Auction House manipulation: how far is too far?
by Mike Schramm 
Jul 18th 2007 at 5:07PM
Over the past few weeks, I've heard now of two different AH plots coming to fruition. A while back, Seth sent us a tip about a character named Zygar on Maelstrom who'd bought out every single item on the AH that was selling for less than 2g, and relisted it at 2g. Apparently it worked (because lots of people were willing to spend 2g on that stuff), but it didn't make lowbies happy, because they didn't have that kind of money to spend on the items they wanted.And yesterday, I heard from Cheryl, who told us about Flaggen on Kirin Tor-- he did the opposite, and started way undercutting the other jewelcrafters on the realm. Another interesting idea, and one that's also working, because he's outselling (obviously) every other jewelcrafter out there.
Is this kind of AH manipulation "griefing"? Should Blizzard step in when one character, either by sending prices high or low on the AH, changes the whole economic system on a realm? I'd think not-- these economies were designed by Blizzard to be run and controlled by players, and all the players on a realm can stop this kind of thing easily-- just stop buying from Flaggen (if you disagree with him, although some players have rightfully pointed out that what he's doing drives down prices for the gem customers) or the guy on Zygar. But on the other hand, great discrepancies in the amounts of gold at level 70 vs. the lower levels (buying out all the items below 2g probably wasn't possible before Outland) could classify this as griefing, and cause Blizzard to step in-- perhaps by limiting the amount of auction purchases by one character. What do you think? How laissez-faire should Blizzard be about AH takeovers like this?
[ Thanks Cheryl and Seth! ]
Filed under: Analysis / Opinion, Tricks, Virtual selves, Odds and ends, Economy, Making money
Reader Comments (Page 1 of 3)
Phil Jul 18th 2007 5:16PM
The answer to all of these is patience. Before BC, when I started playing, I couldn't afford most things on the AH either. What I could afford I picked up slowly, as they came up cheap. The "buy everything for 2g" is more a product of someone having too much money *cough*dailyquests*cough* rather than a real problem. It will last exactly until the next person lists something, and 24 hours from now that guy's mail box will be full of expired items.
Limiting people from buying things would be miserable. "Want to level up tailoring? I'm sorry, you can only have five stacks of runecloth. Hope you're patient!"
Blizzard already has the means to influence the economy: quest rewards, vendor sales and crafting professions. If the best gear at low levels comes from quest rewards anyway, it matters much less that the cost of low-level gear is run up by people with outside money sources. All trying to control the market would do is create a big headache and cause even more people to stand around hawking things in /trade in between chuck norris comments.
Karl Jul 18th 2007 5:17PM
Supply and Demand is a funny concept. It works in real life, but even then, Governments have to step in every so often. No, don't play around with limiting prices based on what others want. The guy who was undercutting is making the system work. The person who bought all items and resold them...She had to buy them first in order to resell them. That made people money, and if people would have chosen to ignore her sells and wait the 12 hours or just...Oh I don't know, play the game...could have really hurt her pocket book. If you are going to price-check, don't bother having an AH, and just set prices through vendors.
Chris M Jul 18th 2007 5:22PM
Flaggen- the JC on Kirin Tor has a unique situation as I view it. If this individual has decided to undercut his/her competition so much that it's making a significant impact; it's a similar situation to someone that pays for something and gets change back- thinking they made a profit.
Not only is Flaggen undercutting his competition, he's undercutting himself. Eventually he'll run out of cash to purchase/farm his materials; in which case he's up ***t creek.
I've seen massively overpriced items just like everyone has. This guy that bought out the whole Auction House under 2g is intelligent, I grant you- and IS reducing the enjoyment of the game for other players; but it's a mechanic of the system. If Blizzard starts going Gestapo on our Auction House, it won't be long before tools like Auctioneer and BottomScanner get the boot- as they allow me to buy items that are REALLY priced too low for their worth, and relist them at ACTUAL price. (Like that one guy that always farms silk cloth and prices it at 2 silver a stack/20. And has like 10 stacks on the AH. I buy it back, and relist it at the speed of light- after which I send him a whisper and tell him how much money I'm about to make.)
Although that sorta makes me an ass.
...
Chris
Andrew Jul 18th 2007 5:32PM
These players excel at a part of the game where most players fail. They must be stopped!
Sarah Jul 18th 2007 5:34PM
On my realm, horde side, some wiseguys decided to do that with just wool cloth, buying them all out and setting them at articially high prices. Unfortunately it's been months and hasn't recovered because people are able to sell it at that price (everyone needs it at low levels) so they just barely under each other. So now a stack of wool cloth costs more than a stack of mageweave. I just ignore it because it's so easy to farm.
Argent Jul 18th 2007 5:36PM
@3 - hah. you'd be pretty wrong about him undercutting himself.
he's essentially become the walmart of jewelcrafters on his server. and i don't exactly see wallyworld hurting for profit.
if he truly has ben successful in cornering the market with his efforts, then he will make up and and all shortcomings in regards to prices by sheer volume. it's the only way such strategies work and they can be very profitable indeed.
if you want to break such monopolies, you simply have to undercut him until he stops. since most people aren't prepared to play a large volume game like that, chances are, that could be a long time.
Chris M Jul 18th 2007 5:37PM
@Sarah - same thing happened on my alt's server. When I first rolled there the first thing I did (after hitting 15-ish) is head to the closest main city and peruse the auction house and scan the auctions, getting a feel for the market.
Then I find that Wool Cloth is at 5g/stack and I hit the ROOF..
Needless to say, I did NOT make that character a Tailor, but I did have to level first aid, and when I needed those last five pieces of wool cloth to hit silk bandages- I was so terribly annoyed to have to buy a stack to satisfy my need.
Chris
Ken B Jul 18th 2007 5:49PM
@Chris M
If it annoyed you to pay that price for 5 wool cloth, you could have just went and farmed it yourself. Or asked your guildies/friends for some wool. Vote with your wallet.
Chris M Jul 18th 2007 5:51PM
"6. @3 - hah. you'd be pretty wrong about him undercutting himself."
Actually, believe it or not I do this for a LIVING (market analysis) and my work has kept me in business for the last 10 years or so.
If this guy is undercutting everyone SO MUCH that there's been a stink raised about it- I freely assume that we're talking about a 100%+ margin of loss between the closest to 'actual' average; and his auctions.
In that case, yes; he IS undercutting himself.
If I buy item X for $10 and item Y for $18; combine them to make item Z- and sell item Z for $15 - there IS a problem, and I AM undercutting myself. Especially when item Z sells everywhere else for at LEAST $30. People will buy my item Z because it costs less, but am I MAKING money (i.e. profit?) hell no, I lose money on every one that sells.
Chris
Paul Jul 18th 2007 5:52PM
I would say cornering the market on something, like low priced items i guess, is market manipulation.
But just selling your gems for a lower price isn't. If he's selling them for below what he acquires them for, then eventually the money losing scheme will end, but if he's selling them for a profit and still undercutting everyone else, doesn't that just make him more efficient than everyone else?
He's like Walmart, without the shady business practices and employees working 39 hours a week to collect goverment checks.
I really don't see what's wrong with what he's doing, but then I've never jewelcrafted before-- am i missing something?
Jim A Jul 18th 2007 5:57PM
On my server (Eonar-A), we have the bag vendor who sits in Darnassus all day and all night and hawks her bags...
she does giveaways, promotes them, and advertises them in general chat...
quite amusing actaully ;)
miked Jul 18th 2007 5:57PM
for almost 2 months now i have been buying netherweave cloth to make netherweave bags. at first i did this just for myself but then i realized how much it cost for a netherweave bag -- at the time they were near 10g, and netherweave cloth was about 5g/stack. including thread and the auctionhouse cut, that was over 3g profit -- i couldn't resist. Since then i've sold well over 300 bags (a conservative estimate -- i haven't been keeping records but there have been some weekends where i have sold over 50). i make sure that i always have bags on the auctionhouse for people to buy... and usually cheaper than anyone else's as well.
needless to say i have made myself quite a bit of money, but at the same time i have made many other players quite happy. at least once or twice a week i'll get whispers from people thanking me for the great price on their bag (or set of bags), or asking me to make them some more, which i gladly do.
i'm sure that i've made other tailors not so happy though. since i'm willing to sell my bags at razor-thin profits (since i know they will sell) i can often undercut them while still staying in the black. i know that non-tailors appreciate the lower prices (closer to 5g nowadays) and if i can make a profit while buying all my materials, i know the day will come when someone farms all of their cloth and undercuts me. When that happens i'll gladly step aside and let them make their money.
Moravan of Ravenholdt(US)
Pick up your bags today!
dudemcguy Jul 18th 2007 6:02PM
They are doing something smart and everyone wants to punish them for it. 5G a stack for wool?!? Let me just jump on an alt and grind until I have 20 stacks. Then I'll put them on the AH for oh around 4G. So lets see a leveled alt, random drops, and a ton of gold for me.
As for the JC bulk is the way to go. Just mining I've got around 50 jewels from red to orange sitting in my bank.
tim Jul 18th 2007 6:12PM
If person B's undercutting everyone by more than the AH fees, there's a moneymaking opportunity for someone to just buy out everything he lists and relist them at a higher price. Like say person A.
'outselling everyone' is a terrible plan. If selling is all I care about then I can buyout everything on the AH and post it at 1s - I'll sell millions!
As for 'buy out everything and relist', you absolutely don't need the AH at low levels - in fact he's helping newbies far more than harming them, as he's *buying all their stuff*. The people he's irritating are rich alts who expect to buy level-appropriate green gear.
Baluki Jul 18th 2007 6:11PM
Why would you want to lower gem prices? They're already criminally low as is.
Scruffy Jul 18th 2007 6:16PM
The AH is a funny thing....
I've seen Primal Earths as low as 3-4G whereas Primal Airs hit 24G last night. You'd think Primal Fires would be around the same as Earths but I guess tailoring mages suck them all up. They were around 20G. Water went up from 12 to 15G in short order. Primal Manas are always just a bitch like Airs so I farm them.
As an Alchemist, I only need one of each a day but I still like the prices to be low. I could turn around and sell the Primal Mights since their availability is far more limited.
Elixirs and potions, though, has nose dived. I rather liked selling 5x Major Agility for 22G or 5x Super Mana Potions for 18G or Draenic Wisdom or Healing Power, etc.
I shrug, farm more motes of earth, fire, water, air, and mana, make only the potions/elixirs that get me a comfortable profit, and continue plinking G into the epic flying skill fund....
java Jul 18th 2007 6:19PM
People hedging bets on commodiities in the auction house is a fair and reasonable way to go about making gold in game. Call it a WoW Day Trader for all practical purposes.
When I started out in the game, for every gold I made farming commodities, I probably made another gold in AH. However as the game progressed I found myself enjoying other aspects of the game that made me money and I decided to part ways with playing AH as a form of revenue.
I remember playing the market and buying out of a certain ore that was priced at 2G and relisting at 4G and making 20G at the turn of a dime. I also remember buying out all the stacks of the same ore for the same amount a week later only to find someone undercut me and I was forced to play the game of delisting and relisting or even in situations where I just said I'm going to have to sit on this stuff until the right opportunity comes along. That is a lot of work, that is a lot time spent tracking markets. This emphasize that playing AH day trader can be lucrative but it can also leave you in a bad position. It sounds very familiar, oh wait that's just like the stock market....
Market & Economies work in the real world and they should continue to work here unabated.
Java
Coherent Jul 18th 2007 6:24PM
Obviously economic manipulation can be disruptive. This has been adequately demonstrated time after time in real-world markets.
Probably blizzard should put in some kind of broad prohibition about AH manipulation as a chilling effect, but only enforce it when things are extreme. They should do spot checks on player economic activity, such as someone buying or selling huge amounts of low-value items or making extreme amounts of money, or constantly buying items and immediately reposting them at a higher price. (which can be a sign of a monopolization attempt)
They could issue warnings or suspensions to keep the abuses down, and people who feel aggrieved about a suspension or banning can file appeals (by paying a nonrefundable filing fee) to have the penalty overturned or reduced. In the event of a successful penalty reversal, the appeal filing fee would be credited to the account.
Storm Jul 18th 2007 6:30PM
mmm I love MMO economics. The truth is it's basic economic theory and the behaviour coming from the everything for 2g sales or the undercut everyone on gems is hardly anything Blizzard needs to deal with.
On the everything for 2g in some cases it may be right to buy and list them at a higher price in some cases it'll be the wrong move. Sure a lvl 70 with extra gold probably won't care 1.5g or 2g (it's still in an area where marginal benefit > marginal cost to them). To a low level though yeah I see why they'd be upset however in wow there's no monopoly on production (aka you can kill the mob that drops an item yourself or get from someone not going through the ah) so it isn't really a problem. The greater truth from the perspective of a low level is that all it's really doing is causing inflation and while relative money drops off mobs aren't increasing so aren't the things they're spending money on (skills, repairs, etc). If anything it's giving them an opportunity to be rolling in cash by listing the item for 1.9g on stuff that should normally sell for say .5g and selling to either Mr. 2g or to the next level 70 who comes along and needs it. From the 2g seller's perspective the behaviour will last on items where it's worth it for the guy to re-sell at 2g (aka equilibrium based on supply and demand is closer to being reached), but when the market really needs it to be sold for less then he's just wasting his money and odds are he's going to figure this out eventually.
For the JC undercutting everyone no one practises predatory pricing period not even Walmart as much as people dislike it (they practise cost cutting in every way shape and form, but not predatory pricing). You don't sell below cost and lose money on the hopes that you'll get rid of all competition and be able to act like a monopoly and capture consumer surplus. It doesn't work in the real world and it sure won't work in a fictional world where there's low barriers to entry into the industry (especially since most of his competition would just stop selling for awhile let him list his stuff higher and undercut him). Just reading the linked thread now all the guy is doing is selling gems for a lower price which is either being stupid or just seeing a new equilibrium develop. There's no way he's losing money on the sales since if he was he'd be out of money eventually and no one would have reason to complain so again it's just a balancing equilibrium between supply and demand. If you can't sell your gems for the price you list it's simply because your price exceeds the equilibrium price. The mechanic is working the way it is right now because everyone has ignored the actual market. In this case seriously someone please go read up on perfect competition and what economic profit is in that situation. Obviously we're not in 'perfect' competition because there are some barriers to entry, but we're pretty close seeing as there are probably a lot of JCs who can do exactly the same work he does in exactly the same manner if they wanted to.
Oh and please don't tell me about, but people do take losses and sell stuff for less than mats (thus predatory pricing). An obvious example in my mind would be engineers selling khorium scopes, but it's not really predatory pricing because there's a utility attributed to skilling the prof up which if it didn't exceed the utility of the monetary loss the item would never get crafted.
mxwp Jul 18th 2007 6:31PM
I say leave the AH alone! If these folks find ways to make money gaming the AH, then kudos. There really is no need to complain. Really, quest rewards are good enough while leveling, and at end game all the good stuff is BoP. Anything else is easily farmable... there is no reason to use the AH if you don't want to.