Unreal Estate

November 18, 2010 4:28 AM

Man sells virtual space station for $635,000 in Entropia. Previously, same man buys virtual spacestation for $100.000.
posted by meech (49 comments total)

Also previously: man is employed by Entropia.
posted by dudekiller at 4:40 AM on November 18, 2010

Jacobs does seem to have real buyers (though if Yan Panasjuk also turns out to be an Entropia Universe employee then this post should fall on its sword).
posted by meech at 4:50 AM on November 18, 2010

Who would devote so much time and investment into something that doesn’t exist in the real world?

I trust we'll eventually reach a point where journalists no longer feel the need to write "lol wacky internet" stories about financial transactions involving virtual property. People pay Microsoft billions of dollars for products made up of the same ones and zeroes, and nobody asks why they're buying something "that doesn’t exist in the real world." And for that matter, Forbes Magazine is filled with ads for luxury products whose price tags are based on entirely vaporous snob appeal, far more than the cost of their materials. People pay money for things they value. Not everything they value is tangible. Why am I explaining economics to Forbes?
posted by Horace Rumpole at 5:02 AM on November 18, 2010 [17 favorites]

Hey does this mean the housing market is picking up again? .....oh wait..
posted by samsara at 5:07 AM on November 18, 2010

Ok, sounds to me he turned around a killer investment - that's what, 735% ROI? Impressive even if you think crap like Farmville & etc are rotting brains.
posted by Old'n'Busted at 5:11 AM on November 18, 2010

He has his own theme song.

I'm curious about this. Is it gauche to give yourself your own theme song? Should you instead wait until someone has written a theme song for you? Maybe you can make a wishlist of theme songs for others to choose for you.

People pay money for things they value. Not everything they value is tangible.

I emphatically agree with this point, and think Hatsune Miku is a great example of this. She started out as a music program, was given artwork, and exploded into a popular singer in her own right. Recently, tens of thousands paid money to see her perform live in concert. I think the only thing amazing about the entire "virtual commerce" phenomenon is how amazed popular media still seems to be by it.
posted by Marisa Stole the Precious Thing at 5:14 AM on November 18, 2010 [1 favorite]

We've just found the next bubble! Everyone, get started as a virtual space station flipper while you still can!
posted by notswedish at 5:23 AM on November 18, 2010

I don't think any reader of Forbes is amazed that people pay enormous amounts of money for things of little "real" value. Isn't Forbes targeted at CEOs of companies such as those that make Coke, sitcoms and Silly Bandz?

The amazement that Forbes readers feel most likely comes from them realizing there's a whole 'nother economy out there that they don't own (yet).
posted by DU at 5:23 AM on November 18, 2010 [1 favorite]

About the only aspect of this story that's interesting is that someone's willing to pay over half a million for a property in some MMORPG that I've never heard of, or that it was worth $200,000 per year in income--anybody here ever play this thing? Instead, Oliver Chiang spends a lot of time talking about Jon "Neverdie" Jacobs, someone who looks like a Jersey Shore wannabe with a handful of IMDB credits for movies that no one has ever heard of, and even describes Jacobs' father as "a prototypical Bond villain of sorts" because he pulled off a few financial scams back in the day. (The deceased elder Jacobs is probably best known now for his estate suing J.K. Rowling because he wrote a novella called "Willy the Wizard" that had a few plot points roughly similar to Harry Potter and the Goblet of Fire. Maybe Neverdie is selling this thing to pay his legal bills from that.)
posted by Halloween Jack at 5:27 AM on November 18, 2010

Obviously the amounts of money involved have gone up, but as others have said, this isn't exactly new. I think I remember people buying items in Diablo 1 with real money.

Hatsune Miku is a great example of this.

That video is pretty cool. I wonder how the musicians feel about being the band for a virtually rendered singer who has synthesized vocals. That must feel at least a little bit odd.
posted by menschlich at 5:28 AM on November 18, 2010

That video is pretty cool. I wonder how the musicians feel about being the band for a virtually rendered singer who has synthesized vocals. That must feel at least a little bit odd.

They're probably Vocaloid fans themselves. She has some pretty die-hard followers. This bit I found pretty interesting:

In March 2010 three metal plates with Hatsune Miku’s image etched on them were placed on board Japanese spacecraft Akatsuki and sent into space after a nationwide petition with more than 14,000 signatures demanded she be included.

Read more: http://www.dailymail.co.uk/sciencetech/article-1329040/Japanese-3D-singing-hologram-Hatsune-Miku-nations-biggest-pop-star.html#ixzz15dmlEJmE

posted by Marisa Stole the Precious Thing at 5:33 AM on November 18, 2010

When you look back on the science fiction that predicted all this stuff, it hits you that the one thing everyone got wrong was the idea that everyone involved would be cool.

The William Gibson equivalent of this story is, like, an ex-SAS guy known only as Grindstone lives in geosynchronous orbit and builds virtual real estate from spare cycles on encrypted Triad networks. He rents it out to a shady network of researchers working on fractal-based mind control technology, and eventually gets dragged into an attempted coup in West Africa by a woman who was able to dig up his past and use it against him.

Here in the real world, we have Second Life and Entropia.
posted by No-sword at 5:36 AM on November 18, 2010 [32 favorites]

I have a piece of REAL waterfront property. If there's any suckers..I mean..smart investors out there who want to make me an offer or trade for a virtual space station - mefi-mail me.
posted by Brodiggitty at 5:38 AM on November 18, 2010

Arguably, if it was netting him $200,000 a year, he sold it for well below its actual value.

On the other hand, the whole thing has the feel of a pyramid scheme: it works as long as there is a new supply of believers coming in at the ground floor, each of whom can then proceed to make investments, earn returns, and cash out. Ultimately, the scheme runs our of fresh suckers and the bubble bursts, just like in the real world.
posted by beagle at 5:38 AM on November 18, 2010 [1 favorite]

I trust we'll eventually reach a point where journalists no longer feel the need to write "lol wacky internet" stories about financial transactions involving virtual property.

Maybe the real-world value is not being made clear to people who don't play these games.

When you buy a spreadsheet program, for example, you buy a tool that helps you move real-world products. The cost of the program is justified by the actual rent-paying money you'll make using it to sell actual loaves of bread.

What is the real-world investment value of this imaginary space station? Do (lots of) other players pay the owner real bread-buying dollars for the entertainment value of pretending to be on an imaginary space station?
posted by pracowity at 5:41 AM on November 18, 2010 [1 favorite]

What is the real-world investment value of this imaginary space station? Do (lots of) other players pay the owner real bread-buying dollars for the entertainment value of pretending to be on an imaginary space station?

There are, apparently, goods and services you can purchase with real money in said space station.
posted by Marisa Stole the Precious Thing at 5:42 AM on November 18, 2010

I know someone (a programmer) who worked on one of these virtual world sites, he had set up a virtual printing press to counterfeit the currency used in that VW, handed off the fake FAKE currency to another friend who had signed up to be on the site for the sole purpose of these transactions, who then turned around and sold the fake currency on eBay for hard cash. Dead serious.

Barnum would be proud of this silliness, and those of you rushing to defend the idea of the value of virtual real estate, I'll hazard a guess that you're most likely an American - or Japanese - citizen. This disease seems limited to certain cultures, thankfully.
posted by dbiedny at 5:43 AM on November 18, 2010 [1 favorite]

WTH!?!? Is that a hologram in the Miku video? Are holograms that much more awesome in Japan?

That just blew my mind.
posted by oddman at 5:45 AM on November 18, 2010

Don't forget Rei Toei from Idoru.
posted by Splunge at 5:45 AM on November 18, 2010 [1 favorite]

Do (lots of) other players pay the owner real bread-buying dollars for the entertainment value of pretending to be on an imaginary space station?

As I understand it, yes. In Entropia you can charge access fees to "property" you own.
posted by AugieAugustus at 5:49 AM on November 18, 2010

And it IS a disease, make my mistake - my ex's daughter, 12 yo, was addicted to the Sims, she was particularly enamored of the pets add-on for that game, to the exclusion of much of everything (except television). The kids had spent a year pestering their mother for a dog, while the pet turtles languished in their excrement-encrusted water (which I would sometimes help the kids change, just to make it happen, I really felt bad for the turtles, and was the one who bought the water heater for their tank that the ex felt was gratuitous). Once the first few months went by, the initial excitement wore off and the kids started to ignore the dog, I confronted the daughter one day, who would spend hours locked away in her room, on her computer, while the poor doggie barked away sadly in the next fucking room. She had called me into her room to look at her virtual dog pets, and I just had to point out the irony of the fact that she was completely ignoring the real dog, to spend time with the virtual dog. The point was largely lost on her. The value of virtual, indeed.
posted by dbiedny at 5:52 AM on November 18, 2010 [7 favorites]

There are, apparently, goods and services you can purchase with real money in said space station.

But real money for real-world services or real money for strictly virtual services? Will some real person pretending to be some virtual person on the virtual space station say that he is shining my virtual person's virtual shoes and then everyone in the game will pretend that my virtual shoes are shiny? Or will the real person behind that virtual person actually visit me in the real world and shine the actual leather shoes on my actual flesh-and-blood feet?
posted by pracowity at 5:52 AM on November 18, 2010 [1 favorite]

WTH!?!? Is that a hologram in the Miku video? Are holograms that much more awesome in Japan?

Here's a video showing how it's put together. I'm not really sure what that would be considered; it looks like they're just projecting the image of her onto a pane of something or other, in front of the other performers, but it certainly looks better than what I would expect from doing that. When I first watched it, I initially thought it was completely faked - like, they filmed the lighting and the crowd, then CGI'd her in.
posted by menschlich at 5:56 AM on November 18, 2010 [1 favorite]

But real money for real-world services or real money for strictly virtual services? Will some real person pretending to be some virtual person on the virtual space station say that he is shining my virtual person's virtual shoes and then everyone in the game will pretend that my virtual shoes are shiny? Or will the real person behind that virtual person actually visit me in the real world and shine the actual leather shoes on my actual flesh-and-blood feet?

It provides enjoyment and entertainment, whether it's something you can hold in your hands or not. These are all things contained within the hardware of your computer, much like music, movies, and games. I'm not getting the bewilderment here. It's just yet another fun thing you can get from your sitting in front of a monitor.
posted by Marisa Stole the Precious Thing at 5:56 AM on November 18, 2010

"It provides enjoyment and entertainment, much like music, movies, and games. I'm not getting the bewilderment here."

"...$635,000"

Is the bewilderment clearer? I'm with you on your basic observation, but typically when prices reach this level it's either for (real) income producing goods or its a fetish.
posted by Reasonably Everything Happens at 6:19 AM on November 18, 2010 [1 favorite]

What I always love about these discussions is the people who make so much noise about "People spend REAL money on fake stuff in a video game?!" wouldn't bat an eye at dropping $100 on a bar tab.
posted by Uther Bentrazor at 6:20 AM on November 18, 2010

I think it's the high prices created by artificial scarcity (or whatever the economics term is) that boggles people. The reflex is to wonder why anyone would pay $635,000 for something that presumably you could make infinite copies of at little or no additional cost?

And the answer, I guess, is that in this game there is only one copy of the space station allowed -- it's not like every player is allowed to build a space station from free pieces of virtual space station left lying around in the virtual world -- and this virtual space station offers a lot of fun activities for the limited number of players who can get into it.

So there are two levels of artificial scarcity here:
1) People are willing to pay non-zero amounts of real money in exchange for getting to be one of a limited number of virtual players in the virtual space station and enjoying whatever the hell it is that the virtual station offers in the way of real entertainment (music? chat?). They pay small amounts that non-players wouldn't marvel at. It's like buying a ticket to the movies or a concert. But...
2) All of those relatively small real-world payments add up to a lot of real-world money for the owners of the pretend space station. Enough to make it worth $635,000 in real-world dollars. And that's what surprises non-players.
Something like that?
posted by pracowity at 6:22 AM on November 18, 2010

Is the bewilderment clearer? I'm with you on your basic observation, but typically when prices reach this level it's either for (real) income producing goods or its a fetish.

If you'd read the article or the thread, you'd note that it does generate "real" income.
posted by kmz at 6:28 AM on November 18, 2010 [1 favorite]

What I always love about these discussions is the people who make so much noise about "People spend REAL money on fake stuff in a video game?!" wouldn't bat an eye at dropping $100 on a bar tab.

So you would equate a virtual glass of liquid and a real alcoholic beverage? Go back and read my message about the virtual vs. real dog. If you don't understand the distinction, well, thanks for playing.
posted by dbiedny at 6:30 AM on November 18, 2010 [3 favorites]

When you look back on the science fiction that predicted all this stuff, it hits you that the one thing everyone got wrong was the idea that everyone involved would be cool.


Other science fiction took it a step further: strapping everyone's brain to computer mainframes and making everything a virtual world. Which makes me think of steak. Ignorance is bliss.
posted by hpb2earnest at 6:32 AM on November 18, 2010 [1 favorite]

1) People are willing to pay non-zero amounts of real money in exchange for getting to be one of a limited number of virtual players in the virtual space station and enjoying whatever the hell it is that the virtual station offers in the way of real entertainment (music? chat?). They pay small amounts that non-players wouldn't marvel at. It's like buying a ticket to the movies or a concert. But...
2) All of those relatively small real-world payments add up to a lot of real-world money for the owners of the pretend space station. Enough to make it worth $635,000 in real-world dollars. And that's what surprises non-players.

Alright. Let's say I've set up a music website. There, you can chat online with other members, and buy music. The money I make from membership fees and from selling music (which is intangible) eventually adds up to an insane amount of money.

This really isn't any different from having a virtual space station, where people can chat with each other, and buy "virtual" items to increase the enjoyment of their online experience. It just happens to take place in some 3D world instead of a 2D website.
posted by Marisa Stole the Precious Thing at 6:35 AM on November 18, 2010

@Du - Forbes is targeted to the small to medium business owner. Unlike the Economist magazine, which assumes its reader knows what the Federal Reserve is, Forbes articles will have include background information like "The Fed is X, does Y" as part of the story.
posted by psergio at 6:37 AM on November 18, 2010

The money I make from membership fees and from selling music (which is intangible) eventually adds up to an insane amount of money.

Isn't this business model increasingly obsolete?

I don't follow this stuff closely, but it seems that from the business side it's all about the advertising and from the consumer side it's all about the community. I totally get why a critical mass-level community with some traction is an enjoyable way to spend time and some money. But I also get why the idea of spending over half a mil on something that is potentially very fragile is setting people off. In 'real' bubbles there's always the risk to move on to another bubble. With virtual bubbles the ability to move is elastic in direct proportion to its community.
posted by Reasonably Everything Happens at 6:51 AM on November 18, 2010

The thing that surprises me is that anyone cares this much about something in Entropia. Entropia is a very bad game. It is notable for being the very worst MMORPG I've ever played. There is very little of interest to do, and the advancement rate is glacial to encourage you to spend real money upgrading your character.
posted by Mitrovarr at 6:53 AM on November 18, 2010 [2 favorites]

Isn't this business model increasingly obsolete?

Probably. Still, it's the same dynamic in 3D virtual worlds as it's been in 2D ones. Might very well be a swelling bubble near the popping point though.
posted by Marisa Stole the Precious Thing at 6:59 AM on November 18, 2010

So if this was Zork -- yeah, the last time I spent much time playing video games I was using a Commodore 64 with a hard drive the size and weight of a cinder block -- if this was Zork, people would be paying real US dollars to a virtual store owner to get extra virtual batteries before they were eaten by a grue? And the store owner would get rich in the real world because he somehow managed to get control of the only virtual battery store in Zork?
posted by pracowity at 7:47 AM on November 18, 2010

Sounds like the perfect way to launder money.
posted by blue_beetle at 7:57 AM on November 18, 2010 [1 favorite]

I'll hazard a guess that you're most likely an American - or Japanese - citizen. This disease seems limited to certain cultures, thankfully.-- dbiedny

The designers of Netropia in Sweden might disagree with you. Or what of that guy in South Korea who died from lack of food and water while he battled in virtual worlds?

It is a disease limited only to those cultures that have access to the technology needed to join in.
posted by eye of newt at 8:10 AM on November 18, 2010

Arguably, if it was netting him $200,000 a year, he sold it for well below its actual value.

While this would be true if he were selling a rental property, the lessened value probably reflects the volatility of the virtual property. I think the anticipated return on virtual properties are more uncertain. There's no standard virtual space, no guarantee that this game will continue to be popular to the extent that it is or that it will even exist a few years from now. It might have made $200k last year, but it might not 5 years from now when it's past old and busted.

If you build on floodplain, your property value is going to be lower, factoring in that risk. Virtù properties are subject to factors that the investor/creator can't control directly, and so are worth less than a stable verité property.
posted by bonehead at 8:22 AM on November 18, 2010

The point of the bar tab analogy is that you're paying for an experience. People don't often drink alcohol for the calories.

The virtual vs. real dog story is very sad, but it sounds like there are many layers of neglect in that family.
posted by Skwirl at 10:07 AM on November 18, 2010 [2 favorites]

So you would equate a virtual glass of liquid and a real alcoholic beverage?

No, but I certainly would the experience of playing an MMO with a night of drinking. I go out drinking for the enjoyment of doing something with friends and the sensory experience. I'd play an MMO for the exact same reasons. The only lasting effect of either is getting fatter than I would otherwise be had I done something more active with my evening, and that's a negative side effect, not a goal.
posted by Zalzidrax at 10:10 AM on November 18, 2010

Arguably, if it was netting him $200,000 a year, he sold it for well below its actual value.

What is a company netting $200,000 a year in a completely safe industry worth? My feeling was that this was low as well, and that the whole 'if the servers go down you have nothing' thing was a factor in that, but I don't really know what to compare it to.
posted by piato at 10:48 AM on November 18, 2010

FWIW - some people on the thread are maybe unaware that Entropia isn't that much like WoW - the game currency is *directly* linked to USD, so that a starting player begins by harvesting poop (not joking!) and selling it to vendors. Of course, the degradation of their eq as they do this means they don't earn much...

I'd imagine most people on entropia are there to earn money rather than have a satisfying experience, which makes this kind of profit all the more impressive, but I wouldn't really know.
posted by piato at 10:51 AM on November 18, 2010

Don't forget Rei Toei from Idoru.

Or Sharon Apple from Macross.

Hell, I suspect she probably is Sharon Apple from Macross.
posted by vorfeed at 11:03 AM on November 18, 2010

Don't forget Rei Toei from Idoru.

<3
posted by Rei Toei at 11:13 AM on November 18, 2010

Once the first few months went by, the initial excitement wore off and the kids started to ignore the dog, I confronted the daughter one day, who would spend hours locked away in her room, on her computer, while the poor doggie barked away sadly in the next fucking room. She had called me into her room to look at her virtual dog pets, and I just had to point out the irony of the fact that she was completely ignoring the real dog, to spend time with the virtual dog. The point was largely lost on her. The value of virtual, indeed.

Yeah, well, I should tell you about all those hours my aunt spent in church talking to her "father", while her real father died penniless and alone.

People do things like this. They let distractions get in the way, they numb themselves with repetition and escapism to make it easier to deal with their lives, and they choose the ease and comfort of fantasy over the difficulty of real-world love. If you think that virtual worlds make this process any easier, different, or more like "a disease", I suggest you go by the local liquor store around 5:15 PM, or drive around town in the evening counting flickering television sets in living-room windows.

I say this as someone who frequently argues against the so-called value of WoW and the like, by the way. I don't think it's a positive thing to spend 20, 30, or 40 hours a week playing a simplistic video game... but the idea that it's negative because it's not "real" is ridiculous. It's bad because it's not a very rich experience, and is deliberately made that way so that more people will pay to play... but as millions of readers, board game fans, and D&D and Warhammer players have discovered, there's no reason why virtual experiences have to be that way.
posted by vorfeed at 11:41 AM on November 18, 2010 [6 favorites]

I play Entropia Universe. It has a big advantage over other MMORPGs in that you don't subscribe and you aren't required to put in any money. (Yes, I know other games are adopting this model.) The non-subscription means that I can be away for long periods of time and not lose my monthly fee. When I return, all my stuff is in my locker waiting for me. I have put money into the game, probably $150 over six or seven years of play. I also drew several others into the game that put in money. One of them is still there. He sells stuff, small-time, like weapons and armor and so on. He makes a little money. He enjoys playing the game. I hunt, prospect, craft -- I enjoy playing the game. For a while I played with a guild but now I play alone -- that way I can play when I want and not when some group activity is going on. (My guild had members in many time zones. It was tough to get together. Most of us had jobs, too. Very few students.) Some players like to dress up. They spend money on clothes and socialize. They are the players that hang out at the Clubs. There are other reasons people play the game. It's not total combat, like WoW, or corporate theft, like Eve. It's more freeform so I suppose some people find it boring. Whenever a story comes out like this one about massive amounts of cash being made on the game, some people feel impelled to diss the game. I don't care if this is a publicity stunt or not, I still like Entropia.
posted by CCBC at 2:18 PM on November 18, 2010 [2 favorites]

What is a company netting $200,000 a year in a completely safe industry worth?

Around $3-$4 million, IIRC. One way to look at it is that $4m is how much money you'd need to invest in some run-of-the-mill investment in order to get $200,000 a year out. Wikipedia article.

I, too, find it befuddling that people are surprised at nonphysical things having monetary value. Websites, brand names, rights of various sorts… for that matter, the money itself has no physical existence; bank accounts are a virtual thing just like the space station, just with more legal and societal support for their continuity.
posted by hattifattener at 11:37 PM on November 18, 2010

So you would equate a virtual glass of liquid and a real alcoholic beverage? Go back and read my message about the virtual vs. real dog. If you don't understand the distinction, well, thanks for playing.
posted by dbiedny at 9:30 AM on November 18 [3 favorites +] [!]

I'll take it in good faith that you did not confuse my valid analogy for my having the cognition of a 12 year old with her copy of Nintendogs. If you were, I really suggest you go back and take economics and retake philosophy.
posted by Uther Bentrazor at 11:10 AM on November 19, 2010