What Broke the Magic Online Economy?

That was not well researched though, if at all - it's by complete outsiders with little actual knowledge of what happened. Even the person they talk to (Skaff Elias IIRC) gives them a dubious offhand anecdote. It's a Malcolm Gladwell level story.

Yeah, if they just had a flat monthly fee for infinite phantom drafts, I would love that. Although having played on beta servers, infinite would probably be the wrong number as everyone just drops at the first sign of trouble.

In short, because Magic is one of the best games ever designed, and this is the only sanctioned way to play the full game online. Magic online was created a long, long time ago before more modern concepts of game monetization (freemium / mtx based) were developed. It's ended up as something more akin to an online poker room than a gaming server.

Pretty much all that is necessary for an "economy" to develop is some form of scarcity, the ability to trade reasonably freely, and the ability of the traders to set prices. If you've got that, you'll get a market of one sort or another, and it's not hard to even accidentally end up meeting one of the conditions when you didn't mean to. Charging flat fees or usage-based subscription fees is not enough to guarantee that an economy will still not emerge... MMORPGs have those things and economies, too.

(There's not much guarantee about what sort of economy you'll get... it's easy to get one that pathological in some sense, either psychological or mathematical. But you'll get something.)

Basically, because Wizards of the Coast came up with the core concepts of the pay-to-win money treadmill game 15 years before the App Store launched--low cost to start playing, psychological impetus to spend more money on a regular basis, appealing to kids and teens with lots of free time and a willingness to badger their parents for money, social enough that players will stay in the game for years because all their friends play. It's kind of breathtaking when you look at the parallels now.

They had that entire previously-untapped goldmine of a market space to themselves (or near enough, given the quality of their early competition) for long enough to get really culturally entrenched, and that meant they were able to shift the model online (and keep a much greater chunk of the profits) without as much resistance as you might expect--if you already believe that 5 cents' worth of ink and cardboard can be worth dozens or hundreds of dollars if it's got the right picture on it, it's a lot easier to believe that the same picture on your computer screen can be worth the same.

MTG, like many other collectible card games, is as much about the "economy" and the collecting aspect, as it is about actually 'playing' the game. This has unsurprisingly carried onto the official online version as well.

Those who don't want to pay, have always been able to play for free with GccG and others.

That statement just doesn't fit well with what is being said - what the author meant was something more like "my hypothesis is that constructed popularity goes down over time but since Wizards doesn't release data on this we cannot know for sure". This really should have been caught by the editor (cough Andy... cough) and clarified.

Yes, this is how a hypothesis is formed.

You seem to be overlooking a huge thing - collectibles have an (above-the-board) resale value. While perhaps the market crashes someday, for 25 years Magic cards have done nothing but go up in value. I'm personally up tens of thousands of dollars lifetime from paper Magic, and some thousands from dabbling in digital. And all of it was purchased for play, not investment.

Non-collectible virtual goods have dubious resale value. You can technically sell game accounts I suppose, but it's inevitably against Terms of Service and commensurately difficult.

When all my friends got into MtG back in high school I said, "I'll play but I'm going to make my own cards. I don't want to buy them from the store." But no one would go for it. I never understood. I used to say, "But there are no actual wizards at Wizards of the Coast."