Castronova, E. On Virtual Economies

In his paper On Virtual Economies Castronova explores gaming and the economy of virtual worlds and he asks himself ‘whether these virtual economies will grow in importance’ and ‘how this will affect real-world economies and governments’ (Castronova 1). According to Castronova the demand for game time can be expresses in an ‘economic model’, although I don’t completely understand this model. Besides this, he thinks it is unlikely that one company or game will dominate the market. He also mentions that nowadays it is not always sure where, for example, assets belong to. Castronova speaks of a new ‘virtual frontier’, but he’s undecided who the new governing authority will be. He concludes by saying that there are quite a few differences between earth economics and avatar economics (Castronova 18).  

            My question is, “can real-world economies and governments be used as an example or ‘help’ virtual worlds?” Castronova seems to keep treating ‘the economics on earth’ and ‘avatar economy’ as two separate things and doesn’t really answer question like “where do certain assets belong to?” and “who will the new governing authority be?” Even though, he does mention for example the End User Licensing Agreement (EULA) that limits the rights of players (Castronova 15), I think it can be beneficial if we look into it more. Maybe with some slight adjustments, some real-world institutions, like the law, can also be used in cyberspace.

Slater, D. Capturing markets from the Economists

Slater believes that ‘culture’ and ‘economics’ are internally related to one another and he feels that if you analyse the ‘cultural economy’ you have to take into account the lived social practices (Slater 61). Slater thinks conventional economists are mistaken in believing that products are self-evident and fixed. He and most advertisers see ‘real’ markets and products as dynamic. At the same time, advertising is often seen as a cultural intervention in the domain of the economics. For example, advertisers usually try to rationalise the market and market relations and form a strategy, so they can sell their product as well as possible. Besides this, advertisers always try to select the best market for their product. 

What I would like to know is, “how (do) advertisers on the Internet select their markets?” and “does Internet advertising really work”? If I’m not mistaken, Slater thinks that a ‘market’ cannot be defined as a given structure, but at the same time he sees it as a culturally defined domain with certain boundaries and economic structure (Slater 68). I think this definition is a bit unclear. Besides this, it also seems very difficult for advertisers to select just one market, when the Internet consists of numerous, different, ever changing markets. Even if advertisers succeed in doing so, chances are that it doesn’t turn out the way they planned it. For example, advertisers often use pop ups, but many people find pop ups annoying and throw them away as soon as they can. However, pop ups still exist, so it is likely that somehow they do have the desired effect. How exactly, I do not know (yet).