Pay-to-trade

With increasing frequency, developers are restricting what can be traded inside of new games. This is especially true given the rate at which social and mobile games  are being released, but it is a trend that has crept into the more hardcore online games, as well. Many games now make it impossible, or nearly impossible, to engage in any trade whatsoever. Where trade is allowed, the rate at which new, tradeable items are introduced seems also to have diminished.

I suppose this is a reaction of developers (or publishers) to the potential cost of trying to manage a complex system like a virtual economy. It seems to be a reasonable, if risk-averse, business decision: make all your players into a bunch of Robinson Crusoes, and then you don't have to deal with the consequences of economic problems like MUDflation, duping bugs/exploits, and so forth  You also make yourself the monopoly supplier of every good in the game, which seems good for revenue. But virtual economies are more than just headache-inducing game systems; they also generate valuable data about a game and about what players like and dislike about it. Just  as important, developers might be underestimating players' willingness to incur a lot of costs in order to realize the gains from trade. As a consequence, they have shut off their access to a valuable revenue stream.

Let me say first that I get why trade is an uncommon or restricted mechanic in multiplayer and social games. Allowing players to trade means that the company has to manage one or more currencies in a market economy - no easy task in the 200 year history of modern economies, much less in the 15 year history of large online games. There's customer service costs because you have to deal with people trolling or defrauding one another. Then there are the revenue losses. Payments diminish when you allow trade because players can exchange surplus items with one another. A player doesn't need to buy from the company if she can get what she wants from other players.

What do you lose by having no trade? First, you lose information. Prices determined on a market are signals about what is dear to players and what is passé or boring. Prices can help us understand the extent to which a person is killing Goombas because she enjoys it versus the extent to which she's killing them just so she can use the loot to buy more wood for her house. If you have no market, only expensive surveys and speculative data-mining can tell you which is which. Purchasing behavior also allows you to create players segments. Its hard to judge a player's patience, for example, without examining how sensitive they are to the costs of their decisions. A price can be tracked and considered.... or not. You can watch a player's purchase and know that she had access to simple, useful information, and you can know whether or not she made a good decision. That information can help to drive conversion strategies.

The second thing you lose with zero-trade is an important potential source of revenue. Trade itself - the ability to do it - is a treasured commodity. Economic development, at its heart, is a story of how societies developed methods to make trade easier. Stop and consider how complex it would be to execute a trade through time, over distance, or with multiple people, without the following institutions: A reliable currency, attorneys to draw up contracts, courts to enforce contracts, police forces to threaten punishment in case of theft or damage to property, a system of fleshed-out property rights, a postal system, a reliable transportation system, and so on. These systems and institutions are valuable to us not because they directly, materially improve our lives, but because they reduce the costs we must incur in order to materially improve our lives. They reduce transaction costs.

In the real world, we pay huge sums in the form of taxes and fees to keep transaction costs low. So here's my question for developers: How much would your players pay you in exchange for the ability to trade? A $10 flat fee? $5 a month?  $0.10 per trade ($7.50 for 75 trades)? $1.00 per trading partner? And what about all those players who would never pay for a virtual item: Do you think they would never pay to trade with their fellow players?

To anticipate and respond to some objections to "pay-to-trade":

Transaction costs, cleverly employed, are vital to providing players with interesting decisions. But when they are effctively infinite - that is, when no though has been put into them at all - they may provide valuable sources of revenue. Simply prohibiting economic play is not the most profitable solution to an unavoidable multiplayer design question: How much should be players be able to trade?

(Cross posted from www.motivateplay.com)