Korea Times and Terra Nova’s Korean correspondent Unggi Yoon write about Korean lawmakers’ plans to carry out a regulatory precision strike on Bad RMT without inflicting too much collateral damage on Good RMT. The problem is defining what is acceptable real-money trade of virtual property and what is not.
You would think that a simple way to draw the line would be to follow the rules set out in the operator’s end-user license agreement: if the operator allows RMT, it’s ok; otherwise it’s not. There are a some complications, however.
Korean MMORPG companies seem to have a much more ambivalent attitude towards RMT than some Western operators. This may be related to the fact that in the case of Lineage, it has been argued that RMT was actually helpful or even vital for the commercial success of the game. From the Korea Times article:
Major operators of online games, such as NCsoft, NHN and CJ Internet, say that they are not sure of the government’s real intention at this point. “We don’t think the ban will severely damage us, because gamers will find another way to trade,” an NCsoft official said.
I’m actually surprised to hear that this NCsoft official seems to prefer players trading.
So if the regulator would empower the operating companies to make decisions regarding RMT, it might not get the results it desires. Scamming and freak violence related to the virtual under-economy has made RMT an area of societal concern in South Korea. Steven Davis describes a recent scandal and suspects that the ‘law grew out of these agencies desire to appear to be “Tough on”… something.’ Thus the regulation might not actually be designed with the game industy’s benefit in mind.
Another complication is that real-money trade of virtual property is by no means restricted to MMORPGs in Korea. Various community sites and other services make use of the virtual economy phenomenon. Their value chains may be more complicated than just operator—RMT company—consumer -relations (this is certaintly the case in China, where I am at the moment). In these cases, unduly restrictive regulation might harm the growth of a interesting new sector of business that creates real economic value.
Meanwhile, the MMORPG item traders have formed a trade union of their own, obviously promoting pro-RMT policies:
“We believe it will be practically difficult for the government to punish or ban such trade,” said an official of the Association of Digital Asset Trade Promotion, an interest group of the item trading firms. “There is no clear definition of ‘unfairness’ anywhere in the regulation. Plus, how can they separate illegal deals from legal deals when there are millions of them?” cites the Korea Times article.
On the other hand, scamming and account hacking are known to be real problems for users, so it’s not really a solution to say that “regulation won’t help, so let’s not do anything.”
One solution to the security problems would be to build more robust virtual property platforms. Many of today’s services that ended up being storehouses of valuable virtual property were designed like entertainment services, not like the financial systems they unwittingly became. For those operators that are willing to allow RMT to take place, constructing their own Station Exchange could be a solution.
At the same time, I understand that many developers would just like to make neat online role-playing games with absolutely no real money involved in in-game matters. Not sure if the new Korean regulation will help with this.
Virtual Economy Research Network | 
If anything, setting up something similar to the Station Exchange is only going to increase the liability and problems of game publishers. Aside from the fact that it alienates a lot of players it would be a counter-productive move risk-wise.
The companies best bet (and what everyone doing already anyway) is to simple state that it’s breach of contract and they prohibit it.
Imagine there as a blackmarket where cigarettes are being used as a method of payment (which is not seldom the case in places where money uses its value…) you can’t hold the cigarette manufacturers liable.
It seems to me that talking much about ‘economy’ people forget about implication of property rules on a society.
Depriving people from property rights and prohibiting the exchange of items and services is SOCIALISM. Socialism is a LOOSING model of economy, characterized by huge black market, total dissatisfaction, stagnation and totalitarianizm. In just a few words – NO FUN AT ALL.
Think about it. 🙂
Sam, what kind of “liability and problems” is Station Exchange causing for SOE? A common theory is that legitimising RMT (and thus recognising that virtual items have monetary value) makes it difficult for the operator to nerf or shut down the service, lest they end up being liable for the lost “property”. But I have not heard of this being a problem in actual practice. UO has allowed RMT since 1999, and there are tons of services where the operator itself sells virtual items. In their EULAs they disclaim any liability for lost “property” and it seems to have worked thus far.
Furthermore, consider this excerpt from SOE’s Station Exchange white paper:
The introduction of Station Exchange did, however, have a marked effect on SOE’s ability to mediate problems that arose as a result of illicit trading via third party auctions. Prior to the introduction of Station Exchange, 40 percent of customer service time was spent on disputes over virtual item sales. Since the debut of the Exchange, the overall customer service time spent has dropped 30 percent.
To anonymous poster:
Even in our market economy, markets are socially conditioned. There are many goods you cannot legally “own”, “buy” or “sell”, e.g. human organs. The reason for this is that as a society, we have decided that allowing markets in these goods would cause more more social harm than good. Using the same reasoning, I think it is perfectly possible to find situations where prohibiting RMT is justifiable.
The age of laissez-faire capitalism was in the 19th century. Today many countries (particularly in Europe) are best characterised as social democracies.
Does the recent announcement on the imposition of a RMT tax by the Korean government supersede these plans? thanks.