An open letter: The failings of MTGO’s trading system, and how to fix them.

Note: This article is courtesy of SirGog and is duplicated from his post on the official MTGO forums with his permission. Since it is an excellent post and really an issue that deserves more attention, I wanted to do my part to help get more eyes on it. I’ve done some format editing to improve readability, but the content remains untouched. -The Editor

Disclaimer: This thread was posted in late September 2014. It references some card values that may no longer be even close to accurate if you are reading this at a later date. Such is the nature of #MTGOFinance.

An open letter: The failings of MTGO’s trading system, and how to fix them.

Rather than explaining why I think the trading system in MTGO is the most serious ‘big problem’ with the client right now, I want to open by encouraging MTGO players to carry out a small experiment.

Over the next week, play as you normally would, and record how long you spend logged into the MTGO client. Don’t count extended AFK time, just the time you are mostly paying attention to the client.

Record how long you spend actually playing games of Magic or other related activities like building draft decks, and how much total downtime you have (time between tournament rounds, or time spent acquiring the [c]Mox Emerald[/c] your Vintage deck needs, or the time spent trying to sell the [c]Garruk, Apex Predator[/c] and the foil [c]Stoke the Flames[/c] you just drafted).

I believe that if you play either Limited or competitive Constructed much at all, you will find that collection management related downtime – selling unwanted cards, and seeking out desired ones – dramatically cuts into your Magic playing time.

Collection management is a big part of paper MTG, but like cards becoming accidentally damaged, or incorrect judge calls, it is something that the digital version of the game can do differently and can do better than paper.

This letter is about my proposals to decrease the time wasted on collection management by players, so that we can spend more time on the parts of MTGO that we actually enjoy – competitive-minded decision making in a world of incomplete information and nearly unlimited possibilities.

A bit on trade history:

This is background info and can be skipped, but may interest some.

MTGO player-to-player trading was originally designed, like many other parts of the game, to mirror paper trading fairly closely. Players can either stick their currently unneeded cards into trade binders (making them visible to prospective trade partners) or they can keep certain cards in reserve. (For example, I might own four [c]City of Traitors[/c] that I don’t put in my trade binder, but if you have a [c]Tarmogoyf[/c] I want I might be willing to make them visible then). All transactions are direct player-to-player trades.

Early on, before I started playing on MTGO, the Event Ticket became THE established currency of trading. It could have been packs instead, but for various reasons related to prize support, liquidity of certain boosters, and tickets being a cheaper object than packs, tickets made more sense as a currency. Tix being a trade currency has been given ‘official’ approval by WotC in many an article since then, for example in articles that focus on budget decks.

Early in MTGO, card liquidity* was low, until around the era of Betrayers of Kamigawa, when human dealers were phased out in favor of bots. Early bots didn’t handle the whole trade, they just spammed a trade message in various channels over and over alerting you to the offers the human behind the bot was offering, but soon the fully automated bots appeared and then became common.
Owning a trade bot was initially extremely lucrative and their coding was a guarded secret, but in time they became widespread and margins became lower. Now, it is effectively impossible to be a dealer on MTGO without running multiple bots 24/7, the human element of trading from MTGO’s early days is completely gone, and there is third party bot software available to ‘buy’ a license for in exchange for a fee.

This isn’t an attempt at nostalgia for the old days. I think the automation of trading has been a good thing in general – drafters can offload undesired cards with less effort than before, Constructed players (competitive or casual) can assemble decks more easily and at a lower price, and price speculators can quickly acquire 200 copies of the card they expect to be the Next Big Thing. In short, liquidity in the market has increased, and this is a good thing.

However, there are problems as it stands.

* – For those without economics knowledge, ‘liquidity’ means how easily something can be traded. Increased liquidity generally reduces the gap between buy and sell prices. You can see this in paper Magic, where many dealers will offer a higher percentage of their sell price for highly-in-demand Standard cards they can move quickly than they offer for hard-to-sell cards like a Japanese foil [c]Goblin Welder[/c] (even though the latter will command a high price if you find the right buyer).

Problems with the current system:

Firstly, event tickets are indivisible, meaning that players cannot trade for low value cards without trusting a bot that has a partial ticket accounting system or finding a mutually acceptable low value trade item. This is not a good system at all as more than 95% of the cards opened in booster packs have a value well south of one ticket.

This rewards unscrupulous bot owners (closing one bot and reopening a new account can result in you stealing up to 99 cents from each of a LARGE number of players, this really adds up). It also has nonmonetary effects – it feels much worse to trade for obscure cards. Consider a card like [c]Clone[/c] – making a trade of one event ticket for four copies of [c]Clone[/c] feels really bad, even when there is the promise of future credit. (At the time of writing, M14 Clone’s price was 0.03 tickets on the first bot I checked).

This negative feeling extends even to people who value their time – I don’t mind spending USD 0.88 for the convenience of quickly finding four copies of a desired card, but I do feel bad about hitting ‘confirm’ on a trade where I’m getting only 12% of the value of what I am trading away.

Secondly, if you want a card, there is no easy way to find someone that has the card you want. You can go to the message boards and find someone that claims to have the card you want, but due to the messageboard reflecting only what people claim to have and a limited amount of characters that can be typed into a message, it will not necessarily be accurate.

For example, take two cards at opposite ends of the desirability spectrum, [c]Clone[/c] and [c]Cryptic Command[/c]. (At the time of writing, the first bot I checked is buying a Modern Masters Cryptic Command at 21.01 tickets and selling at 23.49, there may be better deals out there but I will use those prices to make a point).

A search in the client for the text string ‘Cryptic’ will find a selection of bots that claim to have Cryptic Command in stock at a certain price. This can be misleading. Often what they mean is ‘The last time I updated this message I was selling Cryptic Command at 23.49 tickets, but since then I sold my last copy’, or ‘The last time I updated this message I was selling Cryptic Command at 23.49 tickets, but since then I decided to up the price to 24.99 tickets and I hope you don’t notice or don’t mind’. Your search will also find bots that are offering to buy Cryptic Command at various prices, as well as people that are trading Cryptic Commands but will not disclose their prices.

A search for ‘Command’ or ‘Cryptic Command’ will work but will show less results, as people familiar with Magic lingo often abbreviate this card as just ‘Cryptic’ and those search terms will not connect with this abbreviation. A player unfamiliar with the nuances of MTGO trading and card nicknames may be disheartened to see only a small number of people claiming to deal with this card.

It’s worse again if you want a specific edition of the card. Try to find someone – anyone – that will sell you the fourth foil Alara Reborn [c]Maelstrom Pulse[/c] you want in order to complete a playset where every card is identical, or an ME4 [c]Tundra[/c].

A search for ‘Clone’ on the other hand will show very few results, as while a large number of players have the card and are happy to trade it, they do not consider this fact worth advertising.
Thirdly (and this has already been shown above), there is no requirement that players honour their publicly advertised prices. This is a major timewaster for people that are trying to source a card. Many of the larger bot chains have algorithms written into them that actually dynamically increase card prices as you try to buy more copies of it. So buying one [c]Cryptic Command[/c] might cost you 23.49 tickets, but buying two might cost you 23.79 tickets each, and four might cost 24.49 each.

Fourth, the trade system generally requires people using it to have at least a basic grasp of English (or more specifically, for two trade partners to share a language, but in practice that means English as all bots I’ve ever seen are in English). My suggestions would overcome that barrier, allowing me (a person who speaks only English) to trade to a player that speaks only Japanese. It would also improve the experience of trading with a person who speaks French as a first language alongside just a few words of English.

Fifth, and most importantly, trades require both partners to be online. This dramatically favours bots over human dealers, to the point that human dealers basically no longer exist, and many dealers that sell items bots do not handle well (such as complete sets) often post a classified ad and have a bot auto-reply saying “Hey, thanks for the interest, I’m AFK, try again at 6.30pm Pacific Standard Time”.

Finally, the trade system as it stands does not support large trades. About a year ago, I traded a very large number of tickets (500 at the time, that was a fair price then although it would not be now) for four sets of Return to Ravnica, and had to talk the set seller through a way to do the trade that didn’t expose either of us to potential fraud. Otherwise, I could have let them take 400 tickets in one trade and taken all the mythics and rares, and then blocked them, effectively stealing nearly 100 tickets. This could be much worse with 4x foil sets or other huge transactions, such as trades for a foil [c]Black Lotus[/c]. Whilst I believe WotC would take a hard line against using deception in trades, it would be better if the system simply did not allow it.

My suggestions:

Firstly, eliminate event tickets and replace them with an account balance that is used to enter tournaments, purchase digital MTGO products from the store and can be used as a currency to conduct trades (but never withdrawn for cash).

If there are legal reasons (gambling laws) and/or credit card fraud reasons that prevent this being done, instead introduce a new digital object, the ‘chip’, which represents one-thousandth of an event ticket. Allow event tickets to be ‘opened’ like boosters (becoming 1000 chips), and phase out Event Tickets, using chips as the new way to pay tournament entry fees. So you could enter a 2 ticket Constructed 1v1 queue by paying 2 Event Tickets, or alternately by paying 2000 chips.

Either of these would solve problem 1 outright. Low value cards would immediately become readily tradeable, as the vast majority of cards still hold a value of at least one-tenth of a cent.
Secondly, keep the person-to-person trading interface that exists now, but create and heavily promote a new trading system that mirrors the broker-based market in the MMO EVE Online (and consider paying CCP, the makers of EVE, to help you implement it into MTGO). Copy that system exactly, except do not include any equivalent of EVE’s Margin Trading (require a 100% escrow under all circumstances) and do not respect distance/location in the way EVE does. Here’s how it would work:

Suggestion #1 – Sell Orders:

This is basically a buyout-only ‘auction house’.

A ‘sell order’ is a pledge to sell a card for a certain price, if a buyer can be found in a given timeframe. The card in question is removed from your collection and placed in escrow for the duration of the sell order. If a buyer is found, the card is delivered from escrow to that buyer immediately, and the tickets/chips/account balance is transferred to the seller. If the sell order does not fill, the card is returned from escrow to the seller at the end of the time period.

I see no reason to augment the sell order option with an ‘auction house’ or ‘best offer’ options when you have…

Suggestion #2 – Buy Orders:

A ‘buy order is the reverse – a pledge to buy a card for a given price, if a seller can be found in the relevant timeframe. The entire price of the cards in question is deducted from your account balance and put in escrow (alternately, tix and chips are put in escrow).

If a seller is found you get the cards and they get the escrow; if no seller is found, you get the currency back when the order expires.

Buy and sell orders can be cancelled at any time if you change your mind, and in the event of the announcement of a card being banned or unbanned in any format, all outstanding buy/sell orders up for that card are immediately suspended until the player next logs on, at which point they will receive a message “The card [c]Show and Tell[/c] has been banned in the Legacy format, do you still want to offer 105.003 tickets for each of four copies of Urza’s Saga foil [c]Show and Tell[/c]?”

Buy and sell orders would be anonymous, and would treat different versions of a card as totally different objects. (Example: a Mercadian Masques [c]Counterspell[/c] would be treated as a different item to a Tempest [c]Counterspell[/c], even though many players would consider them interchangeable, however a text search for [c]Counterspell[/c] would show both, as well as their foil versions, and the various other printings of the card from 7E, Master’s Edition sets, preconstructed decks, promos and other products).

Players could look at their objects in escrow, buy orders and sell orders at any time, cancel orders at any time, and modify an individual buy or sell order once per hour. (Once per hour prevents 0.001 ticket price wars being won by bots that are programmed to check if they have been undercut or outbid every minute).

An example in practice:

– I want to acquire three copies of the card [c]Voice of Resurgence[/c]. Being a little vain, I want my Voices to be shiny. (At the time of writing, the first bot I checked is buying foil Voice of Resurgence for 33.42 and selling for 40.49, so ‘fair price’ is around 36-37 tickets.)

– I browse the sell orders and see a total four foil Voices for sale, at 36.999, 37.000, 41.000 and 236.000 tickets.

– I decide to buy the two cheaper copies of the card, but feel 41 is more than I’m prepared to pay (and I sure as hell am not paying 236). Without me ever knowing who I am trading with, I select ‘buy’ on the first two. My account balance drops by $73.999 (tracked to a tenth of a cent), the two foil Voices are transferred from escrow into my account, and the account balance of my two trading partners is increased by $36.999 and $37 respectively.

– I then decide to post my own buy order to try to get the third one more cheaply than 41.000. Looking at the buy orders up currently, I see four at 24.777, 28.599, 30.600 and 30.602. I consider offering 30.603, but then think that I will get the card more quickly if I offer a little more, and so I offer 35.000 and set a duration of 72 hours on my offer. My account balance goes down by $35, and this store credit goes into escrow. For the next three days, if anyone wants to sell a foil Voice for 35 tickets, even if I am offline, they can sell it to my order.

– Before anyone fills my order, the DCI shocks everyone by emergency banning Voice of Resurgence in Legacy. (Don’t make banned/restricted list announcements drunk, folks). I don’t care, as I wanted the card for a Modern deck. My order now goes into stasis until I log on and confirm ‘yes, I still want the card at that price’ at which point the three day period begins again (or alternately, I could elect to cancel the order and offer it again at a lower price).

A second example:

I play an M15 draft, and one of the cards I acquire is an [c]In Garruk’s Wake[/c]. It is my ninth copy. I do not want this card, I don’t want any of the nine, but I cannot be bothered posting a sell order to try to get top dollar for it. I just want them gone.

I right click it in the collection and a list of buy orders for the card appears on my screen. The first person is offering 0.032 tickets for (M15 non-foil) In Garruk’s Wake but is only buying four copies. The second person (presumably a dealer) is offering 0.027 tickets for the card but is willing to buy as many as 233 copies.

I then am given the option ‘Sell four copies for 0.032 tickets each?’ which I click. After a confirmation window, 0.128 tickets leaves the first buyer’s escrow and is credited to my account balance. Then I right-click the In Garruk’s Wakes again, and have the option ‘Sell 5 copies for 0.027 tickets each?’ Again I accept, and the IGWs go to the dealer, and $0.135 is added to my store balance.

Of my six complaints about the trade system, this proposed overhaul would address five. The only one not covered is the availability of obscure cards, as many human players will not bother posting them. However, it is likely that dealers (human or bots) will fill that void, making sure that there is still liquidity in the [c]Chimney Imp[/c] market – and more relevantly, in the market for low (non-zero) demand, low supply cards like foil [c]Massacre[/c].

Monetizing the Trade System:

WotC are a business, and implementing this system so far looks like a lot of cost for no revenue gain. There’d be customer goodwill (which is meaningful) and also perhaps some people drafting a little more often as they can sell their cards more quickly (which is revenue even if those players are ‘infinite’ and never personally spend money at the MTGO store, as every 8-4 draft of ‘normal’ sets consumes 12 packs net and 16 tickets, netting WotC USD 63.88 in revenue). But there are other ways they could get more out of the system without undermining customer goodwill. Taking a cut from each trade (even a 0.5% cut) would cost this goodwill, and I don’t even think it’s the best way to monetize the system either.

Presently, a moderate number of players pay third parties for licenses to use their trading bot software. WotC should have a goal: to get this money in their pockets instead.

A concrete suggestion:

Firstly, there should be a limit of buy orders and sell orders active at any time for a given account. Something like 8 buy orders and 8 sell orders, with buy orders capped at 4 copies of the card (no limit for sell orders), and order duration capped at 72 hours, would be a good starting point. Or alternately, a limit of having 100 total orders (with multiple copies of a card counting multiple times, so ‘Want to Buy: 3 Wasteland’ would take up 3 of your 100 orders).

That is enough to post buy orders for most of a Constructed deck at once, especially when you consider that you’d be buying many cards directly from other people’s sell orders, but it is not enough to run an online dealership or to build sets at bargain prices for redemption purposes.

Secondly, players would have the option to pay USD6 per month (by credit card, or by event tickets/account balance/chips) to have these restrictions almost entirely removed. USD6 is a fairly arbitrary estimate at being a price that seems reasonable but generates real, ongoing revenue. Accounts that pay this charge would have a limit of 500 buy orders, 500 sell orders, and a cap of 12 copies of a card per order and 7 day time limits. Effectively, paying this $6 per month gets you all of the benefits of running a single bot now, but the money goes to WotC, not a third party bot coder.

Finally, players would have the option to pay USD50 per month to have the restrictions entirely removed. This expensive option would give you the benefits currently reserved for people that run trade bots on a dozen accounts or more.

Players with one of the premium trading options would pay in advance, and be automatically downgraded to a free account if they do not trade at all for a month (so as to avoid the customer relations nightmare of ‘oops, I forgot to downgrade my account before going on a cruise for six months’). At the time of downgrading, excess orders would not be automatically cancelled, instead the player would be unable to post new ones until they fall under their new maximum.

A second option to monetize the system is to require a deposit on sell order listings and buy order listings, that is refunded in full if the order fills. This would dramatically cut down the number of ‘nuisance’ listings where someone posts a ridiculous lowball price such as ‘Buying foil FUT Tarmogoyf, 12 tix’ in the hopes that someone misreads that as 120 tix. This deposit could be as high as 1% of the order amount, and it would serve as a tax on dealers much more than a tax on the Limited and Constructed players that generate WotC revenue.

In summary:

The only people that speak highly of MTGO’s current trading system are the dealers that make a living (or at least heavily subsidize their hobby) from being the middleman between buyers and sellers that cannot find each other.

The prevalence of third party bots available for license is a necessary evil right now, but poses major risks to MTGO’s integrity. There has already been at least one incident where a ‘trading bot’ program had trojans built into it that allowed the bot owners to potentially steal cards from those running the bot. If this happened on a big scale, it would be both a public relations nightmare for Wizards, and a financial risk too (as undoubtedly, some people who had had their accounts cleaned out by a thief would file chargebacks against anything they had recently purchased from Wizards).

In addition, it’s hard to know how much strain bot chains put on the server currently, but it must be significant, given that there seem to be over a thousand bot accounts logged on at any time, they usually have large numbers of cards for trade, and opening trade with a bot would query the server ‘How many of each card does this player have for trade?’ every time.
There’s two more advantages WotC gain before even considering possible revenue from the trading system.

Firstly, by speeding up collection management, players that draft a lot will spend less time on collection management, potentially allowing them to fit in one more draft here and there.
Secondly, by having supply and demand driven broad price guidelines publicly available in-client, WotC aren’t intervening in the secondary market, but they still manage to minimize the number of times a new player goes through the horrible experience of being badly ripped off in a trade. Even if it’s only a small amount, it leaves a foul taste in your mouth when you realize that the [c]Flusterstorm[/c] you just sold thinking it was a useless card actually is worth something. This might improve new player retention.

For these reasons, I feel replacing the present trade system with a buy order/sell order system should be the next ‘big project’ undertaken by MTGO management after the completion of leagues (which I personally don’t enjoy much but am looking forward to seeing as I know a lot of people have wanted them and it is good to see their voices heard). If done well, it will make customers happy, entice them to spend more, and assist in retention and growth – a trifecta that can only be good for MTGO and WotC.