example.

So, why is there so much currency floating around in the world? The answer usually given is that there are not enough “money sinks”. This is not the case at all. There are plenty of money sinks. There are potentially 1,250 different pha amber out there. Multiply that number by 5 again and that is how many terrain pha amber there are.

The key problem is the game is subsidizing itself, heavily. Therefore, the market can never find any sort of equilibrium. What do I mean by this? If I have 100 of those Pha ambers and I decide to sell them, I can choose to sell them to an NPC or on the public at some mark up. No matter if a consumer is demanding pha amber or not, I can always get a minimum of whatever price the NPC is giving me for the pha amber. There can never be a competitive market place because there will never be any competition.

This problem exacerbates itself because of present value. I will always prefer some good now rather then same good in the future.

This is the first part of a two part solution. The market needs to work competitively. Once off the newbie island, no goods should be provided by NPC’s and no goods should be bought by NPC’s, at all.

Most of the second part has already been proposed by the poster Marct elsewhere. Consumers need to be able to bid as well as ask. In other words, they need to be able to place outstanding orders to fill certain criteria as well as sell goods on the open market. These should be as general or as specific as the user wishes. For example might wish to buy pha amber at q50 another might wish to buy pha amber at q50 – q60 another might wish to buy pha amber at q50, jungle, choice.

As I mentioned in the beginning, trade will only occur if the transaction costs are sufficiently small. Part of the problem is addressed in marct’s answer. However, I would like to add to his answer.

Users need to be able search an entire area easily. Or at least be aware of what units are in a specific area. Using some user interface, the user should be able to search all merchants in a given area. That doesn’t mean all the units are universally located, players would still need to walk to that individual merchant to get their item.

Lastly, the UI for merchants needs to be easier to use. It is extremely bulky and difficult to organize. The filters are helpful and they should certainly stay. The improvement should be that items should be columnized: Item, quality, level, seller, terrain, price. The objective is to make the UI provide as much info as possible in a short amount of space. This will allow consumers and providers the ability to make better choices.

As far as not wanting to sell to your enemy, that is understandable and there have been many good suggestions made on these boards so I will not go into that area.

I look forward to your comments.

[iphdrunk]

Nice post one of my favourite subjects in Ryzom.

Not being an economist, my views on the situation were quite simplistic: from the resource supply being unlimited (in the sense where I can keep on harvesting and selling) and from the unrealistic demand from NPCs who are always willing to buy at price, regardless of how many Items I've sold. That's why some players suggested a "tolerance"

Your suggestion about NPCs not buying at all.... lines up with these views, but can be impractical, imho.

So, why is there so much currency floating around in the world? The answer usually given is that there are not enough “money sinks”. This is not the case at all. There are plenty of money sinks. There are potentially 1,250 different pha amber out there. Multiply that number by 5 again and that is how many terrain pha amber there are.

This part I don't fully understand. In what sense is an amber a money sink? it could be if I was able to buy ambers, but it's rarely the case. True, once the NPCs stop buying, players will be in need of selling them, one may think.

If I have 100 of those Pha ambers and I decide to sell them, I can choose to sell them to an NPC or on the public at some mark up.

and the question that arises is: why would you want to sell them? in particular, once your needs are satisfied. This is why some have suggested the addition of luxury goods, the equivalent of " bigger house / bigger car" .

[richky]

Interesting subject, about which I have had much thought over the years

Once off the newbie island, no goods should be provided by NPC’s and no goods should be bought by NPC’s, at all.

First question - where will dapper come from? The current source of dapper entering the economy is though selling to NPCs. Without that, no one has any dapper at all.

And a comment. I played another game where NPCs would not buy anything, though looted items could be converted into currency. The economy did not work in that game either, and the most commonly given solution was to allow NPCs to buy crafted/harvested items from players.

[rushin]

hey

I'm assuming you have read this thread, which is probably the communities most indepth discussion on the subject. I agree broadly with what you are saying, and plead ignorance in advanced economic models.. my viewpoint is based mostly on my experience ingame as a buyer and seller.

I think the root of the problem is the NPC's buying without regard to market conditions. In that thread i made a somewhat complex suggestion, but having read your post i bow to a more elegant approach. remove the sell to NPC option completely.

This would make a huge difference and maybe actually kick start a real economy, because at present there truly isnt one. Here is the problem though; What do you do with the dapper surplus currently ingame? older players and guilds have hundreds of millions of dapper. Another question is how would players earn dapper in the first place?

[marct]

The key problem is the game is subsidizing itself, heavily. Therefore, the market can never find any sort of equilibrium. What do I mean by this? If I have 100 of those Pha ambers and I decide to sell them, I can choose to sell them to an NPC or on the public at some mark up. No matter if a consumer is demanding pha amber or not, I can always get a minimum of whatever price the NPC is giving me for the pha amber. There can never be a competitive market place because there will never be any competition.

I think this statement is mistaken. There is a competitive market place for Raw Materials. It just so happens that the demand is much much much higher than the supply. The fact that you would choose to sell to a proxy(the vendor) and have your profits cut is a decision you make. People will pay 5,000 6,000 even 9,000 or 10,000 per material.

The crafting in-game is more manufacturing, and theoretically there is a demand through the world of Atys for that stuff. I do agree that vendor prices should fluctuate based on the supply. Demand though is kind of false and being represented as the demand of the whole of Atys.

Would it be interesting if those things could be in place, yes. Is it on the top of my list, no.

The problem is not the materials, as much as it is the results from crafting. and the influx of crafted items to the "gray" vendor market.

Noin.

[marct]

remove the sell to NPC option completely.

This is not feasible. It completely eliminates a harvester from the economy. Bascially the price of materials to "manufacture and gain skill" would fall to zero. No one could afford to buy mats to level. Every item you crafted would need to be for sale to the public.

Noin.

[iphdrunk]

Every item you crafted would need to be for sale to the public.

Noin.

that's another good point. The number of items needed to level is way higher than the demand. The evident solution would be either drop/destruct a lot of crafted items (and then it would imply an increase of material cost) or review completely the number of items needed to level... thus making an item more costly / time consuming or taking a lot more mats to craft, but it should be worth using and selling to a player... and the whole gameplay balance needs to be reviewed: the harvesters pulling less mats, if the number of items needed to level decreases, loot tables reduced.... and if the number of mats per item was increased, the supreme gear would be way rarer (although not a bad thing per se, maybe).

[dhuberma]

This is day 5 of my free trial. I have 62 in forage, 23 in melee, and 15 in mage.

Welcome to Atys! *gulp* You have a harvesting skill tree up to 62 in five days? Wow, that's fast!!

I have 500K dappers in my wallet with nothing to spend it on and frankly, I’m not sure what dappers are even used for.

Inventory management becomes a bit of a challenge in Ryzom over time. You can purchase three packers (from ~122k dappers through 600k+ dappers). You can purchase an apartment for yourself for additional storage (1 million dappers). You can contribute to (or buy outright) an apartment for a guild as a place to convene and for shared storage options (10 million dappers). You can purchase (both with cash and, of course, barter) upgraded armor, weaponry, and ammo from crafters. (Yesterday I paid 10,000 dappers + 2,500 dapper tip to a crafter for my new QL100 MA vest.) You can negotiate the purchase of special outpost (abbreviated OP here) materials and items from a guild. Finally, a segment of the population uses dappers to purchase materials from both NPC and PC stores with which to grind crafting.

I would like to talk about the failings in the marketplace of Ryzom. The economy, is of course, a critical element to most MMO’s and especially so to games which are less loot / mob drop oriented and more craft based (like Eve, for example). Ryzom fits more into the later then the former, and thus, having a fix for the economy is critical.

You've made conclusions without presenting evidence to support them. I will assert the opposite: the Ryzom cash economy does not fit the traditional MMO model; cash in Ryzom is a very minor element to the economy; the economy in Ryzom is mostly barter and gratis.

Unlike other MMOs, players buy virtually nothing from the NPCs. (We buy replacement tools and we buy big ticket items as articulated a few paragraphs above.) Trade occurs almost exclusively intra-playerbase. Due to the lack of a large number of money sinks (I'm pretty sure I comprehensively listed all the money sinks in this game a few paragraphs above), cash becomes ubiquitous, and heavy liquidity easy to maintain.

Much of the bartering, in turn, is done for materials, for services, and most often (and this is the best part of Ryzom, to me!), free of charge. Guildmates, friends, teammates, kind and generous persons everywhere, are often happy to craft items for free for other people.

People have proposed auction houses/consignment merchants and similar. Such a mechanism may very well increase cash trades in the economy. I believe, however, they reduce the personal interaction necessary when such a mechanism does not exist. Having to go out and find crafters, befriending them and/or socializing and negotiating with them, is part of what makes this game fun. This is very much a personal preference, but Ryzom is very much a non-traditional MMO, and this is but one more factor which I feel contributes to Ryzom's "feel".

So, why is there so much currency floating around in the world? The answer usually given is that there are not enough “money sinks”. This is not the case at all. There are plenty of money sinks. There are potentially 1,250 different pha amber out there. Multiply that number by 5 again and that is how many terrain pha amber there are.

I do not follow what you are saying here. How is your harvesting of a material relevant to a discussion of 'money sinks'?

This is the first part of a two part solution. The market needs to work competitively. Once off the newbie island, no goods should be provided by NPC’s and no goods should be bought by NPC’s, at all.

Why? What's broken about the system today? Are you unable to find the goods you desire? Go out and meet those who can supply you with them. Are you unable to find a market for the goods you wish to sell? There may not be a good market for those goods, or you may be selling at the wrong price point.

Most of the second part has already been proposed by the poster Marct elsewhere. Consumers need to be able to bid as well as ask. In other words, they need to be able to place outstanding orders to fill certain criteria as well as sell goods on the open market. These should be as general or as specific as the user wishes. For example might wish to buy pha amber at q50 another might wish to buy pha amber at q50 – q60 another might wish to buy pha amber at q50, jungle, choice.

As previously written by me, I hope Nevrax does not implement this. I prefer the forced social aspects of such trading. The antiseptic "auction house" has no place in Ryzom, in my opinion.

Best regards,

[etrusan]

Your suggestion about NPCs not buying at all.... lines up with these views, but can be impractical, imho.

and the question that arises is: why would you want to sell them? in particular, once your needs are satisfied. This is why some have suggested the addition of luxury goods, the equivalent of " bigger house / bigger car" .

It is a little scary, I will admit, however in Eve online NPC's do not buy or sell goods (they do, but the price floors and price ceilings are ridiculous, such that you would never sell / buy from them). There is a second part to this which goes better in your second statement.

This part I don't fully understand. In what sense is an amber a money sink? it could be if I was able to buy ambers, but it's rarely the case. True, once the NPCs stop buying, players will be in need of selling them, one may think.

You know, the reason why you aren't understanding is my fault and I apologize. I should have never used the word "money sink" because in any economy there is no such thing. Think of currency as a revolving door. It keeps on moving, but never dies.

In online games, people see this infusion of cash from the NPC's and they rightly think this needs to be balanced. In some games, like EQ, this makes sense. In other games, Eve and Ryzom it does not. There should be no (or very little) infusion of cash from the outside world. More currency added is seignorage (the government printing more money). If the government prints more money to pay down its debt, or whatever reason, what happens to the existing currency? It devalues. This concept is slightly different then inflation, but roughly the same, so if you are comfortable with inflation then you can think of it like that.

Another example, real world, if I buy some good from a merchant, he puts that money in a bank, which gets loaned out to a consumer of loans, who spends it on a contractor for a new building, this contractor pays an employee who buys food, which gets deposited in the bank again.

This principle is something called the velocity of money.

However, it seems judging from your second sentence that we are pretty much on the same page anyway, I just wanted to clarify what I wrote earlier.

First question - where will dapper come from? The current source of dapper entering the economy is though selling to NPCs. Without that, no one has any dapper at all.

This is a good question, part of which I answered above. What you are really talking about is inflation. It doesn't take a math genius to figure out if X number of fixed dollars are in the system and Y number of people are in the game. X / Y is the average amount of currency in the system. If Y goes up (population) the ratio X / Y will go down. In other words, fewer dappers per person. Fewer dappers per person will cause an increase in the value of each dapper. This is inflation.

Mostly, this is a game balancing issue, I think. I explicitly didn't mention the quest givers and the cash they hand out for this reason. While a pitance right now, these could be adjusted to allow for an infusion of cash into the system when needed.

As for you second part, I would direct you to Eve online, while not perfect it is regarded as the best online economy ever created. I'd be curious to know which game you are refering to, so I could look into it for my own research.

[richky]

This is a good question, part of which I answered above. What you are really talking about is inflation. It doesn't take a math genius to figure out if X number of fixed dollars are in the system and Y number of people are in the game. X / Y is the average amount of currency in the system. If Y goes up (population) the ratio X / Y will go down. In other words, fewer dappers per person. Fewer dappers per person will cause an increase in the value of each dapper. This is inflation.

Mostly, this is a game balancing issue, I think. I explicitly didn't mention the quest givers and the cash they hand out for this reason. While a pitance right now, these could be adjusted to allow for an infusion of cash into the system when needed.

This sounds good in theory, but the fact is that money never divides evenly . Dapper would tend to accumulate in the hands of the top crafters and with a fixed quantity in the world that would mean less and less available for new/low level players. We'd end up with poor Apocaps having to pay outrageous sums to get his messages delivered .
Aside from that, I think it is quite unrealistic to say that the players are the only occupants of Atys that take part in the economy. We are in fact only a small percentage of the population, and buying/selling from NPC merchants is a reasonable way of representing the rest of the economy. As has been said though, in the past we could sell to NPCs but there was very little we could buy from them and so the amount of dapper in the hands of players was continually increasing. With Outposts we now have something else to pay NPCs for, so some of that dapper will find its way back to the NPC side of the economy.
As you said, it is really just a balancing act, and I am not sure how increasing payment for missions is an improvement on selling goods to NPCs.

As for you second part, I would direct you to Eve online, while not perfect it is regarded as the best online economy ever created. I'd be curious to know which game you are refering to, so I could look into it for my own research.

Unfortunately, that is no longer possible as AC2 closed its doors last month .