Editorial Section:
Last week I received a great question from a reader named Rick. His question boiled down to the following:
"Why are people paying more than one US Dollar for an event ticket (through eBay, no less!)?"
This, is a great great question and has forced me to bridge the gap that I usually try to avoid; real life issues in my articles. I try to avoid normal news stuff because it's a slippery slope. Do I mention a latest disaster? What about the latest election? What about unemployment rates? The impacts of the real world are often attributed to many more things than they truly deserve, and for that reason I generally tend to stay away from mentioning them here. But like every good rule, it needs to be broken and bent from time to time. This week is one of those weeks.
Getting back to basics:
Economics 101 says that Supply and Demand would dictate the price of an item on the secondary market. And that's very true, even in MTGO. But there must be more to the story than that, right? I mean, even with demand up, wouldn't the price of a ticket be worth right next to 1 US dollar as people would be willing to just straight flip them from WotC to the secondary market if they went over $1 US? Probably, yes... but what happens when $1 US no longer is worth as much as it was in the grand scheme of things? Supply is definitely down, no questions there. The amount of tickets that have been consumed by events is staggering when you consider how many new queues have been added that use tickets and pay out packs. Like the two man queues, the pre-release events, and now the sealed queues for release events. The need for tickets is rising steadily and the one place to get them remains the same: WotC store for $1 US. Demand is up, but supply for all intents and purposes, should be able to keep pace as they're just a few clicks away. The basic tenets of Supply and Demand aren't the only explanation at this point.
Inflation, Tickets and Mythics...
So if it's not just supply and demand... what *is* happening? The likely key to that question is tied to the real world mess with which we are all likely are dealing: economic troubles, government stimulus and currency inflation. The long and short of the issue is that as more and more money gets printed by the governments involved the actual value of that currency decreases more and more against static things. And even though an event ticket feels more closely related to another currency than say, a loaf of bread, the way that event tickets enter the system is by being ordered from a 'manufacturer' and delivered and used as needed. So what happens when the currency behind the MTGO items gets inflated? The corresponding costs of things seem to go up. A $5 card goes to $6 then $7 then $8. An event ticket goes from $.9 to $1.0 to $1.02 and so on. It also makes cards like chase rares that would be worth $25 have a perceived value of $35. They're not actually "worth" more than they would have been before, but due to inflation of the currencies in question they command a higher dollar value.
This could also be used to explain the ever increasing costs of chase rares like Baneslayer and Jace. Granted, they have huge demand and self created supply issues, but even with those two things added into the equation, the end result still seems disproportionate to the ever increasing price tags we've been seeing in the past year.
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On lists and Legacy
In case you missed it, WotC recently closed a pretty large loophole with the Reserve List (http://wizards.com/Magic/Magazine/Article.aspx?x=mtg/daily/other/031810a) that previously allowed them to reprint any card that they wanted to, so long as it was a "Premium" version (aka Foil). In that brief article, WotC states that they will follow the previous loophole version for the rest of 2010 and announced the cards that they will be reprinting as premium versions. After 2010 though, they will no longer allow that loophole to exist and will refrain from ever reprinting anything from that list as a paper version again.
Last week I was singing the praises of them finally pulling the trigger on that loophole and getting more versions of some important cards into MTGO and into MTGP. And maybe it's just the paint fumes or maybe it's me becoming an old curmudgeon, but dang it, this pisses me right off. The reserve list hasn't provided a useful purpose in years. WotC won't reprint the Power 9 regardless of the list, but leaving the list keeps them from printing the original duals and other Legacy and Vintage staples. Ever.
Now, maybe this is just an elaborate conspiracy theory to bolster MTGO's Legacy scene, and if so, then I applaud WotC for improving MTGO. Being as WotC can actually make a lot more money providing those old Legacy cards on MTGO than they can in Paper. Every dual land on MTGO represents profit to WotC in the past 24 months. Higher MTGO Legacy participation signifies the same thing... more money in WotC's coffers. As opposed to Paper Legacy cards, which have long since been filed away and spent.
Discussion Items:
MED 3 Farewell Events underway!
It's that time folks! Time to grab some tickets that have been burning a hole in your wallet and do some events for your MED3 duals and other chase cards! If you're still missing some Legacy and Classic cards, now might be a good time to plan for some events.
Urza's Saga pre-release begins March 26th!
Speaking of Legacy, Classic, and all of that we're looking at a huge set of events coming up at the end of this month, named the Urza's Saga release events! These will dump some amazing cards into the eternal formats and hopefully will be better attended than the previous Legacy card sets of the Tempest block...
Worth on Force of Will reprinting (repost):
I'm linking this one here because it gets lost a lot. In this thread Worth goes on record about not reprinting Force of Will. It took me a while to track this down so I wanted to stick it someplace safe.
Card price discussion:
Why hello there Force of Will! Long time, no see! You look like you've been working out since we last met! Force of Will surges up to 80 (eight oh) tickets this week. I can only hope it's due to Legacy speculation and not actual Supply/Demand issues. If the former, then it should probably reduce a bit as things move forward. If the latter then it's going to be rather interesting to watch the Legacy format try to get its legs under it on MTGO.
Other improvements were high hitters in the Legacy world, with the the obvious duals improving. Tarmogoyf had to remind the world that he's still amazing, which evidently the rest of the world agreed.
Cards that moved down were mostly avatars, and some stranger old cards like Abeyance et al.
Card Price Tables:
Card Price Charts:
force of will chart
natural order chart
tarmogoyf chart
underground sea chart
lion's eye diamond chart
sylvan library chart
taiga chart
sylvan library chart
tropical island chart
savannah chart
lavaclaw reaches chart
sylvan library chart
sylvan library chart
eye of ugin chart
creeping tar pit chart
"wrexial, the risen deep" chart
"wrexial, the risen deep" chart
rampaging baloths chart
hell's thunder chart
warren instigator chart
felidar sovereign chart
oath of druids chart
mana drain chart
avatar _ morinfen chart
avatar _ arcbound overseer chart
cryptic command chart
"avatar _ ink_eyes, servant of oni" chart
avatar _ chronatog chart
abeyance chart
demonic tutor chart
avatar _ platinum angel chart
hada freeblade chart
everflowing chalice chart
elvish archdruid chart
tectonic edge chart
death's shadow chart
bloodghast chart
ad nauseam chart
cryptic command chart
mana crypt chart
mana drain chart
40 Comments
I don't think your explanation about the price of tix going up because of USD inflation holds water. Because tix are sold for a constant price in dollars, the tix economy is basically pegged to the USD, and it won't fluctuate based on the value of that currency.
I think your original point about the addition of events is all the explanation you need. Fewer tix = higher cost. The reason the eBay price can rise above $1/tix is
1. Sales tax. If you live in a state that charges tax, you can do better buying off of eBay than from the Wizards store.
2. eBay coupons. eBay/Paypay very occasionally gives out coupons that can make the effective price of the tix less than $1.
I agree with Ian. Your paragraph about inflation is so very wrong.
I'm in two economics classes right now and my professor has told us at least three times how wrong the "more money gets printed by the governments" statement is. If you mean it as a metaphore then sure but even then the inflation anaylassi is just off.
I agree that inflation is not the reason for tickets to be sold for more than 1 USD and it is likely to do with taxes(especially the VAT), but what do you mean your professor has told you that the "more money gets printed by the government" statement is wrong?
There is no way to deny that the increased printing of money increases the nominal value of goods. There are more dollars chasing less goods and I don't care how complicated people try to make the situation it is really that simple.
No one anywhere on the political spectrum will say that printing money does not cause inflation.
first off polititions are nieve and know nothing about economics.
Second off it's true that printing money will cause inflation. However, when was the last time that an advanced capitalist nation has actually printed money without relation to the demand of money increseing. (I'll give you a hint, not in my lifetime or any of ours to my knowlege.)
When a politition states that the governement is actually printing money it is 100% false. The government (US atleast) only prints money to replace damaged currency or if the demand of money has increased(but even then I don't thik they print money.)
Money is created through the banking system and not by the government printing money. The baning system usually only adds to the money supply when it is demanded by the public and firms.
So the next time you hear a polotition say that the government is printing money you'll know that they're completely nieve.
I would trust your argument so much more, if you had any idea how to spell half of the words you used.
Spelling aside, technically bluedragon (and his prof) is correct. The Treasury Department doesn't just take money off the printers and go buy stuff. As you might intuit, most spending these days doesn't involve cash anyway. I'll explain (and to be fair I'm sanding the edges here a little bit for understandability):
The way new money is added into the economy is via the Federal reserve. Banks can only lend money that they have. If they run out then they stall - very roughly what happened in 2008. (And without protections in place people would have trouble withdrawing savings, as happened in the bank runs of the 1930s.)
Banks in good standing (aka not 2008) can get more cash from Central Reserve Banks. Those, managed by the Federal Reserve, use the power of the government to have ultimate credit. They lend money to banks at a low rate, banks lend it out slightly higher, and the wheels keep moving. The number one way this is managed is the "Fed Funds Rate", which is the percent that those central banks lend out at. The lower it is, the lower the other banks can afford to go on their loans.
So consider what happens if you have a low rate. People want to borrow because it's cheap. That means the Central Banks have to loan out more money. So more money is going from the government out to the economy. And that is what can cause inflation. More money exists not in the paper sense, but in the bank account sense. If the Fed raises the rate then there's less borrowing, less money available, and less inflation. (Possibly deflation.)
That said, the phrase "printing money" is shorthand for all that crap. Low rates and increased liquidity to promote borrowing is commonly referred to as "printing money" even though there's no printing involved. And bluedragon's prof should know this and stop being pedantic about it.
(p.s. Governments need to borrow money too, so just consider the above process as the government itself starts using up the supply. Greece is on the verge of defaulting in part because they signed on for the Euro a decade ago and in doing so lost the ability to "print money".)
Amar, your explanation is simple yet elegant. Thanks for that. I have one quibble though I am not sure this is still true. Some banks have had the power to lend up to triple their assets in credit. Which has led to some interesting events in the past. Notably, the banks mass failure a few years ago before the start of President Obama's term.
The reserve requirement is actually 10%. Still is. It's there to cover the immediate payback needs and no more. So banks can lend not just three times what they hold, but nine times. (Although a loan is an "asset" so I'd avoid using that word.) Most don't go quite to that limit so triple might be more practically realistic, but the law is 10%.
This isn't a bad thing by the way. If banks had to hold more money on hand they couldn't make as many loans, so they wouldn't have as much opportunity to make profits, so they'd have to charge a greater rate spread. It would be harder to get a loan to buy a house, and you'd pay 7 or 8% instead of 5%.
The problem a few years ago is that banks loaned money to people who couldn't pay it back. That meant Fannie Mae and Lehman Brothers and all the other guys couldn't pay their own loans, and no longer had good standing to borrow more. Since the whole banking system is based on passing money around, when it stops flowing back everyone feels that pain.
So strictly speaking the problem wasn't the quantity of loans, it was the quality. Yes technically there should have been fewer, but it should have been the right fewer.
Sorry, I suck at spelling and I guess I'm bad at explaining it, thanks Amar. But, I've always just "got" economics. The thing is so many people just lossly use the term "printing money" and have no idea that the fed is increaseing the money supply through the banking system.
Ditto. Luv ya Ham but you're completely off here. Neither inflation nor exchange rates would explain paying $1.02 on eBay vs $1.00 in the client. They're circumventing Sales Tax / Value-Added Tax, which eBay users don't collect but Wizards does. That can make Tickets in the store cost as much as $1.20 to a European user.
As for money being printed for increased liquidity ... yeah that can be an inflation-stimulating effect but it's far more complicated and again irrelevant here.
Buying tix through the store adds 25% VAT, giving me a 1,25 USD price tag on a ticket. Ebay is better...
The weird thing is that I even have to pay 25% tax for redemption, even if I already paid the 25% on the tickets to complete the sets. Something is rotten...
Hammy, I think you missed an important section of that new reprint policy, which read as follows:
Virtual Cards
This reprint policy only applies to physical, printed cards. It does not apply to cards released on Magic: The Gathering Online or in any other digital distribution.
As others have said the effect is likely to do with Sales Tax issues. Here in the UK, I have to pay $1.175 for a tix bought from the store. That means as long as the price is lower than $1.17 on Ebay, it more worthwhile for me.
What the observed rise in tix prices likely means, is that the percantage of tix bought by international players has increased compared to before...
...anyone know what the sales tax is in Jordan!! ;-)
Tbh I find this a much better explanation then inflation, sure its there, but for the average american player you'd be insane to pay more then a dollar for tickets off ebay
There are few factors who made the eBay price of tix over 1.0:
1) Much less tix sold there than before
2) More use of the tix ingame
Practicly, only ppl who pay VAT or sales tax pay for them as it makes no scence to pay more than a 1$ when u can buy directly from wizards. Its way more easier and faster way to get the tix too, as there is absolutely no risico or wait time.
I'll just back up what other people are saying, when you add in 17.5% VAT and currency conversion charges you are better off using ebay when you can.
The problem is that tix are becoming harder to find on ebay; there are fewer auctions, and buy-now auctions are now unusual, meaning you need to join in competitive bids and wait for the auction to end as well. In fact last time I needed tix I used the store since there were zero available in a time frame of a week on ebay.
It's quite clever how wotc have manipulated the situation so that tix are being used for their primary purpose and not as de facto money.
I think it might be time to do a more exhaustive line search on Legacy staples and compare prices across several MTGO dealers and eBay prices for paper singles.
I don't think the gap is nearly as big as it was even a month ago when I wrote that article.
Then again, it might also be just as instructive to wait until April and see just how much of the current pricing is speculation
Can we get back the classic/std/extended overall price charts (now with legacy)?
I'm suprised Mox Diamond isn't crashing already? Maybe next week since its still kind of fresh news.
The non-foil version won't fall much (though it won't go up either). So far nothing else of value to MTGO has been revealed in the set, basically making the FTV set a $35 mox diamond. The SH FOIL mox though will likely tank quite a bit.
I predict at least a 10 tix fall on Mox Diamond. (from 35 to 25). The deck it is best in in legacy (Land) won't work till we get Maze of Ith in MED4 and Rishadan Port in Masques (or possibly in MED4) I don't think that many peopel will be clamoring to play with it.
Plus I anticipate at least one other wanted card in Relics (Sol Ring and/or Mana Vault) that will take up a good portion of the value. So anyone holding onto Diamonds will be taking a risk of 15-20 tix per loss if valued at 35.
It's my understanding relics doesn't come out until August. Since Legacy is going to be official 3-31-10 the card might not take a dive just for the simple fact that people will want to play decks using it for the next several months.
I sold the one I had just to be on the safe side, but I didn't see myself buying 3 more for a playset. Had I owned 4x, I might of held them for awhile.
You comments actually don't make any sense because over the last year inflation rates have gone down (there was acutally an extended period of deflation for most of 2009). Not to say that its a great thing or anything - for instance some pay increases (for instance some government jobs) are linked to inflation. So a lot of people aren't getting the pay increase they are used to, but in theory the same amount of money should buy about the same amount of stuff. Of course people spend most of their money on already fixed costs (ie mortgages, car, and other debt payment) so that's not really the case.
I agree with the above reasons for tix price increases - VAT and Sales Taxes and increased demand.
Oh, and anyone interested in buying packs or tix for resale here are some tricks.
1) You aren't going to make a lot of money, and it will take time. I did this a few years back when I was unemployeed for an extended period. I made enough to help sustain me and I had a lot of time on my hands. You are almost always better off just getting a real job, so don't count on it to be a efficent use of your time.
2) Get an interest free credit card (if you can, they might not even have these any more...) and get its mailing address in a state without sales tax (I used PayTrust and their delecious South Dakota mail center).
3) Take as little risk and exposure as possible. You margins are narrow, as are everyone's. I used PayPal, but had some problems with chargebacks and the like eating away at my margins. If I was to do it again I would use something like PokerStars to transfer money, and always insist on cash up front. Don't buy a huge amount of product at a time either - you don't get bulk discounts and shifts in the environment can have a major effect on prices leaving you upside down on your inventory.
4) Don't speculate unless you are absolutly sure. Speculation can be a great way to turn a profit, but be careful. See Eye of Ugin.
I think these state of the program articles provide very little value.
I wait all week for these.
His articles see more readers than any other writer here. I think your opinion is in the minority. Then again, you are entitled to it.
You are certainly entitled to your opinion, but I look forward to reading this article every week. It is pretty much the first thing I do every week. Eric provides both valuable insight and useful statistical information. He is one of (if not the) most important people in the mtgo community.
this article may have provided little value, but most of hams articles are full of good stuff.
Keep it up ham
i wouldnt sweat it, wed and fri are ham days, i guess only if you could fit more news you could improve, but what else can you do? make it up!
We should look for that in a special SotP in just 13 days?
I'll quibble about the economics, but I completely agree that your column has a (virtual) ton of solid content.
Glad I got my Sylvan Library for EDH a while ago. Never imagined it would shoot up like this.
Wow, the price to play Magic is getting ridiculous! Im glad Im getting out of it (not really I love to play but its becoming crazy). For those that play paper Legacy, Vintage, good luck in the future finding any real tournaments a few years down the road, its just going to get more and more costly to get any real new blood into the format. Its a shame, this GAME is getting out of hand IMO.
Hello Eric,
thanks for the weekly update. One thing I believe that needs a bit of a change are the price charts or precisely the prices. I know that you are pulling the prices from a well known source but to a large degree many of them are not nearly as accurate as they could be if you would combine prices from different sources. Often the prices are not nearly what the market is "telling."
One example would be the Platinum Angel Avatar. There is no one that pays near the $20 in the chart as they have been distributed en mass during the Momir events. You will have no problem to get them for less then half the value. This also makes many of the percentage changes obsolete as they are not real market values but merely prices set by a dealer. This is especially true for cards that are less liquid.
I know that this is the easiest way to do it but I do believe that true value will only come out of the charts if you are using different sources and combine them for a more accurate market prices.
Otherwise nice job as usual.
Cheers,
Marin
Hello Erik,
Thanks for the weekly update. Though you spell your name with a "K", unlike cool Erics such as myself, I still have and always have had a deep and abiding respect for you. Apparently, so do many other posters, since they continually refer to you by the "Cool Spelling" of Eric, and not Erik, despite how you have signed your articles and listed your name for several years, and dare I guess, perhaps even since you were born.
I mean, even though there were only two articles today and the other one was actually by an actual guy actually named "Eric", I'm sure he's not at all agonized about the fact that you have stolen his name and everyone uses his name when talking to you. And that everytime he sees the "Hello Eric" pop up in the new comment sidebar, he's all excited because he has a new comment on his article, but he doesn't. He's definitely not swearing any kind of lingering consonant-based vengeance across many years or anything, I hear.
(Just kidding, awesome article as ever!)
-Eric<-------------------------------------------------------------NOTE
It IS an easy and common mistake to make and not at all indicative of an insult or slight in anyway shape or form. I am certain I have made it more than once with people who are close friends even. Some people also just fail at the typing.
Hello Erik,
I apologize for the misspelling of your name and hope it did not diminish the value of my suggestion. I will make sure to pay close attention to it. The late hours I wrote this is a reason but no excuse.
Cheers,
Marin
I pay $1.25 for a ticket in the wotc store. I miss serrabot where i could buy them for about 0.90 a piece... I mostly buy them from friends now, or from the store if it's in small amounts.
Why some avatars are so high when nobody want to buy them ? I have platinum, assassin, alt serra and cant do anything with them. Can have a 4-5 tickets max.