What Is RMT?

"My impression is that the ban has had little impact on trading.  Sony, effectively the government of Norrath, is fighting a war of trade restrictions that no government has ever won."

Professor Edward Castronova, Indiana University, 2001¹

RMT, or real money trading, is a practice older than the existence of the 3-dimensional MMORPG.  So why do so many people argue over exactly what constitutes RMT?   The latest example occurred during the SOMERblink controversy in EVE Online.  Reading the forums, I saw the debate occasionally devolve from a discussion of SOMERblink's business practices to what constituted RMT.  When people cannot agree on basic terms people wind up talking past each other.

So what is RMT?  At the most basic level, real money trading is the exchange of virtual goods, including in-game currency, and services for real world currency.  But some of the confusion occurs when the discussion turns to the two different types of RMT markets.

In a paper first published in Proceedings of the 2005 Conference on Future Play, Dr. Vili Lehdonvirta, then at the Helsinki Institute for Information Technology, discussed the problems of the secondary RMT markets for games and how game companies could handle the problems resulting from players.²  According to Dr. Lehdonvirta, secondary markets are markets in which "virtual world users buy and sell virtual assets between each other without the operator’s involvement."  The secondary market is what most players think of when the discussion turns to RMT.  Activities such as purchasing in-game currency and items from 3rd party websites along with power leveling services make up the bulk of the transactions.  Game companies usually frown on these activities and will ban those players who engage in them.  Because these activities usually violate the EULA and/or terms of service for games, I usually refer to this type of real money transaction as illicit or unsanctioned RMT.

Where players come to disagreements on RMT are on those activities that fall in the primary RMT market.  The HIIT's Tuukka Lehtiniemi in 2007 defined the primary market as trade "in which the operators of certain services sell virtual items to users for real money. Such services are usually free to use. Typically players buy the service’s own internal currency with real money, and use that currency for microtransactions inside the service."  Services like this include the cash shops that often appear in games today.  Sony Online Entertainment's Station Cash and ArenaNet's Gem Store for Guild Wars 2 are two obvious examples of game operators becoming directly involved in selling in-game items.  A growing model is the PLEX-model, in which game companies sell items that players can either redeem for game time or sell to others on the in-game market in exchange for in-game currency.

Usually the operators of virtual worlds will allow real world money to flow into world but not out of one.  Exceptions do exist.  Perhaps the most famous involves Second Life.  People are able to convert Linden Dollars into real world currency.  The same is true for the Entropia Universe, although Mindark's world is more of an MMORPG than Second Life.  In fact, for a time in 2006, players could actually withdraw funds from the Entropia Universe using an ATM card.

Perhaps the most unique withdrawal of value allowed by a game operator occurs in EVE Online.  While players do not receive cash directly, they can receive real world value for their virtual currency.  Players have paid to attend events like Fanfest and EVE Vegas using PLEX as well as purchase graphics cards from NVIDIA.  CCP even has a program called PLEX for Good in which players can purchase PLEX using in-game currency and then CCP will donate money to the Red Cross.  In the past players have raised over $100,000 for relief efforts following disasters in Haiti, Japan, Pakistan and the United States.  CCP is holding another effort aimed at helping the victims of Typhoon Haiyan in the Philippines that will run until 7 December.

Some will maintain that because the above examples do not result in bans from the game operators that those actions are not RMT.  But that assertion is not true.  RMT is not defined by whether rules are broken.  Instead, the rule of thumb for determining whether an action is RMT is whether something of value in the real world is exchanged for something of value inside the virtual world.


Notes:

1.  Castronova, Edward, Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier (December 2001). CESifo Working Paper Series No. 618. Available at SSRN: http://ssrn.com/abstract=294828.

2.  Lehdonvirta, Vili, Real-Money Trade of Virtual Assets: New Strategies for Virtual World Operators (2008). VIRTUAL WORLDS, Ipe, Mary, ed., pp. 113-137, Icfai University Press, Hyderabad, India, 2008. Available at SSRN: http://ssrn.com/abstract=1351782.