News, research and discussion on virtual goods, currencies and economies globally.

Sweden moves to tax in-game transactions

Swedish Tax Agency About a year ago, there was a story ricocheting on some news sites about Sweden planning to impose taxes on virtual property sales. It turned out to be a bit of a dud: all they wanted to tax was real-money income, not in-game transactions. Real income, regardless of its source, is supposed to be reported to the taxman anyway. Swedish WoW players would not have to include epic drops on their tax statements, nor would Second Life entrepreneurs be required to report their profits — unless they convert the virtual income to real money, I deduced.

However, nine days ago the Swedish Tax Agency posted a statement/ruling on their website, titled "Virtual worlds — value-added tax" ("Virtuella världar — mervärdesskatt"). In it, the agency states that in-game transactions may incur liability for both value-added tax as well as income tax under Swedish law. Below is my translation of the summary part of the statement interspersed with some analysis.  Read more

Macroeconomic Indicators in a Virtual Economy

French economist François Quesnay (1694-1774)My virtual economy -related Master's thesis (University of Helsinki, economics), titled Macroeconomic Indicators in a Virtual Economy, is now publicly available. As the name of the thesis implies, I ended up concentrating on the macro approach to virtual economies. I developed a measure of aggregate production for a virtual economy, and identified a suitable measure of inflation. A previous blog entry briefly described the idea behind the aggregate production measure, which I call the Gross User Product (GUP). To add some flesh to theory, the thesis also includes measures of GUP and inflation in EVE Online. I'll probably be blogging on some of the findings in more detail later on.

The abstract and the whole thesis are available in the bibliography.  Read more

Virtual worlds don't exist

A world I'm writing this at Breaking the Magic Circle, a seminar at the Game Research Lab at University of Tampere, Finland. Overall, it's been an interesting seminar. As is typical of game studies gatherings, we've heard a mixed bag of presentations on diverse topics and from distinct angles. This can be both stimulating and frustrating at the same time.

My own contribution was a working paper titled Virtual Worlds Don't Exist. I got some useful feedback, for which I am thankful. Feel free to drop your own feedback either as a comment on this blog or via email. I'll paste the abstract below. Updated: you can find my presentation slides here.  Read more

Publishing opportunities

Savvas Papagiannidis of Newcastle University would like to remind us that the deadline for the virtual worlds special issue of Electronic Commerce Research, a Springer journal, has been extended to 31 May 2008. The special issue call can be found here. I blogged about the original call here.  Read more

Virtual law bibliography

Greg Lastowka at Terra Nova has put together a wonderful bibliography on virtual world related articles in law journals. Several of them deal with virtual property and virtual economies.

Gross User Product of a virtual economy

Artist View of Pulsar Planet System by NASA/JPLIn the latest EVE Online Quarterly Economic Newsletter, published yesterday, there is a section that is based on my work done at the Helsinki Institute for Information Technology (HIIT). The section in question is the one called Gross User Product, and is the first outcome of the research cooperation between HIIT and CCP that was announced earlier this year.

Gross User Product, or GUP, is a concept upon which I arrived when transferring the concepts of the UN System of National Accounts (SNA) to a virtual economy. SNA is a standard guideline according to which national accounting is performed for real-world national economies. In the very short, SNA tells the statisticians how to measure the national accounting aggregates, such as GDP.

GDP, GUP – what’s the story here? That’s what I try to explain in this blog article.  Read more

MMORPGs and the item payment revenue model at DiGRA 2007

DiGRA Japan logo Digital Game Research Association DiGRA is the main global organisation for ludologists and other scholars studying digital games. Last September I attended the DiGRA 2007: Situated Play conference in Tokyo. It was a surprisingly large and well-organised conference, and featured over a hundred paper presentations on a very diverse set of topics, including some related to virtual economies.  Read more

HIIT starts new research project in collaboration with CCP

HIIT I am happy to announce that we are starting a new virtual economy research project at HIIT. The project has an excellent lineup of collaborators from the industry: Nokia Research Center, Finnish digital media company SWelcom, casual game community Playdo, and MMORPG company CCP Games. Below is the press release.  Read more

Arden and experimentation in virtual worlds

Wikimedia CommonsThere are two main types of social science experiments that can, in principle, be conducted in virtual worlds. First, with access to necessary logs of an existing virtual world, one could conduct natural experiments, observing e.g. the effects of the introduction of a new feature. Second, with the necessary influence in some virtual world, one could set up and conduct controlled experiments, that is, tweak some property or rule of the world and observe how it affects the behavior of the participants.

The Arden project, headed by Edward Castronova, has the ambitious goal of building a virtual world for the purpose of conducting the latter kind of experiments. A version of Arden is now available for testing and downloading.  Read more

Dutch teen arrested for Habbo burglary

According to news reports, Dutch police have arrested an unnamed 17-year-old on suspicion of having stolen 4 000 € worth of virtual furniture from other users in Habbo Hotel. The teenager is said to have hacked into others' accounts and transferred the items into his own account.

This kind of incidents are not uncommon in various virtual worlds and other services where valuable virtual property exists. But what caught my attention was the somewhat large alleged value of the loot as well as the fact that the suspect is said to be charged with "burglary" in addition to the hacking crime. Burglary, at least in English common law, means breaking into a building with the intent to steal.  Read more