economics
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LinkedIn opens up data to researchers to learn about the job market
LinkedIn will open up its data to academic researchers for the purpose of better understanding the labor market and the economy, Bloomberg reports. The company is inviting academics to submit study proposals that in some way involve analytics, economics or artificial intelligence and it will select projects early next year. If chosen, researchers will then get access to "one of the largest and most robust datasets of professional and economic networks," according to LinkedIn Chief Data Officer Igor Perisic.
Explore the world's economy in Harvard's trippy 3D map
Wrapping your head around the planet's economic activity isn't easy, even if you study economics for a living. However, Harvard's Owen Cornec (he of WikiGalaxy fame) believes he can help. He built the Globe of Economic Complexity, a web-based map that lets you explore Earth's economic relationships through 3D "confetti." It looks more than a little psychedelic, but it's incredibly detailed. You'll not only see the range of exports in a given country, but their volumes, their destinations and the intricate connections between products. Frankly, it could be helpful even if you're outside of academia -- it can provide important context for news stories and otherwise explain machinations that would normally remain confusing.
Valve just opened its virtual item economy to all Steam games
Like virtual hats? Valve certainly does. The company behind gaming classics like Half-Life and Portal is also the creator of Steam, the world's largest digital game store. Beyond just buying games on that store, though, there are hats. Virtual hats, of course, and they are very popular -- Valve's paid out over $50 million to users who created virtual wares in its games (from Team Fortress 2 to the immensely popular DOTA 2). You can buy them, you can create them, you can trade them -- it's quite literally its own economy, and Valve even hired economists to analyze its complex, extremely lucrative system. Today, Valve is opening up that store to all the games on Steam.
EVE Evolved: Mining is broken, but it can be fixed
Mining has a reputation for being the most boring activity in EVE Online, but it's always filled a niche role as a low-effort way to make ISK and play with friends casually. When there's no PvP going on and you can't give your full attention to smashing NPCs in missions or anomalies, mining fills that downtime with something more lucrative and social than spinning your ship in a station. The problem is that mining has slowly become obsolete over the years; alternative mineral sources now supply much of the market's needs, and the risk of flying a defenseless barge just isn't worth the mediocre payout. It's currently more efficient for an individual to buy minerals with ISK made via some other form of PvE, such as level 4 missions or incursions. And on the macroscopic level, such huge quantities of minerals hit the market from alternative sources such as reprocessing loot that the economy could potentially function with no miners at all. CCP has tried to make mining more appealing over the years with buffs and new ships, and the devs recently announced plans to nerf mineral compression as part of a campaign to make mining worthwhile, but I think it'll take a lot more than ISK to get people mining again. In this week's EVE Evolved, I look at how mining and reprocessing are at odds and suggest some ideas for new mining features that could revitalise this long forgotten profession.
MMO Mechanics: Balancing game economies
Most players won't need an economics degree to play an MMO, but strong mechanical forces under the bonnet still guide our actions in our favourite titles. Virtually every financial exchange can be broken down into an effort equals economic gain equation: We put in our hours, and the game economy churns out new gear or money. Since so many in-game actions financially reward players, MMOs have developed mechanics that attempt to curtail the inflation game economies usually see. Charging your character for goods and services, bind-on-pickup gear, regular destruction of valuable goods, and player-controlled auction house and farming systems all combine to keep the spiralling amount of coppers falling into player hands in check. In this week's MMO Mechanics, I'm going to look at some ways both sandbox and themepark MMOs automatically rebalance weighted economies by exploring the systems that restrict the free trade of goods and curb players' constant accrual of money. I'll look at how each system functions and how player manipulation adds a new layer of realism to game economies.
Ask Massively: The dilemma of the free-to-play sandbox
Reader Sharvis recently emailed the Massively Speaking podcast with a question I felt deserved more than just a quick verbal reaction on the 'cast. That, and we just discovered that the ask@massively.com email address went dead approximately three weeks ago, and I've not been receiving your letters there (so send 'em again!). In the meantime: Sharvis. What makes a sandbox so susceptible to its business model in comparison to a themepark? I'm not experienced with sandbox titles, and I can only guess on some of the implications. For example, selling boosters in a themepark is fairly acceptable, but in a sandbox, as Jef pointed out [in his ArcheAge column earlier this summer], that'd be cutting into one of the main features of a sandbox. I'd guess it has to do with these sort of MMOs being more player-centric, and that's a very delicate system to be messing with. See? I told you this was a juicy one.
The Soapbox: Diablo III's auction house ruined the game
After his departure from the Diablo III development team, Game Director Jay Wilson released a statement that the introduction of an auction house "really hurt the game." While players predicted doom the moment the Real Money Auction House was announced, Jay argued that the gold auction house was equally to blame for the game's fall from grace following its absolutely stellar launch sales. I don't normally agree with what Jay has to say on Diablo III, but in this case he does have a very valid point. Diablo II was consistently popular for over a decade thanks to its immense replayability. At its core, D2 was a game about building new characters and gearing them up by any means necessary. Every enemy in the game was a loot pinata just waiting to be popped, and players farmed endlessly for a few sought-after unique items. You almost never found an item that was ideal for your particular class and build, but you could usually trade for what you needed via trade channels and forums. Blizzard claimed that the auction house was intended just to streamline this process, but when Diablo III launched, it was clear that the entire game had been designed to make the auction house almost necessary for progress. The fault here lies not just with the concept of an auction house but with the game designers. That's right: I'm here to argue not only that Jay Wilson was right about the auction house ruining Diablo III but also that it was his own damn fault.
Virtual world economist says Guild Wars 2's pre-endgame economy 'broken'
Ever since Guild Wars 2 went live back in August of last year, the state of the game's economy has... fluctuated wildly, let's say. But now, about eight months down the line, how is the economy holding up? Virtual world economist Ramin Shokrizade (the same fellow who wrote about using EVE Online to predict the real-world recession) has published a new piece on Gamasutra that takes an in-depth look at the economy of Guild Wars 2 as it stands today. The article is too detailed to summarize here, but one thing worth taking away is Shokrizade's observation that, "with the exception of craft materials, [Guild Wars 2's] pre-endgame item economy is broken." He elaborates that, for example, a level 39 green-quality chestpiece regularly sells on the auction house for around 112 copper -- a scant 1 copper more than vendors pay for the same item. He concludes that GW2's pre-endgame economy is "one of the worst [he has] studied in the last 14 years." Eesh. He also takes an in-depth look at the role crafting plays in the economy and the effects of the in-game economy on cash-shop purchases. The full piece is a bit long but certainly worth the time for anyone interested in the intricacies of virtual economies or Guild Wars 2 players in general.
Mark Jacobs on the coming F2P apocalypse
Mark Jacobs isn't jumping on the free-to-play bandwagon like most of his MMO-making contemporaries. The Camelot Unchained developer and former Dark Age of Camelot head honcho predicted a F2P "apocalypse" in a recent interview with VG247. You know, free-to-play is just another model, and just like every other model in the industry, it will hold its special little place for a while but then there will be consequences. Those consequences in a few years will be a bit of an apocalypse. You're going to see a lot of developers shutting down, and you're going to see a lot of publishers going, oh yeah maybe spending $20 million on a free-to-play game wasn't the best idea ever. That's part of the reason, but the other reason is equally as important, that if you go free-to-play, you really have to compete with every other free-to-play game out there. Camelot Unchained, which recently passed the halfway point of its $2 million Kickstarter goal, will be a "niche subscription game," which Jacobs says will allow his studio to focus on creating content for a more desirable audience. The subscription model "allows us to focus our game on the people who want to pay for it, and are willing to pay for it," Jacobs explains. "I'll take a smaller subscription base that is dedicated, is energized and is excited to play our game, and to work with our game, than ten times that base where I have to deal with a lot of people who really don't care."
The Art of Wushu: Winning in market PvP
Last time on the Art of Wushu, I promised I would write on how to sell production crafts. Crafting is a big deal in Age of Wushu, so it seemed like a reasonable topic to cover. However, I realized doing so would probably be a mistake. Why? If you followed my advice from two weeks ago, congratulations. You probably noticed a huge nosedive in a few markets: hemp, ramie, iron, and mint all took a huge hit. It's a bit flattering to see how I can write a post on what to sell and readers like you guys take it to heart, flooding the market with supply and crashing the value of these commodities. If I gave advice on production crafting, the same thing would happen. Instead, this week I'm going to talk about real market strategy. Pointing out things that sell doesn't help you if the market takes a nose-dive. Understanding supply and demand curves, market equilibrium, and the importance of market diversity are all long-term tools that will help you regardless of what you're selling.
EVE Evolved: Top ten ganks, scams, heists and events
It's been called "boring," "confusing," and "the world's biggest spreadsheet," but every now and then a story emerges from sci-fi MMO EVE Online and grabs the gaming world's attention. Tales of massive thefts, colossal battles, high-value kills, record-breaking scams, political dirty deals, and controversial player-run events never fail to grip us. Perhaps it's the fact that these events have such huge impacts in the EVE sandbox that captures our imaginations, or maybe we just want to watch with morbid curiosity as a virtual society self-destructs. Whether it's innocent interest in quirky stories or a secret sense of schadenfreude that keeps us glued to EVE's most illicit events, the game continues to deliver them with startling regularity. Most scams, thefts, and high-profile battles will never make the news, instead becoming another forgotten part of EVE's history or just a story for a few friends to reminisce about. But those stories that do reach the news always draw in a huge audience that wouldn't play EVE in a million years but can't get enough of its engrossing stories. In this week's EVE Evolved, I run down a list of ten incredible EVE kills, scams, heists, and sandbox events that have made it into the news over the years.
Making money in a crowded App Store: it's dog eat dog and Spy vs Spy
On the 25th of July, a shiny iOS remake of the 8-bit classic Spy vs Spy launched on the App Store for $1.99. The next day, the price dropped to $0.99 in a launch sale. On the 30th, it went up briefly, then developer Robots and Pencils announced that "to show our appreciation, we are extending the sale price indefinitely." It remains at $0.99 to this day. I'm annoyed by this. Now, please note that this is not a complaint about sale pricing per se. As it happens, I bought Spy vs Spy a few hours after it launched (I'm a sucker for a well-done 8-bit remake) so I paid $2; I suppose from a miserly point of view I'm out a buck. I'm fully capable of spending seven times that for lunch without blinking, however, so I can't claim with a straight face that I'm annoyed about the money. I'm annoyed because Robots and Pencils has just taught me a lesson: don't buy iOS games for $2+ because they'll be cheaper soon. I do not intend this to be any sort of slight against Robots and Pencils, however. If it was the only outfit doing this it wouldn't matter, but the same lesson is being taught to us all, over and over again, by many of the most successful devs in the App Store. For example, it feels like EA puts its entire back catalog on sale for $0.99 roughly every other week. Free App a Day has been enduringly popular for years. Gameloft has regular sales and giveways of its apps. And so on, and so on. It's sale pricing all the way down. App Store consumer valuations: hopelessly broken? So here's my hunch: I think the constant sales are training consumers to avoid "expensive" apps, where "expensive" has taken the seemingly ludicrous definition of "anything more than a dollar." Furthermore, I think this will be to the detriment of us all, in the end: devs and users alike. Before I detail my reasoning, a quick poll: please be honest with me now. How many of you cruise AppShopper's price drops page for bargains when looking for a new game to while away a boring commute? Or how many of you, when someone recommends an iOS app to you, find the first thing you do is load the AppShopper app to check the "price history" section... and if the app routinely goes on sale for less than it costs now, add it to your wishlist to buy the next time it's cheap? I've done both of these things. I suspect many of you have too. This is perfectly rational, Economics 101 behavior: experience has taught all of us that apps do, frequently, drop in price. If we wait it out, we can save a buck or two, and who doesn't like to save money? Suckers, that's who, and I'm no sucker! With the iOS apps market -- particularly the games bit -- teeming with competition, it's not like the pressure to acquire some hot new release right now is very great. There's always something else to buy, something else that's cheap or on sale. So I think some people (most people, perhaps?) take a wait-and-see approach. Insidiously, this is self-sustaining and self-reinforcing; once people are trained to wait for sales, devs can only generate revenue when they put apps on sale, which further encourages consumers to avoid expensive apps. And if you're the only dev trying to swim upstream, people will ignore your app forever waiting for a sale that never comes. It's a vicious circle. For example, consider the case of App Cubby's Timer, an app I liked when I reviewed it recently. App Cubby recently cut the price of the app from $0.99 to free, resulting in downloads going up from 13 per day to around 25,000. That's a not-inconsiderable number of people who, presumably, wanted the app enough to go to the effort to download it but not enough to pay a buck. Now, perhaps Timer's relatively small (but beautifully formed!) feature set meant people were put off. But is that fair? It does one thing well, and it cost a tiny amount of money. Just how much do people expect for $1? I think near-constant sales and price cuts are at the root of at least some of the "but $2+ is soooo expensive!" world view for app pricing, which is (on the face of it) so utterly counter-intuitive as to be baffling. But it does make sense from some angles, and this is one of them. Talking to developers and marketers The acquisition of the Sparrow email client by Google kicked off an extensive dialog between lots of bloggers on the subject of app pricing, App Store economics, and whether or not current "mainstream" pricing clustered around $0.99 leaves enough room for most devs to earn a living or not. Interesting posts from active iOS developers abounded and covered a wide spectrum of opinions; for a few of the more thoughtful, look to App Cubby's David Barnard, Instinctive Code's Matt Gemmell and Instapaper's Marco Arment. It's a problem that's on a lot of people's minds right now. I reached out to a few folks to gauge what they thought of my hypothesis above. First of all, I approached Robots and Pencils itself. Company spokesperson Michael Sikorsky declined to comment, saying "I've polled the team of 5 [who wrote Spy vs Spy] and we got back 8 opinions. So, we're not even all on the same page [ourselves]." However, his wife and co-founder Camille did share her personal opinion: "I think Apple screwed everyone by offering games at $0.99. I think our game is easily worth more but it's a race to the bottom dollar in the App Store. And yes, the users' expectations reflect Apple's choice which is good for them but not good for the devs who spend a ton on production." David Barnard of App Cubby agreed to chat with me and said a few interesting things. Firstly, he urged me not to "lambast" Robots and Pencils for the price cut -- as he said, "They did what worked and are raking in the cash. Better for them to make great money than stand by some sort of principle and lose their shirt." I think he's absolutely right here. Although Robots and Pencils wouldn't tell me directly, I strongly suspect that sales at $2 were simply too disappointing to be sustainable, and the company acted out of desperation. I'd have done the same in its place. He went on to say: The thing is, the ship has already sailed on premium one-time pricing on hit apps. Some apps can survive in a niche at a premium price, but as I showed in my post about Sparrow, you still need to rank relatively high even at a "premium price" to make much money. More and more I just think the App Store has completely shifted the reality of making money on software. Apps that could be hits should try the 99¢ route, and others should just look for other ways to make money. I'll be writing a blog post about this in the next few weeks, but I'm thinking about doing a complete strategy shift for App Cubby. And I'm definitely not going to be working on any new apps without carefully weighing the monetization options. I'm not sure exactly what the long term solution is, but I'll be thinking a lot more about that as I work on my next blog post. (Emphasis mine.) It's that emphasized part that most worries me as an iOS user: I have this nagging feeling that there are great apps I could be using, great ideas that devs have in their heads, that will never see the light of day because the dev isn't confident of a return on the investment. We cannot know for sure just how significant that factor is, though it's not hard to find devs who'll admit they've stopped pursuing ideas because of concerns about profitability. Or, as Keith Shepherd of Imangi Studios (Temple Run, Harbor Master) put it, "I think even one year projects on iOS are too risky from a business standpoint." It's also noteworthy that David isn't specifically talking about games here -- App Cubby's products are utilities. I also spoke to Brian Akaka, CEO and founder of Appular -- a mobile app marketing and consulting services firm. Brian's experience with App Store pricing goes back right to the very beginning (and before; he was a director of Mac gaming outfit Freeverse before moving to iOS projects), so his insight is particularly valuable: I have a unique perspective, as I was working with apps on the day the App Store launched in July 2008, and have seen how prices have reached a downward spiral towards free. While I agree with your idea that the consumer is a culprit in this, I think that the root blame lies with Apple and [the] design of the App Store. A bit of history: When the App Store opened, no one really knew how to price their apps. As I was working with games at the time, the only points of reference we had was pricing for handheld devices like the Nintendo DS ($20-$45) and casual downloadable games from companies like Popcap (approx. $10-$20 at the time). Prior to the App Store launch, someone at Sega was interviewed who mentioned that the price of Super Monkey Ball would be $9.99. So that's what we charged for our iPhone games. And so it went... we would watch our competitors, and when they adjusted their prices, so did we. One day someone at Pangea (who was one of the leading iPhone developers in the first year) decided to cut the price of all their games to $0.99. They immediately shot to the top of the charts. And stayed there. I recall a conversation I had with our CFO at the time. He argued that they weren't maximizing their revenue by charging so little. I rebutted him with, "if they aren't making more money at the lower price point, they would raise their price back." Within a few weeks, we had lowered our prices to $0.99 as well. This price drop, combined with some Apple love (they featured one of our games in their TV campaign for "the funnest iPod") got us to the #1 position in the App Store and several million units sold. Fast forward to 2012, and the situation is worse. The App Store is incredibly crowded and competitive, and additionally Pricing is the one marketing tool (of the 5 P's of marketing) that developers can adjust at a moments notice. This means that developers have (over)-relied on pricing as a tool to promote their app. This leads to frequent price drops, sales, and all kinds of frequent price changes. As you mentioned, this has led to consumers coming to expect that an app will go on sale. And if it doesn't, it's ok, because a similar app will go on sale. An additional issue is that Apple's App Store has suffered from a huge issue since 2008, which is that it is too difficult for a consumer to find the best, most useful app for what they are looking for. As a result, a vast amount of app sales are being decided by what is on the Top Paid charts, which ranks by # of units sold. Any Econ 101 student will know that you will sell more units at a lower price. At this time, many game developers have given up on trying to charge even $0.99 for their app, instead going for the "Free to Play" model. As evidenced by the download numbers as well as the headlines and acquisitions by these "freemium"/"social"/"casual" game developers (such as Zynga, TinyCo, Funzio, GREE, DeNA, etc), the consumer will overwhelmingly pick a "free" game versus one that you have to pay for (upfront). Fixing the problem Brian was kind enough to continue with three pieces of advice to developers launching an app. I'll take them one by one: Be realistic, not idealistic. Even if you know your app is worth more than $0.99, based on your time, costs, blood, sweat, tears, failed relationships etc. It doesn't matter. Remember that the market decides the fair price, not you. There's no getting away from this one. A common problem when economics amateurs consider at what level to price products is getting tangled up in the idea of how much money (or time) it cost to make; but the laws of supply and demand are cold and uncaring. If competitors are selling for $0.99, and your app isn't clearly better than the competitor's offerings, then you're not going to do well selling at $3 -- even if that's what you need to cover your costs. Look at the competition. Is there a similar app out there? Is it priced at $0.99 (or free)? Then so should your app. Until you've developed a reputation as having such outstanding quality that you can charge a "premium" for your product over competing products, you need to be price-competitive. Even Apple struggled through most of it's life by trying to charge a higher price for its products. Consider being freemium and monetizing off of advertising or in-app-purchases. With thousands of games that are available for free, it's a very rare iOS game that can charge more than $1. Typically these are games with enormous brand appeal (such as Tetris) or are well-known for having something truly unique, such as the best graphics (such as Infinity Blade). Josh Lehman's post "Stop Using The Cup of Coffee vs. $0.99 App Analogy" made a number of points. Some of them have been well rebutted by David Chartier and Joe Cieplinski, but the one I really liked, especially for gaming, was "Free Apps Are Often A Great Alternative." In theory, games on the App Store are not fungible; if I want to play Swordigo then 10000000 is not a substitute because it's a different game. In practice, however, for the more casual gamers that make up the bulk of the App Store market I think games purchases are fungible because people just want some entertainment and aren't too fussy about exactly what form it takes. I think consumers looking for a new game probably have a mental shortlist of dozens of "might buy" titles to look into -- the sheer scale of the App Store contributes here -- and one of them is almost inevitably going to be free or $0.99, so the more expensive titles might not even get a look-in to the purchasing decision. Brian touches on the idea of alternative monetization strategies, like freemium games and IAP. As a gamer, however, I am less convinced than him by either approach. I'm wary of freemium games because, fundamentally, I believe extensive use of IAP actively encourages developers to adopt bad game design. Many freemium titles work by being attractive at first, then requiring the user to gradually do more and more amounts of boring tasks -- "grinding", in gamer slang -- to progress... unless the user buys, with real money, some sort of bypass option. Think buying Tower Bux in Tiny Tower, or gold coins in Infinity Blade, or the "do the farming for you" power ups in Farmville. The more boring the grind, the easier it is to lure motivated players into forking out to bypass it. I'm not against developers making money, but I'd much rather pay upfront for a well-designed game that's fun all the way through. I'm not saying all IAP is bad, but I do feel that it's a disappointingly rare dev who can avoid its siren call to the dark side. Still, I cannot deny that freemium games are very popular, so it seems likely I'm simply on the wrong side of history here. So it goes. Non-grind-avoidance use of IAP might not be the ticket to riches either. Consider the sad story of Gasketball, an iOS game that released for free with a $2.99 in-app purchase to unlock the rest of the content. It managed 200,000 downloads, and at one point was close the top of the iTunes games chart -- but only 0.67% of customers paid for the IAP. After two years of work, the two developers behind the game ended up homeless, staying with friends while trying to address the reasons the app didn't sell well and recoup their investment of time. Whither Apple? Brian's last point was: Pray that Apple changes the App Store. (Just don't hold your breath). Apple definitely knows the criticism about the way that apps are discovered, and has shown signs of trying to address the issue, from redesigns of the layout, to the purchase of Chomp (a startup focused on app discovery). However, it's important to remember that Apple's main goal is to create profits for itself, not developers. Something like raising the prices of apps will benefit developers, but not necessarily consumers. And remember that the sheer volume of iOS apps is an important selling point for the iPhone and iPad versus other platforms. So what about Apple? It keeps 30% of all App Store sales revenue, after all. Surely it would try and keep app prices high to make more money? Well, I'm not so sure. Consider Horace Dediu's deduction that app developers receive $12 for each iOS device sold. That implies that Apple makes $5.14 per device from app sales. Apple never discusses margins, of course, but I think I'm on safe ground if I suggest it makes at least ten times more profit from the hardware sales of the cheapest iOS device. I therefore contend that Apple doesn't have much reason to care about how much software is sold for. Profits from the App Store are insignificant compared to hardware sales. An alternative viewpoint is that proposed by "revorad" in this Hacker News post. As Joel Spolsky wrote in his seminal post on software economics, "smart companies try to commoditize their products' complements." Some products naturally fit together and complement each other, and wherever possible, you want to try and engineer the market to force down the prices of things that complement your product. In other words, if you're Microsoft and you sell PC operating systems, you want to create a market with hundreds of OEMs driving down prices of PC hardware; that way, more people can afford to buy a PC and can then be sold your software. If you're today's IBM, you work hard to foster Open Source software, so that enterprise software can be commodized and the market for your profitable consultancy services grows. If you're Google, you release Android to OEMs under permissive, almost-Open-Source licences, so as to commoditize Internet access from mobile devices; then you have a bigger pool of users using Google services, looking at ads and earning you revenue. And if you're Apple? Well, Apple benefits from a crowded App Store marketplace where developers cut prices to the bone in an attempt to stand out from the crowd. Every single app uploaded to the App Store adds value to every iOS device in existence; every single app a customer buys is another reason for them not to migrate away from iOS in the future. Apple is certainly motivated to keep the App Store busy, and sales high; these things help iOS stand out from competitors like Android. But it's not motivated to keep prices high. In fact, lower prices for apps help to attract consumers to iOS as a platform, selling more of the hardware devices from which the bulk of Apple's vast profits flow. The bottom line: I don't think it's likely Apple will do anything of consequence to help struggling smaller devs. Be the change So, let's recap what we know for sure: Numerous iOS devs are reporting that they are struggling to make enough money to stay afloat because consumers won't buy "premium" (i.e. more than a buck or two) apps. Apps that cut their prices report very high sales boosts. Apple makes much more money from iOS hardware than it does from its commission on App Store sales. I believe that points one and two together are rooted in consumer psychology; we're locked into a feedback loop, where about the only way for a dev to get attention is to cut the price of an app, but that only further encourages users to avoid expensive apps. And I believe point 3 means we can't count on Apple to do anything to fix this. If we don't fix it, I don't forecast doom and gloom. I'm not suggesting devs are going to flee the App Store in droves. However, I do think we'll see less interesting apps and less indie devs, as the excess risk scares away the people who can't deal with it and causes risky ideas to be shelved before they are developed. Meanwhile, the big players like EA and Rovio will churn out mostly bland, risk-adverse titles. I think that would be a shame. Devs could play a part by sticking to their guns and refusing to lower premium prices, but realistically I suspect that ship has sailed. Another option is greater exploration of what freemium can offer, as this thoughtful post from David Barnard (yup, him again!) outlines. This is where I really do hope we see Apple play a part: I'd like to see more flexible monetization options added to the App Store, including paid upgrades and trial/demo modes. As for users, the people who ultimately stand to lose the most if the vibrant, lively App Store we all know and love declines? What can we do? I don't see an easy answer, sadly. I'm going to do the only two things I can do: publish this post and hopefully get people talking, and be the change I want to see by buying apps that I want immediately -- not waiting for sale pricing to come around. Sincere thanks to the people who took the time to respond to my interview requests: Michael and Camille Sikorsky, David Barnard, and Brian Akaka.
Google shocker: American web company says web boosted American economy by $500 billion
Who knew that a company which makes a lot of money on the web would be keen to pitch the web as important to the US economy? Google thinks it's as natural as breathing, as it just took significant credit for fueling real-world shopping. About 97 percent of Americans reportedly searched online for a local business -- it's safe to say Google was involved in a lot of those hunts -- and spent an average of nearly $2,000 per person at brick-and-mortar stores last year. The search giant extrapolates to argue that the web pumped about $500 billion into the US economy, even while excluding internet-only sales. That's certainly a staggering number that shows how much of a cornerstone the internet has become for American business, although it comes across as slightly insecure: a company that's reportedly under tight scrutiny from regulators might be eager to show just how much good it's doing for the public in tough economic times.
Valve economist examines TF2's 'sophisticated' barter system
We're not sure why Valve's economist is concerned with the finances of prestigious Covenant Elites in Halo, but the first publication from Yanis Varoufakis on Valve Economics is about exactly that. Only he spelled "Arbiter" wrong like 20 times.Oh, he's talking about "Arbitrage," the practice of capitalizing on the price difference between two or more markets, and its place in the Team Fortress 2 economy. That makes more sense, barely, but between the specialized equations and graphs Varoufakis offers some plain insight into the world of digital economies.For example, Varoufakis calls the TF2 barter economy "peculiarly sophisticated," noting that Steam's support system allows players to side-step the introduction of currency, operating solely on a "double coincidence of wants." This is something that civilizations for centuries have not been able to support for any protracted period of time, and its complexity is the reason we now have money, rather than things to trade with.The isolated nature of digital economies lends itself to intriguing happenings such as that one, as Varoufakis explains in great detail, we assume because he's thrilled to be able to calculate the exchange rates of laser guns and hats rather than boring old dollars and cents.
Valve has an economist now
Economist Yanis Varoufakis was analyzing the financial crisis in Europe, focusing on Greece, when he got a proposal seemingly out of nowhere. Valve co-founder Gabe Newell saw similarities between the situation in Europe and Valve's troubles with its own virtual economies (for DOTA 2 and Team Fortress 2, presumably.)"Here at my company we were discussing an issue of linking economies in two virtual environments (creating a shared currency), and wrestling with some of the thornier problems of balance of payments," Newell said in an email to Varoufakis, "when it occurred to me 'this is Germany and Greece', a thought that wouldn't have occurred to me without having followed your blog. Rather than continuing to run an emulator of you in my head, I thought I'd check to see if we couldn't get the real you interested in what we are doing."Varoufakis stopped by Valve HQ during a speaking tour and became excited about the possibility of researching a digital, fully recordable economy. "Think of it," he said, "An economy where every action leaves a digital trail, every transaction is recorded; indeed, an economy where we do not need statistics since we have all the data!" And now he's writing a weekly blog called Valve Economics. Unless, of course, he decides to do something else.
TERA's new launch features section adds economic changes
TERA's May release date is less than a month away now, and En Masse Entertainment is filling the days leading up to the big event by unveiling a series of new launch features. Today's piece is focused on a number of adjustments that have been made to the game's economic system. For starters, the trade broker has been vastly improved with "robust search features," while private stores have been abolished in order to make the broker the true hub of the game's economy. Enchanters will be pleased to know that the penalty for failing an enchantment has been removed, so while an enchantment can still fail, it won't weaken the target piece of equipment in the process. And to top it off, the currency demoninations have been changed up to prevent players from having to deal with astronomical amounts of gold. The full details, as well as previous new launch features, can be found over on the game's official site.
Apple stock soars, market value close to entire retail sector
If you haven't noticed, Apple's stock was soaring today. It closed at US$589.58, another all-time high, and is up +21.48 for the day. As financial analysts pour over these numbers, they are discovering some amazing trivia about this off-the-charts growth. Morgan Stanley's Katy Huberty may have kicked off this climb when, as Philip Elmer-DeWitt of Apple 2.0 notes, she revised her previous 12-month price target from $515 to $720 (base case) and to a mind-boggling $960 on the bullish side. Apple's stock has gone up 40 percent since last October 14 ($422) when the iPhone 4S launched. Up 68 percent this year alone. Tyler Durden of ZeroHedge points out Apple's market value is almost equal to the market value of the entire US retail sector combined. Asymco also chimed in and noted that "Apple's market value today increased by more than one Nokia, nearly three $RIMM's or a bit less than one Sony." MacDailyNews also points out that Apple's market value ($548.95 B) is now double that of Microsoft ($274.42 B). To see how far Apple has come, Apple went public on December 12, 1980 at $22.00 per share. It's lowest market value was $630.9 million (stock price of $1.375) on July 8 1982. With the new iPad launch only two days away, I have a feeling this is only the beginning of a momentous climb for Apple.
Early estimates say new iPad cuts Apple's profit margins
These estimates are always to be taken with a grain of salt but, if UBM TechInsights is to be believed, Apple is cutting into its precious profit margins to keep the price of the iPad flat. According to the research firm, the total cost of components in the 16GB 4G model is around $310 -- not including assembly and shipping. With a final price of $629, Cupertino is pulling in about a 51 percent profit, a sizable drop from the estimated 56 percent profit margin on the similarly specced iPad 2 at launch. A large chunk of that increased cost of production is made up by the new retina display, which is estimated to cost around $70, and the LTE chipset, which UBM priced at $21. In contrast, current pricing on the panel in the iPad 2 and its 3G radio rest at around $50 and $10, respectively. We're sure Tim Cook isn't losing any sleep though, there are plenty of other ways to make up that lost dough -- like selling more iPads.
China claims one billion mobile phone users, India shrugs
China claimed 900 million mobile users last April, but back then it still seemed possible that India might reach the billion user milestone first. China was ahead in absolute terms, while India's user base was growing faster. According to the latest figures from its government, however, China is ready to stake its claim. It had 997 million phone owners by late February, with growth of around three million per week, which means it should have tipped the scales in the last few days. Of course, it's not really about who gets there first: The salient fact is that millions more humans can now ring each other up, just, you know, to chat.
EVE Evolved: Five scams to avoid
Anyone who's familiar with EVE Online will have heard stories of the game's criminal underworld, from devastating corporate infiltration to the daily grafting of common con artists. Most players will never perpetrate a scam, but those who do are constantly coming up with new tricks to part you from your hard-earned ISK. For every genuine smooth-talking con-artist who comes up with new schemes and socially engineers his way to a fortune, you'll find dozens of copycats who flood popular chat channels with scams they've seen perpetrated in the past. On an average day, over 90% of the chat in Jita's local channel is people posting copycat scams, with legitimate offers completely drowned out. There may not even be anyone at the helm with these scams, as a script could easily paste the scam message every few minutes for an entire day. Not confined to Jita, these scams are often replicated across all of the game's main trade hubs and popular mission-running systems. Knowing how these scams work is the first step to protecting yourself from making an expensive and extremely embarrassing mistake. In this week's EVE Evolved, I explain the trick behind five of EVE's most common copycat scams and how to protect yourself from them.
