Money Sink

Today's main lesson is about thinking of an online economy as a whole. You may have heard of the term 'money sink' or waste, this is to explain an activity or item that is designed to remove money from the world.

Why they are used, and their importance, is very good to learn about. Lets use an example from WoW and apply it to our reasoning. In WoW, there is an item called Mechano-Hog. If we look at the costs to produce this item, we see that any crafter is probably spending around 13,000 Gold minimum to produce this item. So what is it? Just a mount that can be used to go from point A to point B. It does not go faster. Some people would say "But it allows for a passenger!" The wisdom there is to ask "Is it a paying passenger?"

All gold comes from 3 places. Monster makes it when he dies. NPC gives it for selling items to him, and for completing quests. All gold from all transactions on the server originally can be traced back to these activities. Gold is removed from the server when you Repair your gear. When a character quits the game without giving it away. When you buy items from NPC's. And from posting some items on the Auction House. So the number of players on a server doing gold making activities has to stay balanced with the number of gold-removal activities, or else there slowly grows inflation. Back to the Stupid-expensive useless item...

The item exists exclusively to remove gold from the older characters on the server that have excess gold, and want the fake importance item that no one else can afford. Because the 50 other mounts they have also get them from A to B at the same speed, but everyone else has, then they need this item.

Blizzard designed it to appeal to the player that has too much gold. This means their demographics data says 'There is too much gold on the server, and most of it is in the older character's hands'. This means that the prices of standard items are prone to inflation due to the debasement of valued items as people are willing to pay more gold for same item as before. Blizzard wants the game to be enjoyable to the new player, and the new player doesn't have 13,000 Gold to spend just on a mount. So the gold is returned to the server (Destroyed) and the old character has expensive excuse to be 'cool'.

This is good example to laugh at, but it has importance. In order to make the stupid-expensive vehicle, an engineer had to craft it. Hopefully some of the older character's gold went to the financing and labour this engineer had to spend to craft. The gold had a chance to trickle down between many hands before being used up. This is better than having 100,000 gold in your bank account. The end some people choose to spend their gold on may be silly, but it is good that it is being spent and not devaluing all of the currently existing gold on the server.