The Gruter Institute Working Papers on Law, Economics, and Evolutionary Biology
Volume 2, Issue 1 2001 Article 1
Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier
Edward Castronova∗
∗Cal State Fullerton, [email protected]
Copyright c 2001 by the authors. All rights reserved. No part of this publication may be re- produced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher, bepress, which has been given certain exclusive rights by the author. The Gruter Insti- tute Working Papers on Law, Economics, and Evolutionary Biology is one of The Gruter Institute Working Papers on Law, Economics, and Evolutionary Biology, produced by The Berkeley Elec- tronic Press (bepress). http://www.bepress.com/giwp. Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier
Edward Castronova
Abstract
In March 1999, a small number of Californians discovered a new world called “Norrath”, populated by an exotic but industrious people. Having just returned from a dangerous exploratory journey through this new world, I can report a number of interesting findings about its people and economy. About 12,000 people call it their permanent home, although some 60,000 are present there at any given time. The nominal hourly wage is about $3.42 per hour, and the labors of the people produce a GNP per capita somewhere between that of Russia and Bulgaria. A unit of Norrath’s currency is traded on exchange markets at $0.0107, higher than the Yen and the Lira. The economy is characterized by extreme inequality, yet life there is quite attractive to many. The population is growing rapidly, swollen each each day by hundreds of emigr´ es´ from various places around the globe, but especially the United States. Perhaps the most interesting thing about the new world is its location. Norrath is a virtual world that exists entirely on 40 computers in San Diego. The entire dollar-based economy is underground, since the owning company, Sony, considers everything created in the world to be its intellectual property. Unlike many internet ventures, virtual worlds are making money – with annual revenues expected to top $1.5 billion by 2004 – and if network effects are as powerful here as they have been with other internet innovations, virtual worlds may be the next step in the evolution of internet (and possibly human) culture.
KEYWORDS: Internet, Virtual Worlds October 2001
Virtual Worlds: A First -Hand Account of Market and Society on the Cyberian Frontier
Edward Castronova Department of Economics, Cal State Fullerton, Fullerton, CA 92834 CESifo (Center for Economic Studies and Ifo Institute for Economic Res earch) [email protected] Tel. (714) 278-4458, Fax (714) 278-3097
JEL: L86 Information and Internet Services; Computer Software
Abstract: In March 1999, a small number of Californians discovered a new world called "Norrath", populated by an exotic but industrious people. Having just returned from a dangerous exploratory journey through this new world, I can report a number of interesting findings about its people and economy. About 12,000 people call it their permanent home, although some 60,000 are present there at any given time. The nominal hourly wage is about $3.42 per hour, and the labors of the people produce a GNP per capita somewhere between that of Russia and Bulgaria. A unit of Norrath's cu rrency is traded on exchange markets at $0.0107, higher than the Yen and the Lira. The economy is characterized by extreme inequality, yet life there is quite attractive to many. The population is growing rapidly, swollen each each day by hundreds of émigrés from various places around the globe, but especially the United States. Perhaps the most interesting thing about the new world is its location. Norrath is a virtual world that exists entirely on 40 computers in San Diego. The entire dollar -based economy is underground, since the owning company, Sony, considers everything created in the world to be its intellectual property. Unlike many internet ventures, virtual worlds are making money -- with annual revenues expected to top $1.5 billion by 2004 -- and if network effects are as powerful here as they have been with other internet innovations, virtual worlds may be the next step in the evolution of internet (and possibly human) culture.
This report is based primarily on the author's personal experiences while traveling and gathering data in Norrath from April to September, 2001. Other sources include data made publicly available by Verant Interactive, data available for free or by fee from public websites, and data collected by the author from surveys. No one affiliated with Verant Interactive, Sony, or any private companies have sponsored the report or bear any responsibility for its contents. Any avatar