How To Detect Deception, Using Second Life In The Classroom And Sister Wikis (Link List)

Image by a4gpa via Flickr

Just back from the high desert and busy catching up. Here are a few links that caught my eye:

• How To Detect Deception. The Confidential Resource points to this series of posts (Part 1, Part 2) on detecting deception in interviews over at The Keyboard Detective. The posts contain some good material and a fair number of links to other interesting stuff.
• Second Life In Education. I have often blogged about using Wikispaces for analytic projects but Wikispaces is a platform to over a half a million wikis of various types. One of the more interesting ones I recently ran across (via New World Notes) is a wiki on using Second Life In Education. Lots of cool projects you can do/places you can go here with students.
• 8 Sister Wikis From Wikipedia. The always helpful MakeUseOf.com has put together a list of "sister" projects to Wikipedia that everyone should know about. My favorites are the Wikimedia Commons, because it links to a number of free or public domain graphics, and Wikiversity, because it often has useful tutorials on a variety of topics.
  

Beyond Gold Farming: The Economics Of Virtual Worlds (Lecture Notes)

Introduction
The Speaker And The Setting

(Note: The narrative below is based on the lecture given by Lenny Raymond on the economies and economics of MMOs and virtual worlds (See the links above for more on the back-story). I am using Lenny's outline and my own notes taken at the time of the lecture, augmented with comments and notes from the audience. In short, the clever and insightful stuff is Lenny's and the mistakes are all mine...)

Massively Multiplayer Online Games (MMOs) In General

All MMOs share a few key characteristics. They are all online, they are all multiplayer and the players all share the same "world". More importantly, they are all "persistent" in that the world continues to exist and players continue to interact even when a player leaves. Moreover, changes that the player made while in the game will persist, to one degree or another, until the next time the player logs-in.

Beyond these bare minimums, there are a number of variations. MMO's can be text based, 2D or 3D. Likewise, they can be free, subscription based or funded through the sale of in-game items. One of the technical aspects of these games that has significant implications for the nature of the economy is whether they are "unified" or "sharded". Unified MMOs are run from a single server while sharded MMOs replicate the same world to run on multiple servers.

• For example, Eve Online’s primary gameplay is economic, and it is insanely deep. This works in very large part because their markets are not only deep but also liquid and transparent, which, in turn, is because all of their several hundred thousand players are in the same world space.

• World of Warcraft's (WoW's) economies don't work as well because there are only 5,000 or so people on any shard, so the market just isn't big enough to have a truly robust economy. This is OK for WoW as the economic aspect of it is incidental to the gameplay for most players and the market imperfections might even make it more fun for some players (for a more detailed discussion of unified vs. sharded MMO's see "Thoughts On A Sharded Existence").

Historically, modern MMOs trace their existence back to games like the 1970's Multi-User Dungeons (MUD), which were primarily text-based and to the early 3D game, Meridian 59 (1995). Everquest, released in 1999, surprised people with its popularity and encouraged other developers to pursue similar projects.

MMOs, The Business

Today there are about 200 MMOs in existence and another 200 in production (Editor's Note: I have written about the growth of virtual worlds before here).

Annual revenues for MMO's are approximately 2.5 billion US dollars (Editor's Note: Over one billion of this goes to World Of Warcraft alone) and have been growing at about 25% per year. There are approximately 30 million players in the major, western subscription model MMOs alone.

(Editor's Note: The actual numbers are very difficult to get at. The fundamental problem is definitional. For example, Second Life is massive and online but there are not really “players” there as it is not considered a game. Should it count?

Do virtual worlds such as Neopets and Habbo Hotel, both aimed at the 10-13 age group, both with strong gaming themes embedded in them and both, according to Kzero, having more than 30 million users apiece count as well?

Finally, what counts as a player/subscriber? Someone who takes a trial or free account, sets up a character, plays the game once and never goes back? Someone who pays a subscription but only occasionally plays the game? A single player who has multiple accounts? For more on this debate see Measuring MMOs.)

In-Game Economies

It is not really necessary for an MMO or virtual world to have an economy at all. Economies in MMOs exist to provide entertainment, not to organize productive activity – the goods and services produced/distributed/consumed in an MMO could be created by the game operators, so activity doesn’t need to be organized along economic lines. Therefore, the sole reason the economies exist is because they are fun. This is very important in that much real world economic activity is not fun at all, and MMO economies therefore need to diverge from real world economic principles in important ways.

Economies are part of the metagame, or the more complex and persistent, generally social, overlay of derived gameplay based on atomic game mechanics. For example, a chess match is an exercise of an atomic game mechanic between two players, but a tournament and the international ranking system are examples of the chess metagame.

• This seems to mean two things. First, economies are superstructural in that they provide a key series of motivations and other aspects of the game but the mechanics of these interactions are often wholly or partially opaque to the player. Secondly, the economics of the game are the easiest part of the game to transfer to the real world. The virtual currency, QQ Coins, for example, were, until recently, usable as cash in certain parts of China.

Economies not only help provide goals for players (by giving them a way in which they can acquire items that help them play the game at higher levels) but also allow for customization. Being able to trade items for in-game currency and then use that currency to purchase new items is an important part of most games. Likewise, in-game economies provide an incentive to raise skills in certain areas for many of the same reasons.

In-game economies also provide another way of facilitating social interaction. Players have to interact to find the source of a desired in-game resource or service and have to barter or even auction items in order to get the most for items they wish to sell (Note: I have run into a number of players who consider the "free market" aspects of these games to be the most interesting part of them).

Economies also help the game designers effectively ration highly desirable items. Without some way to limit the production and distribution of the game's most sought-after items, pretty soon every player would have the item, negating its value. Economies also help measure player achievement and provide feedback to the designers about which aspects of the game are "worth it" or not.

Economies also allow the game designers to "pay" the players to be "content" for other players. If a player creates an item in a game and then sells it to another player, both players have gotten something from the experience. The designer, in turn, had to create a system to facilitate the creation and sale of the item – no small task – but once done, it is done for good. Players create the content from that point forward.

Finally, economies allow for behavior tuning. For example, creating economic incentives can help create an environment such that higher level characters will choose to move from lower level areas to higher level areas. Likewise, economic disincentives can limit the amount of "subversive" activity in which players engage.

MMO Economies In Action

(Note: For this section of the lecture, Lenny used examples from World Of Warcraft, where the lecture was being held. All of the screen shots below are taken from that game or WoW inspired websites. some of the images were generated during the event and some taken afterwards or from sites online.)

Most MMOs have some sort of automated "vendor" system where players can buy consumables (such as food or ammunition) or other items and can sell excess items for the in-game currency. The screen shot below, from Gameguidesonline.com, shows a typical vendor selling a variety of items at a number of different prices in WoW. Depending on the game, these prices may be standard or vary from vendor to vendor (creating the opportunity for the player to engage in trade). These transactions are typically between the player and the game.

Player to player transactions are often also allowed, however, and typically take place in a special place such as the Auction House in WoW. The screen shot below shows the market in Greater Healing Potions complete with the availability and price of each item. Players can either bid for the item (auction style) or simply pay the buyout price (if any). Each item is treated as a commodity (no Greater Healing Potion is any different than any other Greater Healing Potion) so the market is very sensitive to price and is a good example of traditional economic notions of supply and demand.



Hidden by its simplicity, however, are a number of ways to take advantage of this largely unregulated market to a player's advantage. One of the easiest ways is to "corner the market" in a particularly desirable item for a period of time, thereby creating a pent-up demand for the item, and then putting your supply of the item back on the market at greatly inflated prices.

Another common tactic is to search for items that are selling well below their historical norms, buy them and then re-list them at higher prices in much a same way a value investor looks for underpriced stocks. Historical pricing data is available for WoW through a surprisingly large number of sources including WoWEcon, a site that contains historical data on all items across multiple servers. The size and scope of the market also allows players to engage in market timing experiments, buying products at a time when they are inexpensive and then releasing them back into the market when the going price is higher.

This historical pricing data can also reveal evidence of market manipulation. The WoWEcon chart below, for example, shows the sale of a unit of "Refreshing Spring Water", a very inexpensive item available through multiple vendors, for more than 1000 gold pieces. Such a transaction likely has an out of game component to it as well.



Finally, WoW, and many other MMOs have in-game email systems and "banks" where players or Guilds can store goods and money. These services allow players to communicate and to transfer items and in-game currency to each other (and when a single person has multiple characters in the game, to themselves as well) efficiently. The Guild Bank, within large, sophisticated guilds in WoW, allows for players to specialize in certain skills to the benefit of the other players in the Guild, for example.

The Dark Side

As mentioned in an earlier post, most people think of gold farming, or the practice of using individuals in poor or developing countries to harvest in-game currency for sale, for real money, to wealthier players, when they think of the "dark side" of MMOs. Currently, it is estimated that there are 100,000 people making a living selling in game currencies for real-world money. Worth approximately 1.5 billion US dollars, the business is concentrated in Asia where there is both a good telecoms infrastructure and low labor costs.

In some cases, such as with the Vanuatu-based IGE and WoW, this activity is considered a violation of the EULA, and can, if discovered, get an account banned. In other cases, such as with Live Gamer, the trading activity is not only approved but encouraged by the game designers.

While these economies are small in comparison to real-world economies, there has been at least one documented case of large scale money laundering and it is likely that other crimes, such as tax evasion, are taking place on a modest scale within the confines of at least some MMOs today. As a result, regulators are beginning to take an interest in these transactions. Knee-jerk solutions, such as banning all such transactions, are likely to simply drive the game companies to domicile themselves in more user-friendly jurisdictions.

The Future

Several trends seem to be playing themselves out with respect to economies in MMOs and virtual worlds. The first suggests that there will be a time in the not too distant future when an MMO or virtual world currency will be seen (and taxed and regulated) as a real currency. Right now, the scale of these currencies is not large enough to be of real interest to regulators or tax officials. This is all beginning to change.

Ultima Online, an early popular MMO, peaked with a subscriber base of about 250,000; Everquest, the next "big thing" in MMOs, peaked with a base of about 450,000. WoW is the current front runner and boasts 11.5 million subscribers (Editor's Note: More than the entire populations of Wyoming, Vermont, North Dakota, Alaska, South Dakota, Delaware, Montana, Rhode Island, Hawaii, New Hampshire, Maine and Idaho combined) and does not yet appear to have peaked. These trends are likely to continue given the current popularity of virtual worlds and MMOs with today's pre-teens. It becomes fairly easy to imagine a virtual world with 100 million or more subscribers in the next 5-10 years and a virtual economy that is almost impossible to ignore.

More importantly, the first jurisdiction to come up with a coherent set of rules and regulations regarding virtual currencies is likely to become the domicile for many such currencies. Such a system would not necessarily have to be tilted unduly in favor of the game operator. Rather, it is likely that such a system would have to balance its recognition of the peculiarities of virtual currencies with the need for these same currencies to be trusted beyond the narrow confines of the MMO or virtual world.

(Again, thanks to Lenny for giving his time so generously and to all of the students who helped put this together).
Tomorrow -- Lessons Learned

Beyond Gold Farming: The Economics Of Virtual Worlds (The Speaker And The Setting)

Part 1 -- Introduction

The Speaker

As I mentioned in the last post, finding someone who could speak intelligently yet engagingly on the subject of the economics of virtual worlds was surprisingly easy -- for me. I had, serendipitously, met Lenny Raymond while in California last summer and he was the perfect person for the task.

Lenny is the starter, strategist and fixer for V0lv0x Associates, a "band of experienced high tech marketing, engineering, strategy, and management professionals" based, of course, in San Francisco. Lenny's bio is pretty impressive:

• "Mr. Raymond was previously Entrepreneur in Residence at Alsop Louie Partners, an early stage venture capital firm, where he helped start what is going to be the next big high tech toy company. "
  
• "Previously Lenny was co-founder & COO of FingerTwitch, Inc., the leading provider of deployment technology and services for mobile game publishers & developers; FingerTwitch was acquired by Hands-On Mobile, Inc., the world’s largest mobile application publisher, one year after its inception. "
  
• "Before FingerTwitch, Mr. Raymond was founding CEO of Xigo, Inc., a venture-funded provider of real-time unstructured data analytical software and services for the brokerage industry. "
  
• "Earlier in his career, Mr. Raymond was general manager of Wizards of the Coast (Hasbro)’s online and electronic media business unit. "
  
• "Lenny has also worked at Mercer Management Consulting, in Apple’s Advanced Product Group, and in global corporate finance at Citibank."
• "Mr. Raymond’s education includes a BA in Economics from the University of Pennsylvania and an M.B.A. from The Wharton School."

More importantly, though, was his combination of a deep understanding of virtual worlds and their economies and his ability to translate that knowledge into something comprehensible for an audience of relative neophytes. Oh, and the fact that he has enormous "gamer cred" (from being a long-time player of the games themselves) didn't hurt.

The Setting

Getting an excellent speaker on an interesting topic wasn't difficult enough, though. We needed to make it more complicated. Our budget ($0) did not permit us to fly Lenny from SF to Erie so we decided to hold the lecture about virtual worlds IN a virtual world.

This is not the first time this has happened, obviously (there are lectures and presentations in Second Life all the time, for example), but it was the first time we had done it and none of us were exactly sure how to proceed.

First, we decided to hold the lecture in the online game, World Of Warcraft (WoW). We were all more familiar with WoW than with Second Life and we all knew that the economy is a vibrant and integral part of WoW (potentially, we thought, providing Lenny with the opportunity to make some of his points directly. Boy, were we right about that...).

WoW also has very good in-game communications. There is a text chat function with multiple channels (including private and semi-private channels) and the possibility of in-game voice chat as well. All of us (including Lenny) had experience with these communications modes but none of us had ever tried to pull off a lecture in WoW before. A couple of students volunteered to figure out the details and, before I knew it, we had formed a "Guild" and had developed a comms plan (Thanks Henry, Devin, Kirk and all the other Initiative members who helped make it happen!).

• Note: For the national security types who are concerned about the implications of these robust communications capabilities, it should be comforting to know that Blizzard, who makes WoW, has the ability to monitor all of these methods of communication.

The concept of a Guild is a partiuclarly interesting one within WoW. Nine players have to "sign a charter" in the game to form a guild. There are many reasons to form a guild and they often form around groups of players who have a common interest outside the game (the MCIIS Guild -- see picture below of a "meeting" -- , for example, is an extremely small guild currently comprised mostly of intel studies students or their friends and family members) though that is certainly not always the case.


Some Guilds have 100's of members or have been in existence since the game began. In certain circles, getting into the "right" guild is seen as a good career move and WoW has been called "the new golf" by some (though others would clearly dispute this).

For our purposes, forming a Guild gave us two advantages. The first was Guild Chat (a private means of communication among Guild members) and the second was the potential to access the Guild "Bank", clearly part of the economic infrastructure of the game.

We also decided that we wanted non-players to be able to view the lecture as well. To do this, we loaded up the game on one of the computers in one of our classrooms and broadcast it on the big screen through a projector. In the end, about half of the 25 person audience was in the game and the other half was in the classroom watching the action and listening through speakers.

We had the inevitable technical difficulties -- Blizzard, which makes WoW, had released a massive update/patch to the system a few days before the event -- but things worked out well. Lenny gave an excellent presentation (more on that in the New Year...) and we all learned something from both constructing and particpating in the experience.

As a side note (for the educators in the audience), I was and continue to be very impressed with the learning potential of virtual worlds and WoW in particular. It is a fully realized virtual world, massive in its geographic size and scope. It is a stable, almost always available platform with a wide variety of useful communication/coordination/collaboration tools. You cannot do anything you want, but the variety of things you CAN do gives the world a number of possibilities for interactive learning.

Yes, yes, I know it is a "game" and its intent is to provide entertainment (and make money for Blizzard), not to serve as a platform for a learning experience. It has the tools necessary, however, for a creative educator to take advantage of the high interest, immersive environment the game provides. Whether we build these experiences in games like WoW or simply use the lessons learned from these type of games in the next generation of curricula, my initial impression is that there is something here worth exploring further.

After New Years: Lecture Notes!

Beyond Gold Farming: The Economics Of Virtual Worlds (Introduction)

(Several months (!) ago, we had the good fortune here at Mercyhurst to have a truly gifted speaker give a great lecture about the economies and economics of virtual worlds in a genuinely unique manner. I am just now getting around to writing about it...)

First, A Little History

Beginning with last year's student project into possible Islamic extremist use of Second Life and YouTube, I have begun to become increasingly interested in how virtual worlds and augmented reality will impact our notions of national security -- what are the threats and opportunities (if any) presented by these new technologies?

Over the summer I had the occasion to further explore this topic with a large, diverse and fascinating group of people from a variety of different disciplines. I came away from the experience convinced that this was not only a topic worth exploring but also one that would likely facilitate learning. Many of my students, after all, were already into this stuff -- a trend that I think is highly likely to continue. Figuring out how best to teach (and what can one usefully learn) in these high interest environments seemed to make some sense.

With this in mind, we formed a small, all volunteer research group (AKA "a bunch of people talking about the same thing (more or less)") to explore the possibilities of these new technologies. We gave it a grand name (the Mercyhurst Virtual Worlds Initiative) and set about trying to figure out what that might mean.

We decided to focus on two virtual environments to begin with -- one open and one closed. For the open environment we chose Second Life. It is arguably the best-known virtual world (though far from the largest) and its low cost of entry (free) and well-developed environment made it particularly attractive.

For the closed environment we chose the massively multiplayer online role-playing game, World Of Warcraft or "WoW" as it is often called. We chose WoW becaue it IS the largest such game (with 11.5 million players and growing) and because a number of the Intiative's members were already very familiar with the game and its mechanics.

• The students also established a wiki for the Intiative. It serves mostly as a way to organize events, collectively compile notes and other info of interest to the group. It is not designed to be a Wikipedia-like product or the basis for a finished analytic report. It is really just a "place for our stuff" (You can take a look at it if you like but the organization is fairly idiosyncratic and its utility to anyone outside the Initiative is questionable...).

Picking A Topic

Economics is one of the places where the virtual is already blurring with the real. Real currencies today have a strong virtual element to them. Most transactions in dollars or euros or yen are little more, in reality, than the exchange of a torrent of 1's and 0's across the internet.

Likewise, many virtual currencies, such as Linden Dollars or WoW Gold, are actually or effectively exchangable for harder currencies. The size of these virtual economies is still fairly modest but the possibilities for large-scale money laundering are there and these virtual currencies are attracting the attention of regulators in places like China and Iceland.

Despite these pressing and very real issues involving virtual economies, one aspect -- so-called "gold farming", or the practice of using inexpensive labor in under-developed countries to harvest virtual currencies for sale to players in wealthier countries for real money -- has, to a certain extent, captured the public imagination and dominated the discussion until fairly recently (See the video below for an introduction to gold farming).

Fortunately, one of the people I happened to meet over the summer was able to address, in a sophisticated yet accessible manner, not only the issue of gold farming but also the broader issues tied up with virtual economies. It was a simple thing to determine that economics should be the Intiative's first topic and that getting this guy as a speaker should be our first project. Simple in concept, that is...

Tomorrow: The Speaker And The Setting

Mercyhurst Report On Second Life Covered By Reuters (Secondlife.Reuters.com)

The Second Life Bureau of the Reuters News Agency got wind of the strategic intelligence project done by Mercyhurst graduate students on the prospects for terrorist use of Second Life and filed a report on it today (full text of Reuters piece available here).

Eric Reuters (nom de plume for Eric Krangel, a New York based technology journalist) did a good job, I thought, of discussing the history and level of concern over the possibility of terrorist use of Second Life for training, communications or money laundering. Well worth reading for the background as well as for the props to our grad students.

Related Posts:
Jihadist Use of YouTube, Second Life Over Next 12-24 Months

Jihadist Use Of YouTube, Second Life Over Next 12-24 Months: An Estimate (Original Research)

A group of five students in my winter Strategic Intelligence class were asked to take a look at "the nature, volume, and likely current use of YouTube, other hosted video sites and Second Life by jihadist networks and individuals, and what will the likely future use of these mediums be over the next 12-24 months?" They started the project in early December, 2007 and finished it in mid-February, 2008.

With Congress' and the intelligence community's growing interest in the possibilities for terrorist use of virtual worlds and other Web 2.0 platforms, I thought these student's findings would be more than a little interesting to most readers of this blog. Since they used a wiki as the basic tool for collecting, analyzing and producing their intelligence report, it is pretty easy for me to share the findings (and point you to the key parts of the report).

The main entry page for their project is here (We used our old friends at Wikispaces again. As usual, the students were glad for the low barriers to entry at the beginning but were chafing a bit at the end. To get the look and feel they wanted, for example, they had to borrow some html code from another team and make it their own).

From the main page it is pretty easy to navigate to all of the parts of the wiki. You will likely want to start with the Key Findings which specifically addresses all of the issues in the requirement in the first paragraph above. In general, however, they found:

• "YouTube: The primary current and future nature of jihadist postings on YouTube and other hosted video sites over the next 12-24 months is likely propaganda and recruitment."
• "Western Europe will likely be the main region for jihadist use of YouTube due to readily available broadband internet access, a large population of disaffected Muslims, and the location of their target audience, who are young, Western European Muslims."
  
• "YouTube will likely remain the top video hosting website for jihadist videos over the next 12-24 months..."
  
• "Law enforcement will unlikely be able to keep pace with the number of jihadist postings over the next 12-24 months."

• "Second Life: Jihadists are likely currently very minimally using Second Life (SL)...
  
• "...over the next 12-24 months jihadists will likely begin to explore the ability and utility of the virtual world's applications for money laundering, communication, and recruitment through propaganda...Use will likely be limited to merely exploring due to currently existing alternatives..."
  
• "The most effective countermeasures will likely rely on a close, working relationship with Linden Labs due to the systems in place to monitor financial transactions, avatar activity, and communication."

Beyond the key findings, there is an overall estimate on YouTube and an overall estimate regarding Second Life. The subordinate estimates might also be interesting to readers looking for more detail. Beyond the estimates, there are a number of resources pages, including a video library and a methods and process section. A couple of the more interesting pages include the Keyword Search Results where one team member cataloged the results of her searches using specific keywords (in English and Arabic) in a number of different video hosting sites. Beyond the video library, there is also a video database as well. I also like the presentation of the data in the Second Life User Statistics section (the data itself, of course, comes largely from Linden Labs). As with all of our wiki -based products, we try to source all of our facts, make liberal use of internal hyperlinks and add relevant still graphics and videos to the various reports.

As with other strategic intelligence projects, the primary goal is for the student-analysts in the class to learn what it takes to prepare and present strategic level intelligence to real world decisionmakers. The students do these projects on their own (with a little stick and rudder guidance from me) trying to use, in the process, all of the skills and knowledge they have acquired up to this point in their education. They have no additional resources (monetary or otherwise) and use only open sources. All of the projects last ten weeks from start to finish and none of them are perfect. Expert users of both of these services, for example, will undoubtedly find places where the analysis could have been tighter (Most of the time the students are climbing at least two learning curves -- the "what is strategic intelligence and how do you do it" curve combined, in this case, with the "I really need to know a lot more about YouTube and Second Life if I am going to analyze it" curve). As with all college students, this is just one of the classes and commitments they have to keep up with.

With these caveats in mind, I still think their product, particularly at the "higher" levels of analysis, adds value to the discussion on this topic. The resource pages, spreadsheets and other custom products made for this project are worth the price of admission all by themselves. It is also another good example of how a wiki might be used to help the analytic process. Beyond the collection and process value of the product, I think they have managed to avoid all of the hyperbole surrounding this issue and have offered a sober, nuanced and fact-based estimate regarding the potential for use (and misuse) of these two web-based tools. I thought it was worth sharing.

Related Posts:
A Wiki Is Like A Room...And Other Lessons Learned
Non-State Actors In Sub-Saharan Africa: Likely Current And Future Roles