Castronova, Edward

Edward Castronova

Edward Castronova, author of Synthetic Worlds: The Business and Culture of Online Games, is an associate professor of telecommunications at Indiana University-Bloomington. He previously held positions as an associate professor of economics at California State University-Fullerton, and associate professor of public policy and political science at the University of Rochester. He obtained a B.S. degree in international affairs from Georgetown University and a Ph.D. in economics from the University of Wisconsin-Madison.



In 2001 he released the paper "Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier," at the Social Science Research Network (SSRN), the web's primary source for academic papers in law, finance, management, and economics. In 2003, he co-founded Terra Nova, a weblog about virtual worlds. He is also a frequent speaker and consultant on the implications of synthetic worlds. Professor Castronova was born as Edward Bird and changed his name upon his marriage in 2000.

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tompeters.com asks ...

Edward, what's your book about?

EC: There's something new happening on the internet. Video games are becoming a type of community/society thing happening at a very high level. A lot of people are getting interested in this—journalists academics, and businesspeople.

The problem is that folks who are of a certain age don't have any familiarity with this. They may know a lot about the internet and email, and Microsoft Word and Excel, but video gaming is outside their awareness.

As this phenomenon was developing, I kept having an experience where I would connect with mid-level people in an organization—somebody in business or a reporter, for instance. They would say, "This is all great, but I can't get my editor, my senior manager, my tenured professor to understand what this is." So I wrote a book that I hoped would take a mature, intelligent person, a person of affairs, and walk them through what's going on. That was the point.

What prompted you? What got you to the point where you needed to make that explanation to the world?

EC: To be totally honest, it all started as a joke. In economics writing, there's a tradition of writing joke papers. Which, in the dismal science of economics, is considered funny. Right?

That's a good thing. We like that.

EC: So there might be a paper about the probabilities and expected winnings of people using different strategies at a game like Jeopardy, and people will think, "Oh, that's funny." I was playing a game called EverQuest that had an economy in it. The neat thing about this game was that it was a fully formed economy, with hundreds of thousands of people. It had prices, markets, inflation, and so on.

I thought it would be really funny to write up "Castronova's Report on EverQuest" in the same tone as the World Bank report on Poland, kind of an ironic paper. I started on that road and began collecting the data, thinking I would write a paper that graduate students would read and chuckle at.

I read, for example, some of the work of Ray Kurzweil and others about the ongoing computational explosion and where that's going to take us. Then I saw how big this stuff was already. I realized we weren't looking at tens of thousands of dollars of economic values; it was hundreds of millions of dollars of economic value. And that was back in 2001. It's only gotten bigger since.

So that's what took me from being a mainstream economist to being something of a tech-aware economist, thinking about the future of technology and what it means to the economy online. It totally changed the direction of my research.

I know we're dealing with a very prominent digital divide. I'm 50, but I got sort of turned onto some games—I'm a total neophyte, but at least I have a comprehension. I think there are a lot of people out there whose kids are absorbed at the computer all day, and the parents are not quite sure what the kids are doing. As you say, there are people of a certain age who don't have any idea what you're talking about.

Can you just give me a quick example of an economic feature of these online environments?

EC: Okay. So you're in an online environment with a video game character, and everybody else has characters. You want to go talk to your friend. Your friend has a character. It so happens that his character is on the other side of the world. To get to the other side of the world, you've got to ride a blimp. To ride a blimp, you have to pay a fee of, let's say, 30 silver pieces.

How do you get 30 silver pieces? Well, you have to go out into the world and collect some resource that other people want to buy. Maybe people want to buy copper ore. So oddly enough, all you want to do is go interact with your friend, and you find yourself with a video game character who has a virtual mining pick standing by a virtual mountain, picking away to collect copper ore to sell to somebody for 30 silver pieces so you can ride the blimp and go to talk to your friend.

So from the standpoint of society, what we've got is communication—two friends talking and transporting themselves in this environment. But as an economist, I see trade. I see prices. I see scarcity. I see labor supply. Those things are just as real as the things in the real world. It doesn't really matter that it's a fantastic environment driving them. There's still scarcity and choice and trade.

Right. We just posted an interview with Ray Kurzweil which refers to the same issue of getting beyond this mindset of real life—which I guess the gamers call RL, right?

EC: Yes, RL.

I would mistake it for a Ralph Lauren logo, or something. But what I think everyone has to understand is that the virtual life is expanding so quickly that those distinctions are going to break down. That is, if Ray Kurzweil is anywhere near right, and there's no reason to believe he isn't.

EC: Actually I would say that there are no distinctions except those we impose. For example, you can put your eyeballs wherever you want to. If you want to put them on the TV screen or into a world that your computer's creating, you can do that.

You'll see young people shift between a million instant messaging conversations at the same time. They don't really see a boundary there. However, we impose a boundary between the fantasy space and the real space for a reason. And that is because the fantasy space is special. Right? We want it to be separate. Right? For example, it's no fun to play soccer if just everyone can run onto the field. Right? There's a boundary there. We put it there.

It wouldn't be fun to play Monopoly if people could just whip out their checkbook every time they wanted another property—there's a reason why people don't do that. And that's because the game of soccer or the game of Monopoly would be radically different if we didn't have that boundary in place.

So with these fantasy worlds, it's as if you're setting up an economy in these places. And then you say, "As part of the rules, you're not supposed to bring your real world money in here, or anything like that." And so that boundary is imposed.

Yet when outside observers come and look at the phenomenon, they go, "Wow, look at all the flow of money and value across that boundary. The virtual and the real are blending together." And I'm saying, they're naturally together. We should work on keeping them apart actually.

It sounds like you've been very personally involved with playing these various games.

EC: Yes.

We learned a fair amount about you in the course of reading this book, and I think you were a Shakespearean actor at some point, or had some theater experience.

EC: Yes, mostly community theater.

But still, you have an interest there. I'm just wondering if that's related to your interest in games, where you might be playing, I don't know, some kind of rogue dwarf in World of Warcraft.

EC: I think actually there are deep intellectual similarities between the themes in Shakespeare and what's happening right now in reality. We have these parallel, almost competing environments growing up, where people can choose what kind of game they're going to play. Are we going to play the game of real life? Am I going to be a worker in Starbucks or a starship captain? That's my choice.

It runs throughout Shakespeare that much of the social world is a world of seeming, of self-supporting equilibrium, where value is contingent upon what everybody says value is. So I find that reading things like King Lear and Hamlet is tremendously congenial to understanding why people get blown away by this phenomenon. It's because they're seeing a structure of society that's always been there, but it's very easy to forget about it and ignore it. Shakespeare doesn't let you do that, and virtual worlds don't let you do it either.

So in a way, you're more omnipresent in the virtual world or online world than in real life, where you're cut off from so much of that.

EC: Right. In real life, it's really convenient to, let's say, look at the clothes you wear and the body you have and just say that it's natural, that it isn't a choice. Shakespeare would remind us that everything we put on is a signal in a vast and complex game, even how we shape our bodies.

In virtual worlds, since you can choose your body, you suddenly become conscious. What you look like is a choice. It's unavoidable. And if you think, "Well, that's something that's special about the video game," I'll remind you that the number of breast modifications has gone up dramatically in the last 10 or 15 years. So the culture is changing with an increased awareness of the "game" nature of all social interaction.

As I said, when you go to the virtual world, you can't ignore choosing a body. Am I going to be a little gnome or a great big ogre? Am I going to have a character whose powers are mainly to help others? Or am I going to be a character whose powers are mainly to sneak around and stab people in the back? In the real world, we think that's endowed, when it probably isn't. But in the virtual world, you know it's not endowed. It's a choice.

That's almost scary. All of a sudden, you have to make a lot of choices in the online world that you don't think about in the real world. I come with this body; that's pretty much a given. As you say, I can do the makeover, but it's easy to say, "This is what I came with and this is what I'll run with." On the contrary, as soon as you get into online world, one of the first things you have to do is quickly make a lot of decisions about your appearance, right? But doesn't that in a way create a hurdle for, let's say, someone over 40?

EC: How many over-40 people would be as comfortable as young people are putting on the other gender? That's pretty common in these worlds. Someone will say, "Oh, just for the hell of it, I'll play a girl for a while." What's interesting is that the norms of male/female interaction are sustained. So male characters treat female characters differently, even though everyone knows that a good fraction of the female characters are being played by males.

I don't have any particular doubts about my gender identity, but when I play a female character, that has a distinct impact on how I interact with people, even those who know me in real life. We kid around. You know, I curtsy. I demand things be said in a different way. I talk about going to the restroom with the other female characters, some of whom are female in real life, some of whom aren't.

So it becomes a template by which gender politics can be discussed. And it can be really fun with strangers, people who don't know I'm a guy in real life. I can alternately flirt, if I want to, or adopt some kind of a cold persona, but just generally play out these female roles. I'm not claiming that I suddenly understand what it's like to be a woman. That's not my claim. But I think I understand it better.

It seems to me that at first people playing another gender will conform to stereotypes. But maybe if you play the role long enough, then you actually begin to think about it more.

EC: The deeper point that you brought up is, how many people are comfortable with that? And again, for folks of a certain age, the idea that switching gender would be completely comfortable is kind of mind-blowing: "You mean I can be a woman just for a day? Really look like a woman? It'll be my voice and everything, but it'll be a woman?" How many CEOs are comfortable with that? I don't know. But that opportunity is confronting all of us. And freedom is frightening in some sense.

As part of my research, I'd heard about Second Life, and I was prompted to jump in a little more in the last few days. It's daunting at first. Then there's just this total lack of structure. I'm there in this other world thinking to myself, "What do I do next?"

EC: Well, that's particular to Second Life. Second Life isn't a game; it's a world. And while there is no structure imposed by the designers, the structure has been built by the players themselves. So there are lots of things you can do, but there's no stated direction of, "Go here to have fun."

But getting back to what prompted you to do all this anyway, the fact is that there's an economy there.

EC: Oh yes. There's a massive economy in SL, and unlike most of these places, an economy that welcomes interaction with the real world. You're invited to make real-world money in SL, and that's unique to Second Life.

I'm going to have to go try one of these other games. What do you recommend?

EC: World of Warcraft. World of Warcraft is an event. It's the biggest U.S. game. It's the first multi-million subscriber game coming out of North America. It's also unique in that I don't hesitate to recommend it to folks like you, because you won't have any trouble figuring out what to do. That's been a problem in this area for a long time, just figuring out, "Okay, I have a character. There are other people running around. What is it all about?"

In World of Warcraft, there are big yellow exclamation points above the heads of non-player characters, little robots. You just walk up to them and click on them and they'll tell you what to do. You get led by the hand. Slowly you get en-cultured. So it's a good learning experience.

It's very, very different from Second Life. Second Life doesn't have allure and mystery built in; it's up to the users to create those things themselves. That makes Second Life unusual, and not representative of where this market is right now.

You really see Second Life as the odd child out?

EC: It's an exciting future, okay? So the point of Second Life is to grow into kind of a metaverse where people can create things. That's exciting, but not representative at the moment. Conversely, World of Warcraft is designed to be a world for people to live in right now; it's already built out. If you just look at the numbers, right now Second Life looks like the odd man out. It's just not nearly as big as the four million players of World of Warcraft.

But Second Life is the kind of thing that might appeal to somebody like me, because you can go in there and play some other person. I mean, it's sort of ideal for a guy with a midlife crisis. Right?

EC: That's true. In Second Life, you can make any kind of character you want. In World of Warcraft, you have to be a human, a dwarf, a gnome, or an elf. If those characteristics are what you want to express in your midlife crisis, fine. If not, then you would want to go to Second Life, where you could build your own representation of yourself.

Second Life is for people who like to build their own digital content as well. You don't build a lot of content in World of Warcraft. You pick and choose from a pre-assigned menu of things you can be.

I'm afraid we're not going to do justice to any of this in this conversation, but I'll try to make a point. In World of Warcraft, you develop skills, but it seems once removed. I mean, you learn how to mine ore or you become a better swordsman or you become a better horse rider, I imagine.

EC: Yes, that's right.

There's an appeal in that, right?

EC: I think it's very rewarding. Think about the implications of this for the workplace. World of Warcraft and other similar games make you feel good because they say, "All right. Here's the expectation. When you achieve the expectation, I'm going to increase your power." So if you do such and such and meet this quest, then your horse goes faster, because your character has increased his skill in horse riding.

What happens in the workplace? You're hired. You get a salary. Once a year they say to you, "Pretty good, Joe. Frank got the promotion, but you're doing a good job." Not only that, but work is boring for most people, most of the time. Just look at the explosion in day trading, which is a game.

Believe me, this technology is a challenge to the way people run businesses, to the way we run the economy. What if the point of economic policy was to have fun, not stability or equality or growth or anything, but everybody's got to be having fun? What would be wrong with that?

Well, we absolutely believe that. I just wrote that in a comment at tompeters.com this morning. Somebody was complaining about something, and I said, "Well, I think these guys are just trying to have fun here."

EC: Why aren't we now? People say to me, "You're so lucky. You're a professor, but you get to study video games." And I say to myself, "Why aren't all professors studying video games? Why are they studying growth rate in the labor supply in New Zealand?" I'm not saying those things are unimportant. Don't get me wrong. But everything doesn't have to be so serious.

I was reviewing an application a couple of days ago. I did not hesitate to write a comment in there saying, "I know this is unusual, but I want to say that this person would probably not be a lot of fun to hang around and drink beer with." Normally, you wouldn't write that in a scholarly evaluation of another person. But this study of games is challenging the notion that everything has to be serious.

So why can't we say, "I don't want a smart faculty. I don't want a smart fellow. I want people who are a combination of smart and fun. Stand-up comics are encouraged to apply." It's a challenge to the way we do a lot of things.

Yes, there's a whole history of unlearning that has to happen here. My feeling has always been that the humorous people are a little more intelligent anyway.

EC: When you go to a talk, do you really want to see another PowerPoint? Or do you wish the person would tell a story or a joke that makes you laugh?

That's something presenters should think about. Thanks for your time, Edward. It's been a pleasure talking with you.

Email: castro (at) - indiana dot edu