The Player-Owned Economy

One of the things we've never been entirely satisfied with has been our economy. Our original plan called for a complex supply and demand model based on the nature and size of every port. While this model was sophisticated and interesting, it suffered from one minor and one major flaw. The minor flaw was that players were not as involved in the process as we would have liked; much of the activity of the economy happened 'off-stage'. The major flaw was that the system would require a small army of designers and several years to create all the content, and then the whole thing would still need tuning. For a small company, this was not an option.

So we wrote an economy that, at the time, I called the 'Simple Economy'. It was a very basic supply and demand model; the more of a good you supplied to a port, the less it wanted that good; the more of a good you bought from a port, the less of that good they would sell you. The goods were meaningless, just period labels slapped on an array of dynamic numbers. Nobody wanted 'sugar' for any particular reason; they just generically demanded it across the Caribbean. The benefit of this system was that it was easy to put into place, and could be globally tuned. The drawback, of course, is that it was boring. Even as I was writing it, I was planning the next step up.

I called that next step the 'Player-Owned Economy'. Confession time: I'm a die-hard libertarian. I looked at attempts to manage and control game economies, saw them failing, and thought 'duh, of course they fail. You can't make a planned economy work.' Games are pretty far from real life, of course, which means it isn't as simple as tossing a bunch of resources into the world and letting people sort it out, but there were still many applicable lessons to be taken.

The basic principles of the economy, then, came down to three things. One: Players, not game systems, should determine the value of an object. Items should be worth what players are willing to pay for them, not worth what A_Bag_Merchant_01 is willing to pay for them. Two: All players should be participants in the economy. This is inevitably true anyway; I just wanted to make it explicit. If you want goods, with only a few exceptions you buy them from another player. Every item in the world, again with a few exceptions, is in the world because another player made it -- from wood planks to ships of the line, from loaves of bread to architectural plans. (And everything I just mentioned is actually in the current version of the game, and can be produced by players.) Three: PvP should determine control of vital resources, and strongly impact the economy, but in a way that does not destroy the mercantile gameplay of a PvE merchant. If a foreign power takes over your home port, I want you to still be able to play, but I want you to be sending strongly-worded letters to your local uberguild, demanding they retake the port.

Informing all these design goals was a negative: No crafting grind. So many games fall down when they put together an economy because they strive for an unrealistic goal: they try to limit the number of people acting as economic participants, typically by making it dull and shockingly unprofitable to participate in their economies. This approach fails to see the bigger picture: in the real world, we're all participants. Why doesn't the real world economy fall apart? The answer is specialization. You can only do so many things in a day; you have to focus on a few things to do well, and rely on other people for the things you can't do. I decided it was a problem of scale: if I can cut down trees, drag them to a mill, saw them into planks, then draw up plans for a shipyard, use the planks to build the shipyard, and use the leftovers to build a ship... the scale is too broad. One person couldn't do all that. I needed a way to break these out into separate tasks, so that I could cut down the trees OR saw them into planks OR draw up plans OR build a ship. I needed a way to get people to cooperate, but in the same kind of convenient impersonal way we cooperate in the real world.

Having set the stage, I'll briefly outline how the economy actually works. Every player has a finite number of lots -- right now that number is 10, but it might be larger or smaller in the final release. Lots are an abstraction of how much property you can own, and are tracked on an account-wide basis. They're not tied to any specific port, but instead represent a global amount of real estate you can own and manage.

Players build structures in their lots. Structures are things like logging camps, mines, and plantations; they also include things like forges, lumber mills, weavers, and shipyards. Most structures use 1 lot, but some huge structures, like the largest shipyards, can use 2 or more. Structures are located in specific ports -- if you build an iron mine in Tampico, your mine is actually located in Tampico. To use it, you have to be in Tampico.

Structures can't be built unless some basic requirements are met. First, you have to be well-liked enough by the nation that owns the port that they'll allow you to build there. You don't have to be allied with them, or even very friendly, but you can't be hated. The British Navy isn't going to be operating tobacco plantations in pirate-controlled ports, for instance. Second, you have to own a warehouse in the port. Warehouses are a special kind of structure that does nothing except provide local storage space, and allow you to build additional structures. Third, you have to have the materials on-hand to construct the building -- they typically require various types of wood, stone, gravel, and other raw materials. Finally, the port has to have the proper resources for the structure you're building.

What that means is that you can't build a logging camp to harvest oak trees if the island doesn't have oak as a resource. You can't build a sugar plantation on an infertile island, and you can't mine gold from an island with no gold deposits. (My favorite: you can't collect cochineal beetles without the proper soil for raising prickly pear cacti.)

Once you've got a structure, you next need a recipe. Recipes are simple descriptions of how one or more things are turned into one or more other things, how long that takes, and how much it costs. For instance, I might have a recipe that has an input of one unit of iron, and an output of 100 units of nails; it takes one hour to complete, and costs 100 doubloons to execute. Recipes can be used in any structure of the correct type; a recipe to saw oak into ship timbers can be used in any lumber mill, as can a recipe to saw the same oak logs into planks.

It's not a whole lot of fun to sit and wait for an hour after you use a recipe to collect your goods, though. What's more, that penalizes players who can't log on every hour to use their recipes. Instead, we use the concept of stored labor to represent time expenditure. If a recipe requires an hour of labor to complete, we don't make you wait an hour. In fact, you get the output of the recipe immediately; it shows up in your warehouse as soon as you click the button. At the same time, it consumes 3600 seconds of stored labor from the structure. If the structure doesn't have 3600 seconds saved up, though, the recipe can't be used there.

Stored labor accumulates at a rate of 1 second per real-world second passing; you can store a maximum of 72 hours of labor in each structure. This means if you can't play for a few days, you won't fall behind in the economic game. You'll come back to buildings that are full to capacity with labor, and ready to work. It also means you don't have to babysit your structures when you log on. You can go out adventuring and sailing, and you won't be losing any labor on your structures; it's saved up for when you return.

Structures aren't free, though. To keep one operating, you have to pay upkeep, which takes the form of both doubloons and goods. This upkeep is paid in week-long blocks, although you can pay as much as you like in advance. It's not the end of the world if you fail to pay your upkeep, though; it just shuts down your structure temporarily, until you pay again. This means you can let structures you're not using currently go 'offline' with no penalty and no real cost.

I may be a libertarian, but the governments of the period weren't. We don't have permadeath, so the only real certainty in our game is taxes. Taxes are determined between the port's owning nation and your nation. If they're the same -- you're English in an English port -- the tax rate is likely to be low. If you're English in a Spanish port, the tax rate is likely to be high. If (somehow) you're a pirate in a Spanish port, the tax rate may be crippling. This tax is paid on every recipe you use, every time you use it. If a recipe costs 100 doubloons to use, and you're paying 10 percent taxes, you'll pay 110 doubloons. The rates are adjustable for every combination of nations -- we can decide that the French particularly hate the Spanish, and tax them at 50 percent. Ports that are friendly to your nation are going to make you more efficient; ports that hate your nation are going to make you less efficient.

Thus far, we've talked about all the items in the game in purely abstract terms. When I say 100 'units' of wood, though, I'm talking about 100 tons of wood. Moving that around isn't something you do through email attachments. Some ship has to load that wood up, haul it to a destination, and unload it. This process is handled through two related systems: the auction house and the local market. The auction house functions much as you might expect from other games; the actual model for it is the Auction House from Final Fantasy XI. There are a small number of these, located in large (and unconquerable) capital ports. Currently I'm planning for 2 per nation, one pirate auction house, and one Dutch auction house. Each auction house's prices will float independent of the others.

More immediately interesting, though, is the local market. It's like a small, limited auction house in every port in the game. As a producer in a port, you can offer goods out of your warehouse for sale at whatever price you like per unit, or place a buy order to purchase an item at whatever price you're willing to pay per unit. As a trader, you can visit ports, fulfilling buy orders and buying the products of the local merchants. From the perspective of, say, a logging baron -- someone purely interested in felling oak trees for sale -- this allows you to dump all your goods in a convenient and accessible place, and let traders do the work of buying and transporting them. After all, you may be generating thousands of tons of wood, and moving that around is not really the gameplay you're looking for. From the perspective of a trader, this allows you to travel the Caribbean, learning the local prices for goods and looking for asymmetries, where someone is selling for less than a buy order you know about. From the perspective of a player who just wants to buy some cannons and kick butt, the local markets can be ignored; traders will deliver the goods you need to the major auction houses, where you can buy it. There's a markup, of course, but that's the price paid for convenience.

Before I go into the implications of the system, I'll give you a few examples. I should note that while these examples are derived from actual content that's in the game right now, they're subject to change without notice, as we tinker and tune.

Adam, a Spaniard, owns the deed to an Iron Mine. He places it in Port-of-Spain, on the coast of South America -- a region he spends most of his gameplay time in. He's already built a Warehouse there, so he has storage available. To build this mine requires 20 units of Granite, 60 units of Common Wood, 40 units of Oak (for structural support), and 20 units of Iron (for the tools, carts, and so forth). This is all pretty abstract, but makes the process of building a structure not utterly horrific (when I wrote it originally, it was far less abstract, and almost unusable). Adam's already purchased these goods and moved them laboriously from around the region to his warehouse. He could have just bought them all at the large regional auction house, but he's trying to save some money. The mine takes 1 hour to construct, so he starts the construction and goes off to do some missions. The time requirement is to prevent large Societies from being able to build an instantaneous production line when a port is threatened by enemies.

Adam's mine is completed, and he returns to start mining. He owns a single recipe, 'Iron Mining'. It uses 1 hour of stored labor, costs 400 doubloons, and produces one unit of Iron Ore. The mine starts out with a single stored hour, but Adam took a break for lunch, so he currently has 4 hours stored up. He uses the recipe four times, consuming all his stored labor and 1600 doubloons, and puts his ore on the local market at a price of 600 doubloons per unit of ore. He knows this is the going rate because he's checked the region for other prices. In fact, the high margin is why he got into the iron business; the demand for iron is far higher than the current supply.

Beth owns a Forge. She mostly processes ore for other people; while she owns a single iron mine, it's not her main business. She sees Adam's units of iron ore go up, and realizes Adam hasn't seen the prices of ore today, which have risen by almost 50 doubloons. She quickly buys his ore before he changes the price; since her forge is in the same port, Port-of-Spain, the iron is delivered immediately into her warehouse. If she'd been one port over, she would have had to transport the iron herself. 4 units isn't much to transport, but she usually operates in bulk, which is why she placed her Forge in a port that has iron deposits. She wants to use her recipe, 'Iron Smelting', which consumes 2 units of Ore and one unit of Limestone -- but Port-of-Spain has no limestone. The closest Limestone is in the port of Santa Marta. She could place a buy order in Port-of-Spain, but she doesn't want to wait, so she sails to Santa Marta and buys four units of Limestone. Santa Marta is currently a PvP zone, so she has to dodge an English patrol, but for a cargo this small she's taken her fastest ship, a schooner. She bought four units just so she wouldn't have to make another trip immediately if more ore showed up.

Back in port, Beth smelts Adam's iron ore into a total of two Iron Ingots. She has no immediate need for them, so she puts them up on the local market for 1700 doubloons each. This is a little high, but she knows that the shipwrights of the region buy in bulk to make all the nails and fittings they need for the demands of the major Spanish Societies operating in the area. They'll sell at 1700; it just may take a few hours. She logs off.

Chris is a trader, sailing a massive merchant galleon with his hired escort, a privateer named Diana. Chris arrives in Port-of-Spain and buys all the available iron ingots, a total of 300 units. He knows Port-of-Spain has iron as a resource, and regularly sweeps the port of all its iron ingots. He's paying a premium, 1800 per unit, but he wants everything available. His hold full, he and Diana sail off towards the auction house of Havana -- the center of the Spanish mercantile world. Everyone who needs goods comes to Havana first, so the current price of the (relatively scarce) iron ingots is 2000 doubloons in Havana. Chris has 300 units of iron, but has to pay off a pirate along the way; he gives the pirate 20 ingots, and the pirate wisely accepts, knowing he may not be able to beat Diana's small but powerful cutter. Chris lists his remaining 280 units of iron in Havana at 2000. This costs him a 200 doubloon listing fee, but he's confident they'll sell, and generate a 18800 doubloon profit.

Eric, a weaponsmith for a major Society, needs iron badly, for shot and cannons. He checks Havana's auction house, decides he can't wait any longer, and buys 500 units of iron for 2000 doubloons each -- including Chris's iron. He passes the iron out to his Society-mates, and they convoy it back to their home port. There aren't any good nearby sources of iron in the hotly-contested region in which they live, but there are plenty of gold mines and sugar plantations, so they're able to afford to import iron. Eric owns 5 Weaponsmithies, and his Society demands chain shot. Lots and lots of chain shot. His recipe costs 200 doubloons to execute, requires 1 unit of iron, and uses 2 hours of stored labor. He's been waiting for iron prices to drop, so his structures have almost 20 hours of stored labor. He uses it all up, in 5 parallel runs -- 45 executions of the recipe total, for 22,500 units of chain shot. He delivers 10,000 of them to his Society's Quartermaster, and puts the rest up for sale on the local market. His enemies, the dastardly French Society Les Francophones, may also buy them there, but he's priced them so high that the profits will easily pay for the 10,000 he's given to his Society for free. If the French want to put money in his Society's pockets, it's fine by him.

Let's look at the implications of the system. First, and most obviously: it's large and complex enough to let you find a niche for yourself, doing whatever you want to do. In our example, everyone is pretty specialized, but you could just as easily diversify, owning structures in multiple ports, or owning a larger slice of the production chain yourself. You could own a few mines, a forge, and your own weaponsmithy, and produce deeply discounted ammunition and cannon. Or you could specialize even further, making only a single recipe in vast quantities to take over the market for that item.

It means that player skill is rewarded -- in this case, the player skill of learning the market, learning where goods are expensive and where they're cheap, and why. A trader who just buys low and sells high will make decent money; a trader who can anticipate an upcoming war between two Societies, and buy up all kinds of critical supplies so he can relist them when their prices rise will become fabulously wealthy. Flexibility and agility, as well as knowledge and instinct, will all play a role in manipulating and responding to the market.

It means that taking over a port is more than just scoring a point in a big game of port-football. Ports have resources, and if you can seize them, you can exclude your enemies -- or at least make their production facilities too expensive to compete effectively in the market. If you can grab a local source of iron, or of oak, you can install your own Society members in production facilities and generate vast quantities of cheap goods for your own use. And if you're a merchant, keeping your taxes low provides an excellent reason to fund your friendly local PvP Society to defend the port where all your structures live.

It means that there aren't artificial pressures on you when you decide what to build. If you make items, you're making them for a market price determined solely by other players. There's a reason for every item; when items sell, it's because someone needs them. Conversely, everything you need comes from other players. You may not be able to get that great consumable item, or that great piece of outfitting, because it may not be profitable enough for anyone to list one.

It means that pirates have real impact on the world. If a pirate seizes the cargo of a player merchant, that cargo is a total loss to the merchant -- and may resurface in a different nation's market entirely. A concerted effort by pirates could turn the tide against a nation relying on cargo being delivered through a PvP+ area. It means that blockades evolve naturally; if you can field enough ships, and sink incoming player merchants, you can deny goods to your enemies. And piracy keeps wealth moving around the economy, as any merchant might lose his precious cargo of rare goods, allowing some unscrupulous trader to buy them from the pirate auction house.

It rewards players at every level of the economy. If all you want to do is make a little money on the side, you can produce and sell simple goods like wood and gravel, and make a profit from their sales to players higher up in the production chain. If you want to be a full-on producer merchant, you can generate goods in volume, and market them to your fellow players. And if your whole Society wants to be an economic powerhouse, you can organize and assign economic roles so that the Society can, assembly-line style, produce cannons, ammunition, or ships entirely in-Society.

It gives adventurers a distinct advantage in trading and producing gameplay. Adventurers have the easiest time being liked by other nations and factions, so they have the most possible markets from which to choose when looking for goods at decent prices. Adventurers can move goods that are common in English territory to Spanish territory, where they're rare. Adventurers can build structures in ports of other nations, where important resources are located, and move the products of those resources out to friendly territory, while dutifully paying their taxes to their foreign landlords.

It removes any concept of grinding for crafting skill. In ship combat, we don't make you fire each gun; you're playing the captain, and your crew handles the moment-to-moment tasks. In the economy, we do the same: you're the owner. Your employees and foremen handle the moment-to-moment tasks. You don't have to pour molten iron into a mold; you just tell your foreman 'Make me a cannon' and he implements your orders.

To wrap up, I'll give you a sense of the scale of the economy. Here are a pair of recipes that are currently available in the game. One of them produces a tiny little ship hull -- something like a small schooner. The other produces a hull for a 50-gun ship of the line.

Construct Small Scout Hull
Cost: 5000 doubloons
Labor: 24 hours

Inputs
Keel, Small (1)

Stem (1)

Frame Timber, Small (2)

Beam, Small (6)

Planks, Oak (10)

Strakes, Oak (6)

Filling-frame, Small (2)

Iron Fittings (1)

Nails (1)

Transom, Small (1)


Outputs
Scout Hull, Small (1)

Construct Huge Dreadnought Hull
Cost: 115000 doubloons
Labor: 72 hours

Inputs
Keel, Large (2)

Stem (2)

Frame Timber, Large (15)

Frame Timber, Small (2)

Transom, Large (10)

Beam, Large (80)

Beam, Small (10)

Planks, Oak (130)

Strakes, Oak (74)

Filling-frame, Large (42)

Filling-frame, Small (2)

Iron Fittings (24)

Nails (23)

Transom, Small (4)


Outputs
Dreadnought Hull, Huge (1)

To give you some idea of what these quantities mean, the estimate for the minimum possible price for the larger hulls is 330,000 doubloons -- that's assuming no markup, no taxes, and perfect efficiency. The minimum possible time in which it could be constructed is a little more than 3 days, assuming everything is set up, in the right ports, and ready to go before the process begins. And that's just the hull; it doesn't include the masts, rigging, sails -- not to mention the guns, ammunition, and provisions. All told, a 50-gun ship of the line could be more than 2 million doubloons to create. But at the other end, a small, one-man operation could easily generate a nice, healthy profit creating supplies for that same ship.

It's probably obvious, but I'm really excited about this system. It makes me happy as an MMO player, because I love crafting but hate crafting grinds. It makes me happy as a free-market wonk, because it puts the system complexity where it belongs: on the interactions of the players. And it makes me really, really happy as a designer, because it's built on very simple concepts, so it's easy to tune, easy to expand, and easy to conceptualize. If I want to add a new item, or a new structure, or a new recipe, or a new resource, it's trivial to do so. In fact, it takes longer for the artists to create the artwork for a new item than it does for me to add it to the game.

I've been enthusiastic about the beta testers seeing other features before, but the last week or so since the economy actually made it into our internal builds have felt like the buildup to Christmas when I was 10 years old. I hope that you'll enjoy using it as much as I've enjoyed designing it.