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Supply side Economy / Docking Tax / Capital Markets

Author
Alexander wulfgard
Korrupted Gaming
#1 - 2013-03-02 20:03:55 UTC  |  Edited by: Alexander wulfgard
First of all I would like to thank CCP for developing and maintaining such an amazing MMO.

However I have a number of suggestions to create a more self sustaining world which are designed to enhance and strengthen following areas of EVE:

Increase open-world experience / more player focused
A free player oriented supply side economy compared to the present CCP dominated one
Empire building
More realistic factory and R&D operations.
Developed Equity and Fixed Income markets
Strengthen dependence on corporations and alliances.
Better incentiments for wars

Eve market itself of being an open-world experience which is completely player driven, this is great. However many core elements of the game are CCP-given rather than player created, to mention a few: Concord, Space stations, factories, R&D development, skill books and blueprints.

Many of these institutions are absolutely necessary to the game, for example without Concord in high-sec the whole game would properly descend into chaos and anarchy (and many people would stop playing if they died everytime they logged on). It also makes sense to have the empire states, as faster than light speed and large space empires properly would not be able exist without powerful states and institutions to back it. However everything have a cost, hence CCP-given items should be expensive, taxed and heavily regulated. Said in another way, if you want the protection, easy access and comfort of the Empire you will have to pay for it via high taxes and regulations.

At the moment almost all mining, manufacturing and R&D are done in high-sec and on NPC Stations and with the right skills it can be done at almost zero cost. Instead of the existing system i suggest that CCP gives better incentiments for Player Controlled Stations, Outposts and Player ran factories inside NPC Stations.

How should this be implemented:

1. NPC Station space/inventory should be taxed. Players, Corps and Alliances should be able to rent docking/inventory space at NPC stations (rent paid per m3). If players dock at stations where no space is rented then docking for more than 10min should result in a large docking fee/tax. Equipment/ships/ore left in stations outside rented space will result in the stuff being removed (and destroyed) by the NPC station when the player undocks. Only capsules or shuttles should be able to dock as long as you want for free.

Rent prices should be set by the NPC station based on supply/demand and player held leases should be able to be traded amongst players through the market.

2. NPC Manufacturing/Factories

NPC factories should primarily support the empire and not players, so NPC industry capacity available to players should be very limited. One way of regulating it would be through Manufacturing slot vouchers. These vouchers will give the holder right to fx. 1hr worth of production at plants owned by a specific NPC corporation. The vouchers should be sold through the market, LP stores and given by agents.

Additional, different manufacturing plants should have different tech level which means that low-tech equipment can be produced on all plants, med-tech on some and High-tec only on very few or none.

3. Player owned factories

A player owned factory can be setup by a corporation either on a NPC station or a POS. The only difference between setting it up on a NPC or POS is that the owners will have to pay a HUGE tax to the NPC station while on the POS the price can be negotiated between the respective parties.

This is what is needed to setup a factory:

Taxes representing VAT, environment regulations etc paid to to the NPC station or POS.

Rented office space

Factory Building materials (either produced at planets or given by agents / LP stores)

Workers, janitors, scientists, engineers, accountants etc. (these require a daily salary to upkeep)

Refined Minerals for upkeep and maintenance

Refined Ice products for energy consumption

Various blueprints (depending on factory specialisation)

Billions of ISK - The corporation who build the plant need to invest VAST amounts of money into the plant. The money will represent the assets of the plant. The money invested will not be lost when invested, but subject to a small daily decrease representing service, upkeep and depreciation's of assets. However if the plant is liquidated then maybe 75% of the money can be retrieved.

Finally as EVE is a game based on cooperation between players, I suggest that in order to build a factory you will need a large number of players to be present at the factory location to "build" the plant. In order to build the plant the players will need various different skills (new skills leaned) which could be such as plant engineering, accounting, banking, architecture, machinery etc. The more people building the bigger the bonus will be and the quicker it will be finished, basically it should not be possible for only 1 or a few people to build a factory. Last suggestion in this regard would be that the build function works in the same way as the learning of skills works today, so when building a plant you will not be able to learn new skills or receive SPs.

4. Factory output.

The factory output should be determined by several factors, which are build upon the existing rules of EVE. I suggest that a factory can have 5 low-tec levels, 5 med-tec and 5 high-tec and maybe some specialisation to produce faction/advanced manufactures.

This means that a factory with for example 5 in low-tec, 3 in med-tec and 1 in high-tec will produce a huge amount of low-tec vouchers, good amount of med-tec and some high-tec vouchers.

However if a factory do not have enough staff, invested money, minerals or Ice products available, zero vouchers will be produced.


Please read more below.... ---->
Alexander wulfgard
Korrupted Gaming
#2 - 2013-03-02 20:04:41 UTC
5. Ownership

A finished factory will belong to the corporation who hold the land lease and the corporations CEO will also be the player who is responsible for the daily performance of the factory. However the CEO should be able to appoint other players as his senior management. It could for example be Head of Sales (responsible for selling the manufacturing vouchers the plant produces), Head of Production (player responsible for ensuring raw material supply) and Treasurer (player responsible for paying factory expenses).

6. Finance/Economy

As a factory requires huge amounts of capital to operate (see above), it will be natural that this money will be raised in the market or privately amongst players, corps, alliances or even coalitions. If the money is raised privately then arrangements between the parties can be agreed as people wish.

However if the money have to be raised through the market the issuing corporation will need to go to an investment bank (lots of stations are banks already in the game - and the corporation needs a very high standing with the bank NPC corp). The bank will give the issuer following choices: Shares, bonds or a mixture of the two.

Shares pay the holder a discretionary dividends but the holder also have voting rights.

Bonds only pay the holder interests.

In order for an IPO/Underwriting to be successful, 100% of the shares and/or bonds needs to be subscribed for. If successful the money will be transferred into the corporate account of the issuing corporation.

As described above in order for a factory to operate lots of cash needs to be available (assets), to illustrate my idea lets take this example: the factory needs 10bn ISK to operate, the corporate issue shares worth 3bn and bonds worth 8bn. If the issuance is successful the 11bn ISK are transferred into the corporate account. However the account is already 10bn in negative due to the factory requirements so only 1bn ISK will be available for the CEO to dispose over. The 10bn will be tied to the factory lease. As the lease will be such a valuable asset to the corporation the CEO will not be able to dispose over this asset without shareholder approval. So if the CEO wants to liquidate the factory or sell the lease a shareholder vote will be required. However everything above the asset requirements will be at the CEOs full disposal.

Bonds - if the corporate fails to pay either interests or principal on the bonds when due would constitute a legal default and the bondholders would have prior legal claim over stockholders to all assets held by the corporate. In other words all existing shares would be cancelled, the CEO fired immediately and all bondholders would receive new issued shares and their bonds would be cancelled. The new shareholders can then elect a new CEO which can either try to restructure the company and continue the business or liquidate it, buy back all shares and close the company.



Finally the above described concept works on factories producing equipment, however the same concept could be used to create Universities (produces skill books), ship yards (produces ships), R&D facilities (produces blue prints) and Investment Banks (issues Shares and bonds)



Thanks very much for reading my suggestions, any comments are most welcome.


Kind regards

Alexander
Alvatore DiMarco
Capricious Endeavours Ltd
#3 - 2013-03-02 20:19:26 UTC  |  Edited by: Alvatore DiMarco
I'm going to leave the lion's share of your post to more capable people than myself, but I do want to point out before anyone else that the market in EVE is player-dominated, not CCP-dominated. The things that remain available only from NPC sell orders are intended to serve as ISK sinks, which are very important to have unless your favorite word happens to be "inflation".
Alexander wulfgard
Korrupted Gaming
#4 - 2013-03-02 20:45:45 UTC
Alvatore DiMarco, thanks very much for the first comments to my post.

I agree with what you are saying, and perhaps my wording above should have been more diplomatic.
My statement was just reflecting over the CCP dominated supply side. Almost Zero cost of production, free production plants etc...

But the inflation problem would defiantly be solved by having much more money go to NPC/CCP corporates via Rental agreements and Taxes under my suggestions, not to mention the vast money tied in assets. These new features would be the new ISK sinks.
Little Dragon Khamez
Guardians of the Underworld
#5 - 2013-03-02 21:04:11 UTC  |  Edited by: Little Dragon Khamez
I pay millions in rent every month to an npc corp that owns the stations I rent offices in. How is that any different? The amount of rent I pay is also dynamic, it usually goes up because someone else has rented the office next door.

Dumbing down of Eve Online will result in it's destruction...

Alexander wulfgard
Korrupted Gaming
#6 - 2013-03-02 21:18:33 UTC
the rent paid now is not a necessarity for all players and the possibility of building a factory or Bank in your office is not possible at the moment.

Having players only being able to dock up and store goods at stations where rent is paid could make players more integrated into their corp or alliance.


However I find the present system great for expanding into more advanced options as described above.


A final remark is that I have no overview over the global finance in the game, hence it is very hard for me put actual numbers on present prices compared to my suggestions.
No matter what approach CCP chooses in the future, I hope it would be implemented slowly to avoid distorting the market to much.
Sigras
Conglomo
#7 - 2013-03-03 09:59:56 UTC
1. Then how do new players get started if they begin with no isk and cant even dock anywhere?

2. i can kinda see what youre saying here, but it seems just like a change for no reason.

3. you do realize that POSs have these things called "Assembly Arrays" that build basically everything in game right? we already have factories and they can even be anchored in high sec.

4. The problems with investment banks, or shares/stocks of any kind in this game are many:
A. There is no protection - Nothing prevents the CEO from emptying the corp wallet into his own and then taking off with the money . . . in real life the police come and arrest you for embezzlement, in eve, CCP makes a video about it and uses it as a selling point.
B. There is no real guarentee of profitability or assets on which to base the cost of a corporation's shares.
Alexander wulfgard
Korrupted Gaming
#8 - 2013-03-03 11:12:13 UTC  |  Edited by: Alexander wulfgard
Hi Sigras, Thanks for taking your time to reflect over my suggestions and coming with feedback.


1. I agree that making the game "easy", approachable and attractive for new players is a key priority.

However all new players start in a NPC corp, which will have company warehouse facilities available for its members. In such new players will be able to dock at a number of stations, but the downside to this is that they have to pay the corporation tax. I dont really wanna go into a technical discussion on what the correct NPC corp tax should be, but I do find 11% a bit light.

2. The change is just to give the owner of a factory vouchers which he can distributes amongst suppliers and allies or sell on EVE market.

3&4. Yes I have read about them, but I have never build, owned or operated one myself and in regards to the capital market I were not aware that CCP made a video about it. If you have a link I would be grateful.

Maybe I was not clear enough in my first post, but one of the key things I would like to see in EVE is an efficient share and bond market. As you point out, the only risk for the issuer is reputational risk while holders face all forms of credit and market risk. My suggestions address this in a simple way by transferring some risk to the CEO/Issuer (he can loose control over his company) and he will not be able transfer key assets out of the company. Hence limit financial upside for CEO to commit embezzlement and the credit risk is substantial lowered for investors.


With the implementation of my system, I believe we could see a thriving capital market being created. Shares and bonds would soon be traded through the EVE market in a massive scale.
Sublime Rage
Black Rabbits
Black Rabbit.
#9 - 2013-03-03 11:52:41 UTC
Can you imagine a noob paying the same taxes as a veteran to be able to dock up at a station,having just started out having almost nothing to his name. plus what happens if you dont play for a while?you automatically get taxed for rent?what if you dont play for a long time?you have to give all your isk to stay dock? ridiculous idea
Alexander wulfgard
Korrupted Gaming
#10 - 2013-03-03 12:09:42 UTC
As pointed out in my original post, docking fee/tax is only paid if you do not have a rented office availeble. As you always will be a member of some corporation it will be very unlikely that you dont have office space availeble. Finally NPC corps will also have docking space availeble for you.

If you are affraid that you will not play for a week or more and that your current player corporation is closing down, then I think its fair that yourself take responsible for your actions and forexample become member of a NPC corp. There you can then dock up for free for a long time.
Alexander wulfgard
Korrupted Gaming
#11 - 2013-03-03 12:27:47 UTC
Additional to my the discussion about docking fees.
I see the EVE world as a dark place where everything has a price. Yet you want docking and inventory space for free at all stations all the time... Dont seem very EVE like to me.

and in regards to rookie vs veteran , my suggestions already will take costs into accounts, as most veteran players would have gathered a huge amount of goods, equipment and ships - which they enjoy free storage costs for.
A rookie player with few items would not require the same space.
Alvatore DiMarco
Capricious Endeavours Ltd
#12 - 2013-03-03 13:51:05 UTC  |  Edited by: Alvatore DiMarco
What you're basically saying is that if I stop playing EVE for more than a week without leaving my corp, I should be punished for this lapse in my game activity by having all my ships, all my items, everything I own removed from the stations and destroyed. My ISK should be taken from me as well, in the form of large recurring docking fees since even when I'm logged out the system still considers me as being either "in space" or "docked at X station".

When I finally return to EVE after a week of not playing, I should log in to find my ship in space (or myself in a pod in space if they confiscate your ship for not paying the docking fee) with all my ISK gone, all my assets gone and have to start effectively from nothing.

"Play EVE without breaks or GTFO", basically.

Best idea ever.

Since it seems that you have a deep, burning desire to rid EVE of any subscribers who are not mindless addicted zombies, I find myself with a deep burning desire to suggest you refrain from making any further suggestions anywhere that other people can read them.
Alexander wulfgard
Korrupted Gaming
#13 - 2013-03-03 17:46:08 UTC
The original post discussed various topics where i personally put most thought and energy into trying to create a better standards to develop a more realistic supply side economy and developed capital markets. Nevertheless it seems that the most criticism are targeted towards the docking tax solution and hence I will be happy to discuss this in detail. But I will still recommend players to participate in the discussion of the other topics raised in the original post.


Alvatore I think you should keep a better standards on this forum as I find your last paragraph unnecessary. Please also read my posts more careful in the future before drawing any extreme conclusions from them.


To summarise my suggestion and ideas on docking tax:


If a player docks in a station where he has no office space available then he will face a tax after 10min and equipment/ships left behind will be lost.

Office space can be bought from the station (if any available) or in the secondary market through EVE market. Individuals, Corps, Alliances and Coalitions can buy office space.

NPC corps have office space available to their members.


Why this suggestion:
There's no such thing as a free lunch. Everything in the world costs money and so do storage on space stations. A space station properly cost an astronomical amount to build and maintain and I am sure in a free market the owners would demand payment for their services.


It will create a stronger relationships between players, corps and alliances if players have a greater incentiment to keep equipment in same stations.



Economics:


It is hard for me to set an exact price on the tax and on the cost of office space. But the current office rental system could easily be used as a foundation and hence just expanded.

In my opinion free market, supply and demand should be the base for all prices in EVE.
Sigras
Conglomo
#14 - 2013-03-04 10:12:20 UTC  |  Edited by: Sigras
Alexander wulfgard wrote:
Hi Sigras, Thanks for taking your time to reflect over my suggestions and coming with feedback.


1. I agree that making the game "easy", approachable and attractive for new players is a key priority.

However all new players start in a NPC corp, which will have company warehouse facilities available for its members. In such new players will be able to dock at a number of stations, but the downside to this is that they have to pay the corporation tax. I dont really wanna go into a technical discussion on what the correct NPC corp tax should be, but I do find 11% a bit light.

That is an interesting solution, but it would strongly discourage people setting up small corps, and give large incentives to join the bigger more well established corps in game.

This is not what we need in Eve, it already has economies of scale and no sense of divisions of labor; we dont need to be adding to that incentive.

This mechanic also screws over traders; how can I possibly set up a region wide buy order to be fulfilled if I cant store stuff in a station for more than 10 minutes?

Alexander wulfgard wrote:
3&4. Yes I have read about them, but I have never build, owned or operated one myself and in regards to the capital market I were not aware that CCP made a video about it. If you have a link I would be grateful.

The Eve Online Causality video is the one youre looking for.

And yes, it would be interesting if more of the industrial facilities were player owned, but to accomplish that, I would simply raise the price of manufacturing/research in a station to make it at least a consideration . . . of course the profitability of running your own manufacturing facility would be dictated by the fuel block price, I see this as a win - win solution; more ISK sinks, and a more player supplied economy.

Maybe you could even make the facility rental price increase with demand, so the more slots are used up, the more they cost to use.

Alexander wulfgard wrote:
Maybe I was not clear enough in my first post, but one of the key things I would like to see in EVE is an efficient share and bond market. As you point out, the only risk for the issuer is reputational risk while holders face all forms of credit and market risk. My suggestions address this in a simple way by transferring some risk to the CEO/Issuer (he can loose control over his company) and he will not be able transfer key assets out of the company. Hence limit financial upside for CEO to commit embezzlement and the credit risk is substantial lowered for investors.

With the implementation of my system, I believe we could see a thriving capital market being created. Shares and bonds would soon be traded through the EVE market in a massive scale.

You're assuming that the company is legit in the first place; I envision people starting up dummy corporations and using them for months in order to set up a scam.

You're also assuming that the CEO cares about his job as CEO; IRL, you only have one life and if you ruin your reputation your screwed. In eve, I have 9 characters and can create more if I need to get a "clean rap sheet"

I just dont see any system working where any amount of trust is involved unless its on the highest level, or there is more profit to be made being trusted than taking a one time scam. Notable examples include:
Chribba
Somer
EOH Poker
Alexander wulfgard
Korrupted Gaming
#15 - 2013-03-04 12:33:32 UTC  |  Edited by: Alexander wulfgard
Hi Sigras, Thanks for your good constructive feedback and for sharing the video link.

Sigras wrote:

That is an interesting solution, but it would strongly discourage people setting up small corps, and give large incentives to join the bigger more well established corps in game.

This is not what we need in Eve, it already has economies of scale and no sense of divisions of labor; we dont need to be adding to that incentive.

This mechanic also screws over traders; how can I possibly set up a region wide buy order to be fulfilled if I cant store stuff in a station for more than 10 minutes?


Docking Tax:
Big corp vs Small corp -

I can see where you are coming from, a new player joins eve and starts in a NPC with only limited stations available. Soon he will be curious to explorer more of the universe and join a player corp. So what corporation would the new player choose?

With all other aspects kept unchanged with the exception of new docking tax, the initial choice seems simple - he choose the largest corporation which offers the most docking space available.

However as I started earlier, docking space could also come from Alliances or Coalitions. Which means that a small corp with access to a larger alliance could become more attractive.

Further a Small corp with more dedicated members could easily secure more docking space than a larger inactive corp.



Finally is the economy behind the suggestion. Corporation or alliances that offers docking space to members face costs. These costs have to covered somehow, and this is most likely by the members, so what might look as a cheap deal may end up as the expensive solution.

Market orders -
I agree that the system will destroy the present system with region wide buy orders. Is this good or bad? Lets analyse the pros and cons:


Cons -
Haulers, reprocessors, manufactures etc will face more administrative burdens as you will not be able to buy materials where you are not present or have office space.

These people will be forced to crate a better integrated supply network.

Sellers will also face much less liquidity (or properly none) in outskirt areas.

Pros -
At the moment almost all liquidity is in the 4 major hubs with Jita take up the largest share. This has happened because free markets will always create an efficient market place.

Forcing people to create local trading hubs will also create a growing commence and wealth in these regions. Some systems will have zero liquidity others would experience a boom if active traders chooses to move in.

Sellers willing to travel a bit further than today, will be able to take advantage of better prices and liquidity in local trading hubs.

Finally, I will ask people here on the thread if they really believe its fair that they receive free docking and storing space on all stations in the entire universe?


Sigras wrote:

The Eve Online Causality video is the one youre looking for.

And yes, it would be interesting if more of the industrial facilities were player owned, but to accomplish that, I would simply raise the price of manufacturing/research in a station to make it at least a consideration . . . of course the profitability of running your own manufacturing facility would be dictated by the fuel block price, I see this as a win - win solution; more ISK sinks, and a more player supplied economy.

Maybe you could even make the facility rental price increase with demand, so the more slots are used up, the more they cost to use.


I agree with all you say. My whole point with a better player oriented supply economy is to give players a choice: Either choose the expensive CCP solution (research, manufacturing, industry in NPC stations) or create your own.

I believe it will create a more fun EVE universe, with more possibilities of empire building, hostile takeovers, wars over resources and production facilities.


Sigras wrote:


You're assuming that the company is legit in the first place; I envision people starting up dummy corporations and using them for months in order to set up a scam.

You're also assuming that the CEO cares about his job as CEO; IRL, you only have one life and if you ruin your reputation your screwed. In eve, I have 9 characters and can create more if I need to get a "clean rap sheet"

I just dont see any system working where any amount of trust is involved unless its on the highest level, or there is more profit to be made being trusted than taking a one time scam. Notable examples include:
Chribba
Somer
EOH Poker



Equity and Fixed Income Markets -
I am not that naive, afterall this is EVE :)

Yes lots of people will try to setup dummy corps and they will try to scam money from other players. However I also believe other players will be legit and will need the money to create a real economy industry and some will flourish others default.

The suggestion is still that in order to have listed shares (which can be bought and sold through EVE market) a company would need to launch a successful IPO. If the IPO is not successful, the shares will not be listed. This will put pressure on the CEO/corp to present his company as legit and they will most likely have to make arrangements with investors prior to the IPO to secure promise of funding. Additional, the NPC investment bank do not work for free (I am sure investment bankers are well paid even in the EVE universe) which means that the CEO/corp will have to put down a good chunk of fees, upfront and non-refundable, to be able to launch the IPO. This should keep away most scammers.

read more below ++++------ >>
Alexander wulfgard
Korrupted Gaming
#16 - 2013-03-04 12:33:43 UTC  |  Edited by: Alexander wulfgard
Despite the increased investor protection I suspect there will still be scams, but the losses will be limited and hopefully investors will demand higher returns on assets as part of the increased risk. I believe it could work if implemented correctly.

Further it would create a basis for wars over hostile takeover, shares, assets and EVE will become more interesting lively place to live.


Last remark on IPOs and listed companies is that most information about the company will be public as part of the IPO: Assets, dividends, Interests, Members, Deals and not the least share&bond ownership will be public information to everyone.
If investors were able to see specific information about corporate members like:
How much time members have been logged on while in corp
skill points accumulated while in corp
and more like those. It would be easy for investors to see if the corp is real or a shell build by Alts.