Defining "proceeds": Harder than it looks

2013-04-30 15:19

So, there were bombs in Boston recently. You may have heard. And there are people in Boston, and a lot of them feel that this is sort of a thing which affects them. It may in fact affect them significantly. And if they run, say, a company, one of the obvious things to do would be to collect some money and donate it to a charity.

One such company is Turbine. They make MMOs, most notably Lord of the Rings Online and Dungeons & Dragons Online. I play DDO. It’s a fun game. And they’re doing some stuff pertaining to the bombings, like donating to the One Fund.

But there’s an issue. See, Turbine’s primary way of selling things isn’t dollars. It’s “Turbine Points”, or TP. You can buy TP for dollars; the conversion rate depends on how many dollars you spend. Sometimes there are sales where the conversion rate is different. Sometimes there’s deals where, say, buying a particular thing entitles you to buy TP at a particularly good rate. If you maintain a “VIP subscription” to one of their games, you get additional points over time. And, perhaps most interestingly, you can generate the points simply by playing the game. As your hero makes a reputation in the world, you are occasionally given small additional pools of points. (I’m told that people have worked out a way in which you could unlock all of the “premium” content by playing the content you get access to for free.)

So, they are selling in-game “ribbons”, at a price of 100TP. There’s a coupon to get them free if you want, but if you don’t use the coupon, you spend 100TP.

Now, obviously, the intent is that the proceeds would go to the charity, right? Only. We don’t know how to define “the proceeds”. If I spend 100TP on a ribbon, how much is that in dollars? I have no idea. I don’t think the question is well-defined. And I suspect the charity would not be particularly happy with a donation of “100 Turbine Points”, because they’re not a very negotiable currency.

Consider the simple case: I go to their store, I spend $20, I get 1,550 points. I buy 15 ribbons. I’ve clearly spent most of $20 on ribbons, right? Okay, now say instead I spend $200, and get 23,000 points. I buy 15 ribbons. 1500/23,000ths of my $200 comes out to about $13.04. Have I spent $13 on ribbons? Probably.

Now, what if six months ago I spent $50 on points, so I had 5,000. Since then I’ve picked up 3,000 points that were given as bonuses from my $10/month subscription, and I bought a $10 expansion pack code that included 500 points, and I’ve been adventuring a lot and my characters have earned me 750 points, and I’ve spent 6,000 points on stuff in their store. So that’s 3,250 points left. And I spend 1500 of them on ribbons.

How much was that in dollars? I have no idea.

One simple approach: We sum all the expenditures, and assume that’s the cost of the points. So that’s $120 of spending, for 9,250 points. Only the subscription and the expansion pack thing both contained things other than points. And I don’t know what those things are worth. And it gets more complicated.

Let’s look at an easier case. I spend $200 on points, getting 23,000. I then spend 22,000 points on various in-game shinies. I have 1,000 points left, which cost me roughly $8.69. Now I spend another $50, and get 5,000 points. I now have 6,000 points left. I have spent $250 on points, getting 28,000 points — 112 points to a dollar. But the points I have right now are 6,000 points which cost $58.69 — only 102 points to a dollar.

Which is to say: There is no way to make a sensible decision as to what the “proceeds” of such a sale are. No definition is unambiguously correct.

Turbine’s solution is to admit this, and say that they are making a donation out of their own funds, and they are not trying to exactly tie the amount of that donation to the sales of ribbons. And a lot of customers are mad at them for this, because they want to know where their money is going. And I don’t entirely blame them for wanting to know, but… It’s not possible. So I’m gonna go with “I think these people care more about this issue than they do about trying to cheat their customers.” And probably buy some ribbons.

Peter Seebach