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Author: maracle Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35937  
Subject: Goozex's economic woes Date: 10/25/2012 3:10 PM
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Pretty interesting column about how Goozex killed itself with bad economic policies:

Eventually Goozex seemed to realize that it wasn't making enough money off of trades to make maintaining the site worth their while. By my math the company was only pulling in around $180,000 a year*, and after paying taxes, credit card fees, server/bandwidth fees, etc. there's not much left. So it needed a better way to monetize traffic on the site. It needed more money. So, in 2009, it began allowing users to directly buy points. This decision had some very predictable and very deleterious effects. Namely: inflation.

[...]

Goozex, which has (perhaps foolishly) been kind enough to publicly post its concurrent trades since its inception, has provided a very clear window into the aftermath of their inflation/price control death spiral. Overall trades, which were well above 5,000 in 2009, dropped by more than half to 2,400 in late 2010 and as of the time of this writing are sitting at 835.
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Author: TheDrake2 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34923 of 35937
Subject: Re: Goozex's economic woes Date: 10/26/2012 9:35 AM
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Interesting, do you have a link for more reading?

The Drake

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Author: maracle Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34924 of 35937
Subject: Re: Goozex's economic woes Date: 10/26/2012 11:32 AM
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Whoops, forgot to paste it in...

http://www.gamerswithjobs.com/node/113520

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Author: eaglehaslanded Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34938 of 35937
Subject: Re: Goozex's economic woes Date: 11/9/2012 3:09 PM
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Goozex was created in part to avoid the difficulty of hunting for a suitable trade for your game — in other words, to bypass the normal barter system. A barter system is a system in which goods are traded directly for other goods. This has some obvious shortcomings, the main one being that the person who has what I want may not want what I have to trade.

Goozex created a similar setup using a medium of exchange creatively titled “Goozex Points.”


I've heard of a system like this before. It's called currency. We already have many of them (e.g., the dollar) that are extremely effective.

I assume the big obstacle is that kids don't have bank accounts and credit cards?

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Author: TheJTrain Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34941 of 35937
Subject: Re: Goozex's economic woes Date: 11/12/2012 11:46 PM
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I've heard of a system like this before. It's called currency. We already have many of them (e.g., the dollar) that are extremely effective.

What Goozex (pre-inflation - thanks for that link to that very insightful article, OP whom I'm too lazy to go look up) attempted to do (and succeeded for a period of time, IMO) was reduce the middleman fees that themselves reduced the total value of the trading transactions. Instead of selling a game on eBay or Amazon (and paying eBay or Amazon x% of the total in fees) or selling a game for dimes on the dollar at GameStop and then turning that cash around and buying another game from eBay or Amazon or GameStop (at somewhat elevated prices - see bid/ask) which frequently required a non-negligible infusion of extra cash to complete, with Goozex when you traded in a game valued at 1000 points (~$50), you could turn right around and get another game valued at 1000 points, only spending a "trade credit" that cost you a whole whopping $1 - which, along with webpage advertising, was how Goozex made money and kept the servers running.

Sure, they probably could've done the same thing with USD (like GreenManGaming is doing) instead of points, but back when Goozex started no one was doing that. I do wonder if using points avoids some kind of tax issue as opposed to dealing in official currency.

As a dedicated game-trader for many years, Goozex was where I went first, on both sides of the trade, for precisely that reason. My trading decreased significantly when my backlog got long and the 360/PC ratio of games I wanted to trade/get kept slewing more towards the PC end of things, more of which were ineligible to trade due to DRM etc. I'm saddened that what has happened to it has happened, 'cause it was a great thing for a while. Doesn't look like a comeback is very likely at this point, even after the acquisition.

JT

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