Arbitrage

I just read the interview with Marcko on MMO Melting Pot, which is controversial to say the least. Marcko sold his name and WoW gold guide blog for $50,000, and is now planning to make even more money with a Diablo III real money making guide and blog. Quote: "My goal with Diablo 3 is to get people making $25 per hour." Sorry, not going to happen.

First of all consider the step change: Marcko claims his WoW gold guide made people 40k gold per week. Now I'm not up to date on current WoW gold prices, but 40k gold is certainly not worth hundreds of dollars, and far from $25 per hour. But we all know that there are already a lot of "Chinese" (in reality they come from many countries) gold farmers in World of Warcraft.

So the second and bigger problem is one of arbitrage: There are quite a lot of people in the world who do not earn $25 per hour in their current day job. If it was possible to earn $25 per hour in Diablo III, they would do it. The more people trying to make money from the auction house, the less money there is to be made for each of them. If you price your goods so as to make $25 per hour, somebody will come and undercut you with a $24 per hour rate, and he will be undercut again, and so on. Basically the amount of money you will be able to make is by definition less than what a professional "Chinese gold farmer" is willing to work for. If Marcko's offer was in any way realistic, what would prevent a gold farm operator to buy 1 guide for $17 from Marcko, and use the information in that guide to have a hundred workers make $25 per hour from Diablo III?

I believe I understand where the flawed logic of the "get rich in Diablo III" business plan is coming from. The economy in World of Warcraft does not completely comply with standard economic rules: It is possible to "get rich quick" to the tune of thousands of gold per week in WoW. Been there, done that. But the reason why that is possible is that gold is not a legal currency. Lots of people treat gold like Monopoly money, and if they somehow got lots of gold don't think twice before wasting it on overpriced items. The same is not going to happen with a real money auction house. People have a far firmer grasp of the value of real money, and are not going to waste it like WoW gold. They can't just go out and farm some mobs or ore nodes to make real money to spend on Diablo III auction house items like they did with gold in WoW. AH trading for WoW gold worked because few people were actually interested in making a lot of gold.

I am already not a big fan of gold making guides. I'm not saying they don't work, but you are paying money for information you could have gathered for free from various blogs and game sites. But in the case of Diablo III the matter is much worse: Any guide promising you $25 per hour or similar amounts is a scam. You are more likely to make real money in Diablo III by just playing it and hoping for a lucky drop than you are by playing the auction house. There will simply be too many traders interested in real money for trading to be profitable.

P.S. I'm not so cheap as Markco as to sell my name and blog for $50,000. I have said before that my price would be $100,000, and I am sticking to that number. :) But frankly, I don't think I'll ever get an offer. A site making money by selling "guides" to gullible people has a better commercial outlook than a site providing written content for free.