Interview with IGE

[Elemmire]

well... it could be a matter of not enough evidence... and they aren't allowed to go hack into their database for records or anything like that... right now there is no actual facts on the international level that SE has that will be of any real use in court... or so it seems to me

 

[Pascal]

I’ve explained the whole legal view of the Gil Seller <> Copyright Owner position in another thread. The problem is because of a conflict with two different legal interruptions of copyright laws. Neither company wants to take it to court out of fear of the precedence it could set.

 

[Uzor]

well, IGE did say they will give out the accoutn names of gil sellers when we talked to them, but only to representives of SE

Might have been lying though =/ I dunno.

 

[Dallius]

another angle to look at it is that SE might actually be secretly promoting IGE... think about how many ppl out there you've suspected of buying gil...

buying gil will keep people in the game, and keep that monthly service fee coming in for SE... maybe SE has the facts, they can tell how often large sums of gil are mailed from certain accounts, they have to know who the gilsellers are, or at least have a very educated guess...

they have to have an estimate on about how many players buy gil, and to them it may seem that, yes they might actually lose money buy pursuing this in court, and stopping the gilselling, since it might be that gilbuyers do make up the majority...

just another way to think about it

 

[Veresko]

You see on many of the message boards comments about IGE sweatshops around the world. This is completely inaccurate, we've never done that, we'll never do that, and in fact, we've been working behind the scenes with publishers to identify "problem operations."

Ok.. note the term... "Problem Operation" i.e. people that farm constantly to amass gils or itmes (Nuki's team for example)

Now...

So some of the sources for us are individuals, some are the output of guilds, and some are people that have other individuals working for them as employees or subcontractors. We call them "commercial farming operations."

Is'nt that funny how 2 terms are used here to describe the same thing.... talk about identifying and doing something about it!

 

[crookedmidget]

I believe that SE is in a difficult spot. I don't see them enforcing the rule for not selling gil, because of the high demand for gil. People buy gil with the intention of continued play, which keeps monthly fees rolling in. Let's face it, if in game money was not an issue, it greatly simplifies what it takes to play the game. Some folks like to play for whatever reason, but don't want to do the "hard" things. This keeps membership up, and that probably keeps SE happy. Now we all know that is penny-wise and dollar-foolish because people leave the game due to the environment that this situation creates.

We all need gil. But when the advancement of a few comes to the detriment of all, it hardly seems worth it. I know that it is preaching to the choir here, so continue to spread the word (and the word of the day is not "legs")... And the good Karma.

~Crook

 

[Villarel]

The problem with the "second market" (as the IGE guy wants to call it) is that regardless of the way it's implemented, it will *always* generate inflation which in turn hurts everyone's gaming experience.

The economy in any MMORPG is designed to go something like this:

1) Low level players have very little cash
2) Low level items are, therefore, cheap
3) As a player goes up in level, they get more cash
4) Higher level items are more expensive

So the "natural order" is having 2 markets, one cheap for low levels, one more expensive for high levels (or several "market ranges" but the idea is the same).

The problem with gil selling is that it the number 1 line up there ceases to be true. When low levels have access to "high level cash" then inflation begins. Low level items become expensive, and higher level items become ridiculously high.

Final Fantasy just happens to be particuarly sensitive to that kind of thing because of the "godly" low level items. And it's not SE's design at fault really, because they expected you to be a high level in some other job before being able of obtaining those special items.

In a way, they are "high level items that can be used for low level jobs", but with gil selling they become "real" low level items, and that completely disrupts the economy.

I guess my point is that there is no "good" kind of gil/money selling, since it will be eventually a very strong disruptive force to a game's economy. So the IGE guy claiming he's a gamer at heart and stuff is just a lot of bullshit. And if i had to bet, the "we only buy from good guys" stuff is bullshit too. I mean, after you decide to be evil, why limit yourself ?

I don't want you to fail economics, so I'll explain to you why there is inflation in any economy. I previously explained it in another qcdn thread, but so I'll just quote it here:

It not just simple supply/demand.

The primary cause of (real, i.e. adjusted for buying power) long-term inflation is the growth of the money supply. It appears that people have more money than ever before. When this happens faster than the expansion of the economy, the result is too many gil chasing too few goods and materials (services too). Thus each gil's purchasing power is less than before.

There are other causes of price increases, like the way the price of oil going up and down causes fluctuations in the price of gasoline. But effects like these are smaller and temporary, and they cause both upward and downward pressure on prices. The only big and permanent cause of inflation is money growth.

Perhaps the reason why SE increased the taxes is to reduce the overall money supply. Thus, trying to stem this inflationary trend.

*edit* I forgot to mention that as more people quit, the economy is actually shrinking while the money supply rises. These peopple who quit, liquidate their assets and give/sell them to others. With less people, there is a smaller economy. However, their gils are still on the server and perpetuating inflation.

The economy is an abstract term, and is hard to describe. I think of the economy as encompassing total server production or demand from its population.

A secondary market does not contribute to inflation in any way unless in increases the money supply or reduces the size of the economy.

How does IGE fit into this? Well IGE gilfarmers are helping the money supply grow faster than the growth economy. But there can be other reasons why the money supply is growing faster than the economy. People are quitting FFXI, or less people are signing up; leading to a smaller economy. The combination of a smaller economy and a growing money supply leads to inflation.

 

[Veresko]

How does IGE fit into this? Well IGE gilfarmers are helping the money supply grow faster than the growth economy. But there can be other reasons why the money supply is growing faster than the economy. People are quitting FFXI, or less people are signing up; leading to a smaller economy. The combination of a smaller economy and a growing money supply leads to inflation.

I'm gonna step in here and clear something. The bold statement is simply false and a general misconception. Gil buyers and IGE DO NOT create gils, they DO NOT inject money in the economy of Vanad'iel.

Where does the gil the are selling come from? Wether it's from suppliers, organized group or single player, they get the gil by buying it cheaper then the are selling it, making a profit in the process. Unless you prove to me that SE is creating gils for IGE, this is the only way the can gather it. Another way would be to hire people to farm gils for them, in which case the following will also apply.

Let's refer to the mentionned sources of gils for IGE as suppliers in general. These suppliers gather gils from other players in Vanad'iel. They camp/ farm mid to high priced items and sell them trought Auction Houses, usually Jeuno. Now the AH in itself is just transferring gils from the buyer to the seller. So the suppliers just take the gils they get from items sold at AH and sell it back to IGE, temprarily taking it out of the economy.

When someone buys gils from IGE, it DOES NOT increases the total amount of money available in Vanad'iel since it was originally taken from that economy and just transefered to someone else.

Now, regarding inflation vs recession, in the real world, inflation happens when a government reduces it's interest rates. Banks then follow up and do the same. What does this make? People do not see the benefit of saving money, since the interest they would get in return is so minimal. Therefore, the go out and spend it. It's a classic way to stimulate an ecenomy that has been slow, have the people spend the money, making companies that manufacture the products raise there production, hiring more people.

How does this applies in Vanad'iel? It does not, simple has that. Because in this world, there is no bank, there is no option for you to either spend or save your money. The only thing you can do with it is spend it. So Vanad'iel's economy can theorically never become stalled or even slow down, because the money is always going from one hand to another.

So if this ecenomy cannot, theorically (excuse my english by the way, not sure if this word even exists ), enter a recession, does that means it's in perpetual inflation? Not really either, because higer demand, unlike in the real world, does not mean in increase in production and more emplyement. In Vanad'iel, an increase in demand only mean a temporary increase in price.

I say temporary because every items in Vanad'iel, every product, has alternatives. The price on ANY items can only go so high before people start saying: "Screw that, I'm not gonna pay 15 millions for that extra 1 in dex or acc!" So prices are suppose to stabilize at a certain point.... but has we all witness, they don't one some well looked after items... now why is that?

That's what IGE gil selling is doing. It creates what we could call "the sugar daddy effect" :wink: It's the same situation as if you had a kid that wants something, but instead of encouraging him to work to earn money, his dad just hands him the money to go buy it. The money did not appear in his father's pocket, it came from somwhere, but the kid will not try to negociate and get the most out of each buck, he will just go and buy the bike or whatever, with no regards to the price.

This whole thing, creates some artificial inflation, were the prices keeps raising, but not because there is a huge demand for it or because there is more money injected in the market, but because once in a while (maybe every week) someone has been given money from his dad to buy a specific item, with no regard to the price.

Well, this turned out to be much longer then expected. But I hope you can see now that IGE and gil buyers (and NO, I am not for buying gils!!! I still do not and never will support it!) DO NOT create money, it DOES NOT inject more money in the market, causing the inflation. They are responsible for this "artificial inflation", but not for the reasons one would believe.

Finally, just one more thought and this is purely my opinion, I do not have actual facts to prove this. It is my believe that in fact more money is being pulled out of the game then there is injected in it. Think about it, where does "created money" come from? Quests, missions and selling to the merchants is what comes in mind quickly. Even merchants, people sell cheap stuff to make inventory space. The higher priced stuff is sold at AH, where money is just transfered, not created, as stated above.

Now, how is money pulled out of the game? AH taxes (especially the Jeuno one), bazaar taxes in Jeuno, buying from merchants, airships and chocobos are what comes to mind. This can repreent a huge amount of money. Just stop and think a minute how much you spend in this things per day. I'd say maybe 2-3K and that is being very conservative. How many people is there on the server? 10-15000 ? Let's say it's the later in both cases, that's 45 MILLIONS being drained/sucked out of the game DAILY!

I hope SE is aware of this and that the mechanisms they have in place right now compensate for that lost of money and even things out, because if not, IGE and gil buyer will only have more power. If there is les and less money available, in the general economy, making it harder to get/find, this will encourage people to buy there gils. This will then reinforce the "artificial inflation" that I described, while less money will be available again! It's easy to see a vicious circle forming there.

Again, I have no facts, this is only my believe after observing my own behaviour of spending/ acquiring gils. It may not be true as maybe the gils created by others means, like selling fishes to NPC, might compensate for the loss of money in the economy, but right now,nothing makes me believe so.

Sorry for the long post, I hope it cleared some misconception. Just keep in mind that getting a Peacock Charm to drop will not created money, unless you sell it to NPC.... :?

 

[Veresko]

hummmm... no one arguing? Wow, that's a first!

 

[Veresko]

Damn it!!! I did not wrote that post for half an hour to let it die!!!

DISCUSS!!! Flame me!!! Tell me I'm your god!! I don't care, read the damn thing!!!!!!! :?

 

[Shayla]

Good points Ver.

Especially about the tax sucking out the economy to bring the economy under control to some degree. The tax offsets the possible infinite new gil that is introduced by NPCs via quest or the selling of farmed items. No flame, but there's your response.

 

[Veresko]

Good points Ver.

Especially about the tax sucking out the economy to bring the economy under control to some degree. The tax offsets the possible infinite new gil that is introduced by NPCs via quest or the selling of farmed items. No flame, but there's your response.

Thank you!!!!!!!!!!! Now I can leave in peace!

 

[Rommie]

Gil buyers and IGE DO NOT create gils, they DO NOT inject money in the economy of Vanad'iel.

You seemed to miss the concept of my earlier post.

As you correctly state, inflation is created by an excess of money. What you apparently fail to realize is that there is not one market in the game, but several.

To simplify, I said there were 2 markets. A low level market and a high level market. What gil selling does is, in effect, remove money from the high level market, and inject it into the low level market.

Let me give you an example. Say there's an item for low levels that is worth a few hundred thousands of gil. Clearly, no "real" low level can acquire it, so it isn't an item in their market (somebody farming for a month to get it is not a market force, just an accident). That item belongs to players who have already levelled other jobs to the point where that kind of cash is affordable. The item belongs then to the high level market, where the price is reasonable in comparison to the "production" of gil.

But now, say a bunch of level 1-5 buy gil from IGE. There is a sudden influx of cash into the low level market, and naturally, that generates inflation. If you want to look at it from a different perspective, the item has just got a lot more of demand (the high levels playing a low level job, plus the gil buyers), and the supply remains esentially constant (i.e. all that the game can produce) which i'm sure you can notice is a sure recipe for inflation.

If the money came from outside the game, then that would be that. There would be inflation for those "dual market" items and it would stop there. However, as you again explained, the money comes from within the game itself.

What are the 2 possible sources of that money then ? One is the overfarming of the low level resources (say, bot fishing), the other is extracting it from the high level market (higher level NM drops, or NM drops in high level areas).

The first kind could be considered "fairly" harmless, at worst hurting the chance of low levels to participate in the market as their resources are depleted. The second kind is a much more effective production method, so that's where most of the gil actually comes from.

So what happens ? The higher levels are faced with inflation in their market (remember those items also belonged to their market ?) so they now need more money. As their production means are limited, they do the only thing they can do, they increase the prices of their own products.

You end up with a vicious circle where the depletion of money in the high level market and the injection of said money into the low level market ends up causing inflation *across* markets.

 

[Veresko]

Ok, I really have to go to a meeting in 15 minutes, I am already late. Rommie, I will answer to your post tomorrow, you make sense, but I just see some adjustment to your point.

And the quote is from me, not Villarel, thank you!

Edit: Thanks for fixing it! lol

 

[UnphaZeD]

that was a very long post
~REPLY DONE!

 

[Villarel]

How does IGE fit into this? Well IGE gilfarmers are helping the money supply grow faster than the growth economy. But there can be other reasons why the money supply is growing faster than the economy. People are quitting FFXI, or less people are signing up; leading to a smaller economy. The combination of a smaller economy and a growing money supply leads to inflation.

I'm gonna step in here and clear something. The bold statement is simply false and a general misconception. Gil buyers and IGE DO NOT create gils, they DO NOT inject money in the economy of Vanad'iel.

Do you really believe that Gilfarmers, no do not inject more gil into the economy? Suppose there was no gilfarmers, do you believe that there would be the same amount of gil in the economy? IMHO, gilfarmers do increase the gil supply. Their purpose is the obtain gil and make it available to others. The mechanism in which gilfarmers obtain gil is non-orthogonal to the effect of increase gil on the server. For example fishing and selling to NPC does increas the money supply. They can obtain gil by any means (fishing, farming, etc.) to increase the money supply.

Now, regarding inflation vs recession, in the real world, inflation happens when a government reduces it's interest rates. Banks then follow up and do the same. What does this make? People do not see the benefit of saving money, since the interest they would get in return is so minimal. Therefore, the go out and spend it. It's a classic way to stimulate an ecenomy that has been slow, have the people spend the money, making companies that manufacture the products raise there production, hiring more people.

Your explaination is incomplete.

Do you know how the FR controls the interest rate? Let me explain the mechanism in which the Federal Reserve (FR) controls inflation.
There are 3 primary ways in which the FR uses to control the money supply:

Discount rate—the interest rate charged by FR for short-term loans to banks. When the FR raises the rate, banks may lend less money; when they lower the rate, banks may lend more money. Lower rate means more money in circulation.

Reserve requirements—the portions of deposits that banks must have either in their vault or on deposit at a Federal Reserve Bank. The larger the reserve requirement, the fewer dollars banks have to lend. Loans become harder to get and interest rates rise.

Open market operations involve the daily buying and selling of U. S. government securities (e.g., bonds, Treasury notes, etc.). The Fed buys securities in order to put more money into circulation. When more money is circulating, interest rates tend to drop; consequently, more money is borrowed and spent. When the Fed sells securities, money is taken out of circulation, causing interest rates to rise and making borrowing more difficult.


Just a note on my credentials. I'm in my last term as a graduate student in Business School. I'm getting an MBA in May and love it when people argue on the subject of economics with me.

 

[Veresko]

Allright, time to answer!

You seemed to miss the concept of my earlier post.

I did not miss the concept you explained earlier. You separate Vanad'iel's economy in two different one, on the basis that some items should only be accessable by high-level players while others should be available to everyone.

But then, you could do the same exercice and say that each item has it's own economic laws and potential custommers. Therefore, you are basically taking a discussion on macro-economic (the whole economy and it's implications) and trying to apply reasonning of micro-economics.

However, I will say that I agree, to some degree. Some items are more accessable for the "weatlhier" players (note, not high-level). That does not mean that other players cannot work to afford them. What you're saying is that IGE disrupt this by selling gils, making it easier for everyone to get those "luxury items", therefore creating inflation.

That is exactly what I said in my post! Read it again, especially the exemple about a dad giving money to his kid to get that bike he wants. What you are saying Rommie basically support my observations. Players with less money suddenly become wealthier and can purchase without regards, creating "artificial inflation".

Do you really believe that Gilfarmers, no do not inject more gil into the economy? Suppose there was no gilfarmers, do you believe that there would be the same amount of gil in the economy? IMHO, gilfarmers do increase the gil supply.

Yes, yes and no! You asked, I answered. Yes, some gils is created by fishing, but it is minimal compared to the gils that gill sellers amass by camping monsters with High-priced drop. Do you reall think that when Nuki gets an Archer Ring, they sell it to a NPC for 5K? No, they sell it to AH. Now you do understand how the AH work, don't you? Money is passed from one player to another.

I'm not gonna repeat my post, but you cannot claim that gils sold by IGE is injected in the game, increasing the amount of money available as a whole in the economy of Vanad'iel. They have to take this gil from somewhere! Yes, gilfarmers that fish and sell to NPC will create money, but it is minimal. As for others that farm a certain type of mob, like Treants for cuttings, you are misleaded if you think they do not sell it through AH.

Now, regarding inflation vs recession, in the real world, inflation happens when a government reduces it's interest rates. Banks then follow up and do the same. What does this make? People do not see the benefit of saving money, since the interest they would get in return is so minimal. Therefore, the go out and spend it. It's a classic way to stimulate an ecenomy that has been slow, have the people spend the money, making companies that manufacture the products raise there production, hiring more people.

Your explaination is incomplete.

I know it is, I wanted to roughly explain the concept of how inflation occurs without adding 3 paragraphs to an already long post. But thank you for the specifications of how the Bank/FR relation works.

Just a note on my credentials. I'm in my last term as a graduate student in Business School. I'm getting an MBA in May and love it when people argue on the subject of economics with me.

Congratulations on your MBA (I mean that!). I spent 3 years studying in business/administration and I have been running my own company that has a business number in the 8 digits, employing 70 people, for over 5 years now. I am also very much active in my regional economy and politic.

And yes, I love it when people argue with me about economics.

What you fail to realize Villarel is that the nice laws of economic you learned in school do not always apply, especially not in Vanad'iel. There is no FR, there is no bank and there is no interest rate. People can only do one thing with there money, spend it! Therefore, there can never be a recession or a slump in Vanad'iel, people will always spend, keeping the economy rolling. So consiquently, there will always be inflation. What makes this inflation stop? Choice. There is always alternatives to an item you'd like. It may not been viewed has equivalent in quality, but it will do the job if the first one has come to be to expensive.

I also find it funny that in a one page post I did, your only reply was Yes IGE does encourage the creation of gil and then you explained to us how the FR and banks works. If you want me to change my views and aggree that gil selling/buying contributes in increasing the amount of money available in Vanad'iel, you are going to need more points then that.

that was a very long post
~REPLY DONE!

 

[Rommie]

Therefore, you are basically taking a discussion on macro-economic (the whole economy and it's implications) and trying to apply reasonning of micro-economics.

It could be argued that because of the way the FF economy works (no government, no banks, no salaries/employment, no imports/exports, etc.) the micro-economic "rules" are much more pertinent than the more global macro economic concepts.

On a somewhat related point, it would be fun if there could be trade across game worlds. Suddenly we would have worlds especialized in certain items, the older worlds (with their abundance of high level crafters) buying raw materials from younger worlds, etc.

In a way, a "global" economy without soldiers. I bet many economists would be interested in seeing that at work 8)

What you are saying Rommie basically support my observations. Players with less money suddenly become wealthier and can purchase without regards, creating "artificial inflation".

I still think you place too much relevance on what you called the "sugar daddy" effect. My point is that the vicious circle of inflation is most influenced by the "transfer" of gil from the high level to the low level market.

The issue at work here is not that low levels "shouldn't" acquire what you call "luxury items", it's that they are supposedly prevented by the game system itself from doing it. A level 5 can't camp a level 50 NM, and a level 5 has no time-effective way to acquire a million gil. When that rule is broken (by the transfer), the game's "underlying" economy breaks with it.

If you want to look at it from a different standpoint, the way the game designers went about the economy issue was by controlling production, and adding stringent level requirements to get access to increased levels of gil making. Even high-profit fishing (say 50-60k an hour) requires high level as you can't do it in low level areas.

So esentially you had a production system controlled by level, and a pricing system controlled by demand. That creates those two (or several) markets I was referring to. And the breaking of the most basic rule of the design (high level gil == high level job) causes widespread unbalance, and sends the whole economy into the spiral of inflation.

 

[Villarel]

Veresko,

In trying to explain how the FR works, I was showing you that the amount of money in circulation also effects the overall money supply. Though, in hindsight, maybe I was a little too subtle and you may have easily missed the point.

The money supply can increase from new injection or an increase in its circulation. I guess you didn't see how the FR can affect inflation by increasing or decreasing the circulation of money also. Its true, that gilfarmers don't obtain new gil by selling items throught the auction house. However, by then making the money they sell to others, gilfarmers are increasing the money in circulation.

Even if I agree with you (which I don't) that gilfarmers increase the money supply by a little, it is still more than the economy can support without inflation.

And another point. I can make 100k a day fishing. High level fighers can probably make five times that much. is 500k a day from one person still insignificant?

Final point. Even if there is no federal reserve bank, the economics of inflation are well understood and applicable to any economy. If you don't trust me, go ask an expert you trust (maybe economics professor).

You can turn a blind eye and say gilfarmers are not increasing the money supply. But they do indeed increase the money supply. It does not need to be alot of money. Just enough so that the money in circulation is more than the economy can support without inflation.

 

[Zura]

One thing that always nags me when people talk about the virtual economy - I think of it every time I see a Kraken club sell for 35M.

How much of all this is due to rusty fishing?

I think back to when I went into Rabao for the very first time, packed with people. I figured in my nooby little head that it was just a great place to fish. Which of course it was, if you're pulling rusties. I've tried to find the earliest mention of rusty fishing, but it seems to have started a couple of years ago, long before NA players even got the game. So...let's say you're a JP in dire need of gil. You hear about an interesting method of fishing that synths rusty items. I was skeptical myself, but once the gil started rolling in I was hooked (no pun intended).

Let's say you have a bot too. Fast forward to just before it was nerfed. The amount of gil made by a single person is staggering. Hell, even the NA players that did rusties only for a couple of months made millions. My only regret was that I didn't do it 24/7 and might not be as broke as I am now. XD

Your thoughts?



Real quick,

I believe that SE is in a difficult spot.

I don't think they're in a difficult spot at all. You said it yourself, bought gil means people intend to keep playing. I wouldn't be surprised if SE doesn't have plans to ever stop gil selling; I wouldn't be surprised if some of that 880 million IGE is making goes to keeping the publishers quiet and out of their hair.