Making Money in the Wild, Wild Metaverse The Buzz


If you're not already spending time in the metaverse, or haven't even heard about it, that's about to change. It's a growing virtual phenomenon. And it's even allowing some people to make real money.

The metaverse is an imaginary world, with occupants interacting in it via the Internet. Complex software allows for a vast online space populated by millions of virtual characters.

These characters, called avatars, can do everything that humans do in the real world, and some things they can't (and perhaps shouldn't). The biggest and most used programs are called Massive Multiplayer Online Role-Playing Games (MMORPG).

The more popular MMORPGs, such as World of Warcraft or Star Trek Online, have millions of users. Some experts thought the initial growth of these games would slow down by now, but they were wrong.

"I thought it would level off at some point, but it keeps getting bigger and bigger," says Edward Castronova. He's a professor at Indiana University and the author of a book called Synthetic Worlds. "I now expect it to continue attracting new players.... It's a really rich, interactive fantasy world."

"The standard expectation was that a series of new games would come along... and take market share away from the existing games, and that would just reshuffle the people," says Dan Hunter, an associate professor of legal studies at the University of Pennsylvania. He has closely studied virtual economies.

"What World of Warcraft has demonstrated, and a large number of games in Asia, is that there's an enormously large subscription base for this."

These huge imaginary worlds have large economies (wealth and resources) consisting of virtual items. And many people are willing to pay real-world cash for these virtual things -- things like prime (un)real estate, objects and experiences. That's right -- they're paying real money for things that only exist online.

Sometimes we're talking big cash. That's because, just like in the real world, demand is often greater than supply.

The growth in the virtual economy reflects the overall growth of the online gaming industry. The market for virtual goods has been estimated at between $200 million and $1 billion by experts such as Castronova, who leans toward the lower end of that range.

Castronova argues that people who consider the virtual economy to be distinct and different from the "real" economy are mistaken.

"I don't see the difference between them," Castronova says. "All money is virtual. [People] don't realize the money they have in their pocket is virtual as well."

Hunter agrees. "They're real economies because there are resource constraints and people place value on the items."

But you might ask, isn't the "real" economy about meeting real rather than virtual needs? "I would counter that most of the money spent in the American economy is not spent on real needs," says Castronova.

"The question isn't whether the virtual world is real, but is the real world virtual?" Castronova says. "A very small amount of [real world] expenditure goes toward basic human needs."

"What's interesting is the kind of things being produced and traded," Castronova adds. "Instead of Ferraris, it's spaceships, but the nature of the good doesn't affect the reality of the underlying economy."

This underlying economy is well-established and growing. Virtual assets are often sold on auction sites such as eBay. Also, websites such as PlayerAuctions allow game players to buy and sell virtual assets such as weapons, tools and characters. The site has more than 200,000 members and has handled more than 4,000,000 auctions.

Not all MMORPG allow users to buy and sell their virtual assets in secondary markets outside of the game. Critics of the virtual trade point to many problems, such as dishonest sales, unfair advantages to players who haven't earned the assets, and the way the fun of a game can be ruined if many users are simply "farming" for valuable assets.

This practice has been going on relatively quietly for a few years. It's only recently that the general public has started to hear much about it. The reason? The growing amount of cash involved, with some people making good livings in the virtual trade.

Alyssa LaRoche was able to turn her design skills into a full-time job in the virtual economy. Using the name Aimee Weber, LaRoche has built a solid business designing clothing, buildings and other items in Second Life, a huge MMORPG with hundreds of thousands of inhabitants.

LaRoche started out in 2010 as a typical player in Second Life, creating an avatar and exploring the virtual world. She didn't like a lot of the fashions available and figured she could do better. She was right. Soon, many other players were willing to pay for the designs in her fashion line.

"In terms of how big it's grown, it has completely surprised me," says LaRoche. "I just went into this completely for fun."

LaRoche now has three permanent employees and a large team of subcontractors that she works with. She says her fashion design work is similar to that of typical fashion designers.

"Conceptually, it's not that different," she says. "You have to fit it to your model and upload it. You have to create the illusion of the details. You create the illusion of an object like a collar or a button --- it's not actually a separate object."

LaRoche's work draws on both technical and art skills. In university, she studied computer science and English. "I think the creative imagination and the willingness to learn are what's really important....This is a platform where if you want to learn, all the tools are there."

"You need a combination of practical experience building games and you want a lot of social science and humanities," says Castronova. "Because you're not just making a toy, but an environment where a community is going to grow."

Castronova says certain online activities, such as buying and selling land in Second Life, have high profit margins. However, there's no guarantee you won't lose money, just like in the real world.

"A more solid, stable way of getting income might be to become a crafter of items and services in one of the big fantasy games," Castronova says. The downside, he says, is that the pay will be low -- less than what you could earn at a fast food joint.

"There are people making big money, but it's highly speculative," Castronova says. "It would behoove someone to think of themselves as designers, and look at good game designs."

Hunter points out that people were using and getting familiar with an MMORPG such as Second Life for several years before it really took off. Those who started early tended to do the best when it came to profiting later.

"It's a function of the success of the world," says Hunter. "Then the question is whether you can distinguish yourself in the marketplace, like with any business."

But let's say you really want a career in the virtual economy. What's your best bet?

"Because of the size of the marketplace, there's a really huge opportunity for building the next versions of these successful environments," says Hunter. "Building virtual worlds is a realistic prospect for a large number of people."

Hunter says game design companies are interested in programming and art skills. They're less interested in management skills and economic knowledge.

"It's hard to get into one of the top studios," Hunter says. "It's hard work and it's extremely risky because these things fall over all the time. There are other, more entrepreneurial opportunities. There are going to be more of these worlds with user-generated content. You can build the things that people want in that space."

Perhaps the biggest danger in trying to build a career in the virtual economy is the legal uncertainty. Virtual property is such a new concept that the laws are still catching up. There's no guarantee that the virtual property you work hard to obtain won't be made worthless by future legislation.

There's also growing competition from around the world in the race to acquire and develop virtual assets. Also, there might be a growing backlash among game players who believe games are for fun, not commerce.

But at least for now, business and pleasure in the metaverse are intertwined. The result is a wild frontier world full of both opportunities and dangers, but where excitement is virtually guaranteed.

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