NEW YORK (FORTUNE) -
A growing number of Americans are finding surprisingly lucrative new vocations in previously unimaginable places: the imaginary worlds created by online games.
"Paul," for instance, quit his corporate law partnership in Dallas two years ago to make his living playing a medieval-themed online game called EverQuest. Because so many young people now spend so much of their lives in the simulated 3-D worlds of games like EverQuest, the noncorporeal goodies they accumulate there -- virtual swords, cloaks, gauntlets, in-game currency, etc. -- acquire real value to them, and they will pay real U.S. dollars to acquire them.
So Paul buys and sells virtual items and currency for a living. "The valuation is always difficult," he concedes. "When you think about people paying real cash for something you can't even touch, smell, taste -- that's tough."
Though Paul declines to pin down his annual income -- it's more than $150,000 and less than $1 million, he says -- his Porsche 911 Carrera and wife's Lincoln Navigator suggest that he is comfy.
EverQuest, owned by Sony Online Entertainment, is just one of a category of increasingly popular computer games known as massively multiplayer online role-playing games (MMO for short). As these games' subscriber-bases have burgeoned, people like Paul have begun making their livings catering to gamers' virtual needs.
Estimates of the size of the new market in virtual property range widely -- from about $200 million to $1 billion worldwide -- but most industry observers agree that it is increasing at a breakneck pace, possibly 100 percent year over year.
Most MMOs provide players with a way of making what amounts to an in-game wage. By performing some minor feat -- killing a giant rodent, say -- the player gains modest quantities of the realm's currency. Valuable items (a cloak or sword) may also fall off slain prey. And as the players' characters, called avatars, perform tasks, they win "experience points," which enable avatars to move up a level and gain additional powers.
Players who want to speed-up this tedious process, though, can buy in-game currency, items or high-level avatars from other players over eBay or other Internet trading sites. Player A sends player B real U.S. dollars, and B has his avatar deliver the promised goods to player A's avatar within the game. In the case of an avatar sale, player B sends his user name and password, turning over his entire account.
Though players can make some money by just playing the game and exchanging the in-game loot they acquire for dollars over the Internet, that approach generally yields less than minimum wage. To make more than he made as a corporate litigator, Paul uses a different approach.
He buys EverQuest accounts over the Internet from players who are retiring from the game. He then sells the acquired avatars' items to players through EverQuest's in-game bazaar in exchange for "plat," i.e., platinum pieces, the game's currency. Then he exchanges plat for dollars through Internet Gaming Entertainment (IGE), a business that has sprung up to broker the thriving new secondary market in game currency.
Paul has about 20 EverQuest accounts, he says, and keeps at least seven avatars trading "24/7." Each can be programmed to sell up to 80 items at prices he sets. The most he's ever received for a single item, he says, was about 3 million plat, which might fetch between $840 and $1,200, depending on where plat is trading against the dollar.
Commerce between virtual worlds and the real one -- known as real-money trade (RMT) -- raises knotty legal questions. Sony lawyers say that all the items earned or created in EverQuest are Sony's personal property, and the company -- like most game companies -- purports to ban doing what Paul does in the click-through contracts players agree to when they log in to the game. (That's why we've agreed to assign Paul a pseudonym.)
Intellectual property attorney Greg Boyd, of Kenyon & Kenyon, says companies like IGE are operating in a gray area -- possibly facilitating infringement of the publisher's intellectual property rights, for instance, or inducing breach of its licensing agreements. But IGE's president, Steve Salyer, disagrees. "I've sat with the best legal minds in the U.S. over this issue," he said at a conference recently, "and I'm certain players and IGE are within their rights to conduct the business they conduct. "
There are signs that game publishers may choose to absorb this new market rather than fight it. In July, Sony set up its own RMT service, called Station Exchange. In its first three months of operation -- limited to a small fraction of players in just one game -- Station Exchange hosted $540,000 in real-money trade, with Sony taking a 10 percent commission on every transaction. Sony has said it will now expand the service to most of its other games.
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