Follow-up: What is Sparter? Who does it work for?

sparter1.jpgRecently Sparter, a virtual currency commodity broker for MMORPG games, entered the market with their Gamer2Gamer website services. There has been some debate regarding what makes this startup any different from the IGE’s and gold farming operations that are proliferating in the virtual game worlds many of us spend hours enjoying. Sparter’s stated aim is to make the RTE market safer for gamers by reducing fraud and working with developers to let gamers who want to spend real money for virtual capitol leverage a rating and protection system to conduct their business.

Before our interview with the owners of Sparter at E3 this year I had an opportunity to interview Dan Kelly and Boris Putanec on GameOn!. Gaming Today readers commenting on our E3 piece indicated they didn’t buy the load of goods Sparter was selling for the MMO industry with their gamer-to-gamer initiative so I thought it might be interesting to dig up the original interview and publish it here for folks to read.

Going into the interview, as I state at one point, I was ready to attack the concept. I’d read the information, I’d done the research, but I was not convinced that Sparter was looking out for gamers the way the site claimed so I took the opportunity to ask Dan and Boris about the company and its goals. Here is a transcript of the podcast interview in its entirety.. and embarrassingly at points.. unedited. (it looks funny to read a transcript of what you say.)

GameOn!, Episode 119
Hosts: Shawn Sines and Chuck Nelson interviewing Dan Kelly, CEO Sparter, Inc., Boris Putanec, CTO of Sparter, Inc.

S. Sines: Welcome to GameOn!, Episode 119, I’m Shawn Sines.

C. Nelson: And I’m Chuck Nelson.

S. Sines: We’re going to start off with an interview this week. We have another interview in a few weeks. With us on the phone is Dan Kelly, the Chief Executive Officer of Sparter, Inc., and Boris Putanec who’s the Chief Technology Officer of that company to talk to us a little bit about their gamer-to-gamer initiative under Sparter.

How are you gents this afternoon?

D. Kelly: We’re doing well, guys. Thank you very much.

B. Putanec: Good to be here.

S. Sines: So let’s talk a little bit about what gamer-to-gamer is. I know that there’s a lot of retail services out there that allow gamers to purchase things in a virtual space but it sounds to me like maybe you’re approaching this a little bit differently. Can you explain what the gamer-to-gamer product is?

D. Kelly: Sure, Shawn. Gamer-to-gamer is a new way of trading currencies. To date gamers have been forced to buy from B2Cs. By buying on Sparter from other gamers our customers can save on average 30-40%. By doing so they can save an appreciable amount of money but what’s more important is they’re doing business with another gamer and we think that’s good for the industry.

S. Sines: So this is a product that’s set up to allow gamers in virtual environments, games like Lord of Rings or World of Warcraft to be able to sell items to other gamers if they either acquired them while they’re playing or if they just decided that they’re going to get out of the racket, so to speak, right?

D. Kelly: Well we only support currencies right now. We think that addressees most of the need for consumers so for the games we support, any gamer without any fee can come to our website and shop for currency from another gamer or if he has a little extra currency that he’s looking to sell, he can post it on the website and see if there’s a gamer out there that we can match him up with.

Our goal is good, safe trades between gamers. We never buy gold, we never sell gold, we also never advertise our platform in game.

S. Sines: So you’re working as a mediator, basically allowing gamers to exchange their currency.

D. Kelly: That’s right.

gold.jpgS. Sines: And in this case it’s real currency for virtual currency.

D. Kelly: In this case it is. We understand that a lot of gamers choose to give currency away in games. I’ve perhaps benefited from that once when I was starting World of Warcraft. [laughter] We know that a lot of guilds or other gamers will barter for currency in game. You know, I’ll lead you through this quest if you give me some gold or I’ll let you into my guild if you make a contribution, a donation to the guild coffers.

What we offer is a platform for gamers who choose of their own volition to purchase some currency or if they choose to sell a bit of currency. We want to give them a safe place to do that knowing that, you know, they’re going to be dealing with another gamer and not a large corporation that is exacting a pretty exorbitant toll on gamers to simply move a digital good from one gamer to another.

S. Sines: Now what are the requirements from a gamer to be able to do that? For instance, do they have to be on the same server in the game or is there another way to do it or does it vary by game?

B. Putanec: Our service requires the underlying game support, the trade functionality so in games that are plexed like World of Warcraft, you have to be on the same server as the partner you want to trade with. You also have to be the same faction because they further divide that in faction.

For a game like Eve Online which has 1 global server, any Eve player could trade with another Eve player. We don’t actually enable the transferring capability. It’s … that game has to have it designed in.

S. Sines: So this is a third party brokering basically is what you’re doing.

B. Putanec: We’re a place where gamers can meet up. They can assign the value if you’re a seller, you know, that you believe your currency is worth given the effort it took you to get it. Sellers set the prices, buyers pay us. We escrow the funds and we release them to the seller once the seller has delivered the good to the buyer.

So we’re not in game. It’s ultimately up to two gamers to complete the transfer of the physical — of the digital good but we do offer them services and support and a lot of information so they can both feel that they’re making a good decision for themselves. For example, one of the things that our gamers seem to find most interesting is the price charts that we provide. So for anyone who plays World of Warcraft or Eve or one of the other games that we support, you can come to Sparter and you can look at the price history for currency in your particular market on your server, your faction.

It’s pretty interesting information because the currencies move pretty significantly in value. What’s also interesting is the price spreads. We also crawl some of the B2C sites out there. Since they are the biggest market makers today, we need their prices reflected in our market. So we show those prices right alongside the prices of the gamers who are selling on Sparter and it’s interesting to see just how big of a price difference there is. In some cases you’ll see IGEs selling gold for $100 and you’ll have a gamer on our system who’s selling it for $50, maybe $40.

S. Sines: So what’s … let’s take a worst case scenario. I’m … somebody who’s playing World of Warcraft and I decide I want to buy 1,000 gold and I barter … I use your system to barter that arrangement with somebody who’s in my faction and on my server and all of a sudden the person on the other end decides not to fulfill the bargain. What kind of guarantees are in place to help me?

B. Putanec: So as the buyer on our system, you basically have an ironclad guaranty from us that unless you’re satisfied with the transaction, you will automatically be refunded. And there’s no action on your part that you need to do. The money is simply returned to you directly.

sparter_540x331.jpg

C. Nelson : You’ve also got, you mentioned you have, a lot of information on there. There are ratings for a lot of the people that are offering the services on there.

B. Putanec: Yes, it’s for basically a third party service providing a marketplace for people to make a transaction on. We need to provide information to both parties to choose their trading partner effectively. And if you go and check out the website you’ll see that all sellers have ratings that are assigned based on real transactional data so have they fulfilled an order, have they cancelled an order, have they partially filled an order?

Also if you hover over a seller’s name you’ll get detailed statistics over 1 year, 90 days and 7 days for that transaction history.

It’s similar to a concept, you know, as eBay ratings but much more detailed and based on actual transactional data.

S. Sines: Yeah, that was the thing that came to mind when we were looking at the site was actually I looked over at Chuck and I said you know, this kind of reminds me of eBay or even Amazon sellers, that kind of information. But it was a lot more detailed.

So what drove you to get into this business? It seems like an odd kind of market to get into as somebody who’s not really doing more than brokering trades. What drove you to get into the business?

D. Kelly: Well, we think that there’s a need out there and the consumers, the gamers, have voted. We estimate that they’re spending probably more than $1 billion a year trading goods. Most of that money goes through B2Cs. And the problem is we think that there needs to be a long term workable solution for the industry. The gamers want it but we also have to serve the interest of the developer and publisher.

So the reason Boris and I started Sparter is we think the benefits of G2G commerce for the industry are significant. We think it’ll increase game consumption and it’ll increase profits for developers and publishers. It gives gamers a way of enjoying their games in the style that they choose to play the game and we recognize the concerns of the developer and publisher but we want to work with them to build that long term workable solution that benefits everybody.

S. Sines: Now in the case of a game like Eve Online which has a completely user driven economy which obviously has been manipulated over time, the fact that you’re doing this actually has little to no impact other than just the maybe shifting of that commerce and that cash between players though, right?

D. Kelly: Yeah, I mean the way we view it is the large commercial operations are more likely to have a negative effect on the game whereas in our market a gamer has played the game, he’s got the currency and he’s just moving it to another gamer’s pocket or another gamer’s account. So we don’t think that G2G currency trade is likely to be damaging to a game economy. We also think the reality of it is, it’s happening. RMT occurs and so the question is what form do you want it to take.

We also think it’s not an insignificant benefit that if one of your gamers is going to spend $20 on currency trade, you want that $20 to go into the pocket of another one of your gamers. You don’t want it to go to a large B2C company that pays it out in dividends to their shareholders.

S. Sines: So what guarantees do you have that’ll keep those B2C retailers from basically subletting using your service, creating false accounts like they do in game to barter and broker the exchanges?

D. Kelly: Well it’s hard to provide an absolute guarantee but it is our commitment to try to make this a very safe, open and fair marketplace so anyone with a PayPal account can buy on Sparter and anybody who wants to can list to sell on Sparter, but our typical seller is very much a gamer, so if you look at the marketplace today you’ll see as you hover over some of the names that there are some large sellers but our typical seller is very much a guy or girl who is selling a little bit of currency, basically enough to pay for his MMO subscription fees. So we think as long as there is a real strong demand there’ll always be market-makers or larger sellers, but we believe that there’s potential to let the millions of people out there who are enjoying these high quality games to become sellers and put the markets back in the hands of gamers and take it out of the hands of the B2C.

S. Sines: Interesting. Now have you had any kind of pushback or is this something that the developers and the publishers generally are supporting or do they not seem to notice or care at this point?

D. Kelly: Well, we hope they notice. We’re actually knocking on their doors and in conversations with many of them because we think it’s in their interest to help us devise what the workable solution is. Feedback has been all over the place. Some don’t want to get involved. Others are I’d say more forward thinking in realizing that their consumers have a need and they want to understand how to best address it.

Our belief is that it’s somewhat inevitable that developers and publishers begin to incorporate the needs of their consumers in this regard into their business models. We would help them do that. And we view ourselves as a solution provider, not only for them but for the gamers as well.

S. Sines: Now there’s already a service similar to this for at least one of the publishers which is Sony and their Station Exchange. Have they been open to the idea or are they resisting it because effectively you’re competing with the market that they’re making a profit on?

D. Kelly: Well, without commenting on our conversations with any particular publisher, we applaud what Station Exchange tried to do which is to better serve their consumers. We think it wasn’t particularly the best approach. One, it limited RMT to only 2 servers. We think that doesn’t reflect the real demand and how consumers basically play. Consumers should be able to pick the server that their friends are on or the server that has the population that they want at that time. There are lots of things that go into what server you choose.

We think the right solution is make RMT available to the gamers who choose to participate in it wherever they play, so we’re hoping to work with everybody and anybody to try to better serve the interest of gamers as well as publishers.

C. Nelson: You’re supporting, what? Eight games right now?

wow.jpgD. Kelly: Yeah, so we’re currently supporting a number of games as you see listed on our website. World of Warcraft, EverQuest I and II, Eve Online, Dofus, Maple Story, Silkroad, Guild Wars, Final Fantasy, Lineage Q, Star Wars Galaxies and Lord of the Rings. We will be adding more games over time. Our mission is to support gamers, whatever game they’re playing so we expect that in the near future we’re going to be supporting whatever game has engendered a secondary market.

S. Sines: So to encapsulate this, what do you think is the key demographic for sellers at this point in your market?

D. Kelly: You know, it’s, it’s difficult to kind of profile them as only one type of gamer. Our data is that the sellers map well to basically the gamer audience so they can be teenagers, they can be adults. They can be the highest income individuals, they can be people of more modest means. They can be very heavy consumers, playing 40 hours a week more; they can be people who are slightly more casual maybe playing 5 to 10 hours a week. The point is that anybody who plays the game is creating value potentially for another gamer and we ought to allow for that value to be transferred because it benefits the gaming ecosystem.

The same thing holds true for buyers. We have buyers who have very limited time and buying a little bit of currency helps them stay involved with the game. We have some gamers who spend a huge amount of time in the game, I mean a lot of time and what they want to do is focus that time on certain types of tasks, like raiding. They don’t want to spend that time farming consumables for their raid. So gamer-to-gamer commerce addresses the needs of all these people, not just one type of gamer.

S. Sines: You mentioned you’re focused on currency right now but another aspect would obviously be item or a part or a blueprint or whatever collectible resources in the game exchange, more like a sort of third party online auction house. Have you considered getting into that market or is it something you don’t think you’re interested in?

B. Putanec: Yeah, we have and there’s actually technology infrastructure built to support that. We thought to simplify the market and sort of introduce G2G to the gamer community at large it would be better to focus on a straightforward, simple currency model initially but you’ll be seeing that’s evolved this rapidly as the year progresses.

C. Nelson: Has this all been rolled out now or is there a target date for this?

B. Putanec: So the website is live now, it’s our beta site. We’ve had it up for a few months but we haven’t been advertising it. We’ve been in stealth mode. There are complex problems here to be solved so we’ve been trying to make sure we have a basic level of quality in place before we kind of go public with what we’ve got. But this week we’re going to start telling people about Sparter, asking more people to check out the website, give us feedback, if they have some currency to sell, please use the site, if you need to buy some currency, save yourself a lot of money and buy at Sparter rather than a B2C.

S. Sines: You know, somebody who doesn’t have a lot of time to play games for a long period of time, anyway I can’t invest hours and hours in the game because I’m so busy doing all the reviews and all the work that I do. This is actually something that kind of might be worth my time. [laughter] I guess I hadn’t really thought about that idea before but picking … paying 20 bucks to some guy on the same server that I’m playing WoW or Lord of the Rings on so I could get some gold to, you know, not have to worry about cutting down trees and mining might be worth it.

guild_wars_image.gifB. Putanec: I mean it allows you to decide how you want to spend your time and what your time is worth, right? And that sort of flexibility, that sort of elasticity always benefits the marketplace. So you not only help yourself but you help this other gamer who maybe he’s a little more price sensitive than you so the $20 you give him makes it easier for him to pay his game fees and stay committed to the game that he loves. If people don’t want this, then they won’t trade, but if they do want to trade, give them a way to do so. Put some money in the pockets of gamers who have invested time in the game or let the gamers who have some money and want to trade it off for time do so. Everybody wins. We just want to give people a safe, secure, affordable place to trade.

S. Sines: And like I said, you’re not disrupting the economy, you’re not stealing kills and robbing money out of the mouths of people by hiring 1,000 employees to go out there and mine gold. These are actually gamers who have spare money and basically all you’re doing is brokering a friendly exchange.

Like I said, when I first approached this idea I thought well is this another gold farming concept and it’s amazing just kind of thinking about how it’s not and how you’re really just here to facilitate me trading with some guy I’ve never met on the same server.

B. Putanec: Yeah, I mean if people don’t like certain companies that exist today dominating the space, then the best thing you can do is give your business to another gamer because there are millions of gamers and by working together and with publishers and developers we can take control of this marketplace and make it as beneficial as possible for the industry.

And I think it’s a big win long term to the video gaming business and for gamers but we’ve got to work together, we’ve got to get proactive, we have to recognize what consumers need and we’ve got to do a better job of servicing them.

S. Sines: Well we will post links to the website on the show notes.

C. Nelson: I think you’ll see Shawn as a customer here before too long too.

S. Sines: But I’ve got so many MMOs I’ve got to buy money for now.

D. Kelly: Yeah, I know. I mean there’s so much could drop down there and there’s so much more coming but we’d be interested in your feedback on the site. I mean as we say, we’re trying to solve problems here so we’re really open to hearing from people what they think is good, what they think is unclear. There’s not a lot of pride of authorship here. There’s just a mission and the goal is to do a really good job for gamers and for the game community.

Shawn, if you use the product, please let us know what you think works and what doesn’t and we’re always very receptive to that sort of feedback.

S. Sines: I will definitely do that.

C. Nelson: It sounds like you’ve covered the bases well so good luck with all that.

D. Kelly: Guys, we really appreciate talking to you. It’s always a pleasure and you know, we thank you for the opportunity.

S. Sines: Oh, not a problem. Especially, you know,since services like this are really benefiting gamers and that’s something that is… obviously pretty near and dear to our hearts, not just as journalists but also as people who game actively and enjoy gaming. I hate to see companies destroy MMOs, especially the way things have been going lately. It’s kind of like a badlands out there. You never know if you’re going to get your money’s worth, you never know if you’re going to get the product you pay for and it’s always been a barrier to me personally to even consider doing something like this. So having somebody that I can trust in the middle to broker the arrangement might make it easier.

lotro.jpg

B. Putanec: We agree with you obviously and we think there are millions of gamers out there who feel the exact same way. Ultimately one of the things to recognize is we’re doing everything we can so any input, any partners are always appreciated. Ultimately, the only way to completely solve the problem is for developers and publishers to come on board. So the more people we have talking about it, basically this has been kind of … you know, we want to put a bright light on the business. We’re sharing a lot of information with people now. We’re going to share more in the future. We want to educate and we want to advocate for the consumers out there.

These are not bad people, they’re our gamers and I guarantee you every one of us has played with someone that we thought was pretty cool in the game and that person was buying currency. Not everybody we play with, but someone and they’re afraid to talk about it, right? They’re afraid of being punished by the developer and publisher and so we’re forcing them to take risks out there and we’re exposing them to fraud and it’s just not a smart approach.

We really should try to say there’s a good place, there’s a safe place for RMT. Let’s identify it, let’s define whatever we think the appropriate walls are and that’s were Sparter wants to be. We want to make that happen. The bad actors, the fraudsters that can go elsewhere with their counterfeit gold, they can spam and game, we will cooperate to the nth degree to try to keep those people away from the good gamers and out of our marketplace.

S. Sines: Outstanding. Thank you very much for the opportunity to talk with you.

D. Kelly: Okay, guys, thanks again.

B. Putanec: Take care.

C. Nelson: Alright, see ya.

D. Kelly: Bye-bye.

eveonline1.jpgS. Sines: So, I really honestly came into this interview with the wrong impression. You know, not into the interview obviously because I did the research before we sat down here but when you approached me about the opportunity to talk with these folks last week, when you were saying, you know, we’ve been talking to each other way too much, we need to get some variety.

C. Nelson: I said that?

S. Sines: No, you never say things like that, Chuck, you just kind of imply them.

C. Nelson: This was just another … it’s another good opportunity. You get an email and you look at it and you go hmm, could be interesting.

S. Sines: Well and I think it was actually because like I said, once I started to look into what this was, this is a service that yes, Sony already offered it with the Station where you could barter exchanges and they took a nice little cut off the top as does, I’m sure that …

C. Nelson: I’m sure these guys are alright. We didn’t talk about that, but there’s got to be …

S. Sines: … we didn’t talk about that.

C. Nelson: There’s got to be a little money in it to make …

S. Sines: … it’s like any broker is going to take a certain percentage for their time and their infrastructure. As long as it’s a reasonable amount. I mean it sounds like from everything we saw it looked like it was a reasonable amount.

C. Nelson: You can’t keep the doors open otherwise. I mean it takes money to run the service so that’s going to happen but yeah, you’re right. I mean this seems like they’ve really thought out all the angles on this as far as making sure people are protected, making sure they can facilitate the trades between people on the same servers and the same factions and all that kind of business.

S. Sines: And that’s the key factor that people have to go into this knowing is the fact that if your game doesn’t support cross-server, cross-realm, whatever they call it trading, then you need to be aware of that before you go into this.

The site, we didn’t dive a whole lot into the actual because we didn’t purchase any gold and we didn’t sell any gold so I’m not sure what their interface is like but I’d be interested to see how that all works and whether there’s a lot of banners that come up and say listen, before you complete this transaction, are you sure because World of Warcraft only allows transfers between people in the same faction and on the same server.

To see something like that and to have them even going that extra step to help protect the gamers who are doing these trades, it only helps their business model.

C. Nelson: They give you a ton of information from what I can see on there.

S. Sines: Oh, yeah.

C. Nelson: You really should be well informed about who you’re going to deal with and you can make a better deal.

S. Sines: Well it’s like you asked me, I felt like I was looking at a commodities website.

C. Nelson:Yeah, exactly.

S. Sines: Because you were seeing the pork barrel prices, so to speak, you know, here’s what the going price for 100 gold in World of Warcraft is on this server today.

C. Nelson: Yeah. And one guy may have it cheaper but the other guy has a better rating as far as coming across with the good there.

S. Sines: How quickly he can get it delivered to you, that type of stuff.

For those of you out there who are playing MMOs like I know I am, I’m playing at least 3 right now pretty regularly, then that’s definitely something you should at least consider.

C. Nelson: Check it out, yeah.

S. Sines: If you’re buying gold, don’t buy it from somebody who’s a Chinese corporation with 1,000 migrant workers. This is something … I can’t advocate enough now. The more I think about it, the better the idea sounds to me.

C. Nelson: Yeah, without us actually endorsing it.

S. Sines: No, I’m not endorsing. Let’s not go there.

C. Nelson: No, it does look like an interesting set up there and I think it’s … for folks that are playing those games, it’s worth checking out, that’s for sure it looks like to me.

S. Sines: And I know from interviewing the folks who when they started the exchange at Sony with the Station, that was really their goal originally too was also to make profit.

C. Nelson: Well yeah.

S. Sines: So maybe the way they implemented it was a little differently.

C. Nelson: I think we said this in the past. I think some of the folks were, some of the publishers were not too thrilled about this entire idea to start with.

S. Sines: Well the secondary market has always been a very sticky area for publishers because it’s their property and if you read the EULAs, you don’t own anything.

C. Nelson: And in large part I think the big problem was that they weren’t getting a cut of the profit and there was money changing hands obviously and they were still collecting their fees for the monthly basis and for the sale of the software.

S. Sines: But there was thousands of dollars being made above that in rare items or this or that. Well that’s where Sony finally after so many years of being against it kind of changed their position and said as long as we make a profit on this, you’re exchanging our property that you’re basically leasing a virtual item. I can see where this would be really useful. He’s right. It does allow gamers to change currency with each other and then that way if I need 20 bucks to pay for my World of Warcraft subscription this month, all I’ve got to do is spend 8 hours mining some gold.

C. Nelson: That’s a great idea.

S. Sines: And sell it off to you and I get 20 bucks. I can’t argue the logic of this. I wanted to, I really did but the more I think about it, the better it is.

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2 Comments on Follow-up: What is Sparter? Who does it work for?

XiticiX

On July 27, 2007 at 1:39 pm

So if this money isn’t from Farmers, how come I can buy 1billion ISK from the same seller, over and over again if I chose to?
Farmers hurt the economy of EVE-ONLINE by allowing people that would normally have to work for ISK to buy it outright, and purchase that fancy new Dreadnought they want so badly. If they lose it? Oh well, buy another one. This makes the market have fake fluctuations which damage the REAL players and REAL producers. It also allows players richer in RL to get further ahead in the game than those with modest means. Gamers need to be treated on equal footing, otherwise there is unbalance – which to a MMO is suicide.

Shawn Sines

On July 27, 2007 at 1:47 pm

XiticiX: Interesting question. Farmers are a huge impact on EVE, unlike a lot of other games from what I understand of it (I’m not an EVE player myself) but I guess I see the “you have to earn it” mentality as somewhat elitist. What about the idea of growing the game? Inviting casual players who can purchase resources so they can enjoy the game at the same level as the hard core player?