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China's State Administration of Taxation recently imposed a 20 percent income tax rate on profits made from virtual currency and virtual items, sparking price increases for virtual goods. While this tax rate (if actually enforced) clearly impacts the virtual space, it also affects transactions happening outside of MMO servers and virtual world grids. The taxation policy could ultimately extend to the virtual currencies linked to the largest IM providers in China such as Tencent, drastically increasing the percentage of the population affected by the new laws. Despite this, the positive benefits of eliminating gray and black markets for virtual items and currency may outweigh the drawbacks for gamers and users of the various digital services in China.

Questions remain about what will and will not be taxed in the virtual space, but it's clear that individuals who gain virtual income are expected to declare their profits and pay taxes on this, and do so within seven days of having earned the profit, according to Shanghai Daily.Taxpayers who can provide proof of the value of this property or the value of the transaction are taxed at 20 percent on their profits, while those who cannot provide sufficient verification are taxed at three percent of the total transaction value. But how many people are affected by this new system?

October metrics for Linden Lab's virtual environment, Second Life are not yet formally available, but Lab CFO John Zdanowski wound up giving out a link to the information in advance, so we have the figures to work with. September was not a good month by these metrics, and we were interested to see how October panned out.

Your key takeaways for October are a continuing plunge in premium accounts, and a reduction in overall economic activity. User hours, however were up. A more detailed summary follows after the jump.

Most EVE Online players didn't have the opportunity to attend EVE Fanfest 2008 in Reykjavik earlier this month, but that doesn't necessarily mean they have to miss out on what was revealed. CCP Games and EVE TV have made good on their promise to release video footage of Fanfest presentations and panel discussions. While they did make live audio of some of this available in-game over EVE Voice, it was difficult to follow without the visuals to tie it all together.

Now, they've put up a new video page dedicated to EVE Fanfest 2008, with both low res and high res downloads. They culled roughly 30 hours of raw footage down into 12 videos. We've listed them below, accompanied by the CCP descriptions and video links, for both YouTube (when available) and high resolution versions:

The unprecedented decline of Second Life land area appears to be accelerating according to data from virtual world operator, Linden Lab. The net loss of simulators which totalled nearly 9,000 acres as of midnight on 10 November, has escalated to a net loss of 12,874 acres (52.1 million square metres, or 795 simulators) by midnight of 16 November. At present this represents an accelerating decline, with no sign of it bottoming out.

While a number of users have requested a consolidation of four Openspaces simulators into a single ordinary simulator (which would represent an overall net loss of three simulators per consolidation) there is no data available to suggest that any of the requested consolidations have yet been processed. Linden Lab was not able to confirm for us that any such consolidations have yet taken place, so it is unlikely that they are a factor in this data. The net loss currently represents more than 6% of the total Openspaces simulators as at the time of the new pricing/product announcements.

Each quarter, the economist over at EVE Online, Dr. Eyjolfur Gudmondsson (there are supposed to be accent marks in there but I can't figure out how to make them appear), writes up a review of the in-game economy. There has been a noticeable lag in times past between the schedule for these quarterly newsletters and when they were actually distributed. October saw the release of the Quarterly Economic Newsletter for Q1 of this year and the promise of QENs for quarters 2 and 3 to follow in November and December, respectively.

Today, we'll take a look through what Dr. Gundmondsson has to say about the economy from January to March. I do encourage you to look through the PDF of the QEN for yourself ... and just ignore that they talk about June 2008 in future tense.

Much has been made of a statement recently by Linden Lab's new CEO, Mark Kingdon, that 'Premium subscriptions are immaterial in our overall business.' You see, in a sense that's pretty much spot-on. Unless a premium account owns more than 512 square metres of the Linden Estate (colloquially known as the Second Life Mainland), that account is either only very small revenue for the Lab, or actually represents an ongoing cost to them.

Linden Lab's CFO, John Zdanowski said, 'The revenue we generate from premium subscriptions is largely offset by the stipends we pay out to these account holders, so this decline doesn't have a material impact on our business.'

Either you're on an older premium account with a 500 Linden Dollar per week stipend grandfathered in, or you're on a newer premium account with 300/week. There's also a choice of plans, ranging from monthly to annual. Let's take a look at the relative values.

MMO industry giant NCsoft has seen better weeks than this. First there was Richard Garriott's announcement that he's leaving the company for new horizons. Then came the news that NCsoft's third quarter profits fell by 50 percent.

Gamasutra reported today: "In the three months ending September 30th, the South Korean company's profit was down from 10 billion won ($7.2m) in 2007 to just 5 billion ($3.6m) in this year's third quarter." Gamasutra goes on to cite some additional figures in regards to NCsoft's operations, namely that its Korean titles are still the big earners, with Lineage and Lineage II comprising roughly 84 percent of its overall revenues. MMO titles popular in North America and EU account for roughly 15 percent of NCsoft's revenues. For further details, be sure to check out Gamasutra's piece on NCsoft's third quarter revenues for more statistics linked to the company's revenue dip.

Linden Lab's CFO, John Zdanowski is better known to Second Life users as Zee Linden, though we think of him more as a Zeno, after Zeno of Elea, who baffled, annoyed and amused pre-Socratic thinkers with a set of seeming paradoxes, many of which revolved around the adjustment of frames of reference and measurement -- and, whatever their original intention -- amply display the follies that arise from doing so.

You can pick up all of that from yesterday's Q3 2008 world metrics from Zdanowski, entitled 'Q3 closed on a high note with an unusually strong September'. You might want to check September's published figures against that report, and see if you agree with 'unusually strong'.

There are many criminals in EVE Online, but some push their chosen profession to a whole different level, sometimes even at the expense of their fellow outlaws. Being an outlaw in EVE Online's setting of New Eden isn't just about prowess in combat. For some, the pull of New Eden's underworld is all about the social fabric of the game... and how to exploit it. Deception is their greatest weapon, and paired with the endless opportunities for social engineering in EVE, that weapon can be put to devastating use. Among all of the conmen and scam artists in New Eden, there's one name that conjures up more rage and misery than most others: Miz Cenuij.

From the earliest days of New Eden, Miz was on the path to becoming a major antagonist in EVE. While some players love him, most just love to hate him, and he wouldn't have it any other way. Over time, Miz has become one of New Eden's most notorious thieves and hell raisers, an evil celebrity of sorts. His manipulations have triggered alliance wars, brought him numerous threats from other pilots, thousands of confirmed kills, and raked in a fantastic amount of wealth in the process. His preferred modus operandi in EVE is the long con, but since he learned to convert his wealth into influence over others, he's found that corruption and practiced deception make a formidable combination. As if a counter to restlessness, his apparent goal of keeping New Eden set in motion, if not set ablaze, has ensured that Miz Cenuij lives on a steady diet of tears and rage.

Massively caught up with Miz Cenuij, who told us what motivates him to engage in activities that oppose the interests of so many other citizens of New Eden, and why he enjoys igniting controversy in EVE.

Since the announcement of Openspaces 3.0 product pricing for Second Life (and the subsequent update to a reduced specification Openspaces 4.0 product), Linden Lab has seen its virtual world shrink for the first time on record with a net loss of 24.05 million square metres (a little less than 6,000 acres).

That's a net loss, so however many new simulators have been brought online since the beginning of the month, those gains have been canceled out by customers dumping land, and an additional 24 million square metres have been lost. During its Q2 2008 report, Linden Lab identified the (now deprecated) Openspaces 2.0 product as a primary growth driver.

It isn't presently clear how long this downward trend will last. So far, those net losses amount to just 2.8% of the total Openspaces 2.0 product that are actually out there on the Second Life grid. Many owners, however, have said that they intend to hang on to their void simulators for as long as possible, and dump them just before the jump to Openspaces 4.0 (or Homesteads 1.0) becomes mandatory. It remains to be seen if the Lab can shake off the chill and push those figures up in the latter half of the month.

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	Are you a part of the most widely-known collaborative virtual environment or keeping a close eye on it? Massively's Second Life coverage keeps you in the loop.

The player-driven economy of EVE Online is very much a playground for those interested in being financiers, traders, or whatever variant of corporate tycoon their greedy little hearts desire in the virtual space. EVE is a far cry from most MMOs in that its market isn't manned by NPC vendors, it's almost entirely player driven and remains dynamic due to the fact that EVE is a single-world game, where all player interactions can conceivably affect the game's economy. For some players, EVE's economics is where they immerse themselves. Indeed, in some cases it's even where they PvP with their rivals in price wars and market manipulations. To them, the market is where they live and breathe, just as much as lowsec is the ideal environment for many pirates, and lawless 0.0 space is where players interested in large-scale alliance warfare feel at home.

While EVE doesn't officially support a stock market or banking institutions, the sandbox approach CCP Games took to the game has allowed players to establish their own financial ventures in-game. However, without safeguards put in place by CCP Games, and with New Eden being a place where players can act as they wish, there's always the risk of embezzlement in any large-scale, player-driven financial institution. While it doesn't happen as often as most assume, there have been incidents like the EVE Intergalactic Bank (EIB) scam that have eroded investor confidence in such ventures. Fortunately, not all players are daunted by this, both in terms of those with a vision to establish a financial venture and the investors they rely upon. One such visionary in New Eden is "Ricdic", Founder and Managing Director of EBANK.

Linden Lab's new CEO, Mark Kingdon, has announced a new land product for Second Life, based on all the feedback, and vociferous protestation that all but exploded following the original announcement. Reactions to the new announcement are still a bit mixed, with many thinking that this is the announcement that should have taken place originally. After all, Linden Lab already had all of the information prior to the flood of feedback that they received.

Nevertheless, the end result is that void simulators will be available in two flavors: the Openspaces product (now adjusted substantially) and the new Homesteads product. There's a knowledge-base article enumerating the changes, but we'll break it down for you.

The context in which the Second Life issue of the void/openspaces price-rise exists is a rather complex one, going all the way back to 2006. So, in order to get the whole issue in perspective, we've rounded up the history of void simulators, costs and conditions, all the way back to the beginning.

And it is a far more interesting progression of events than you might think. On with the show.

While much of the world's gold farming activity is based in mainland China, the black market industry operates in violation of the law. Despite this, a large part of the problem in curbing illegal activities in China is that there's a substantial divide between what the law states is illegal and the actual enforcement of those laws. This may well be the case with the law passed last week by China's State Administration of Taxation, which will impose a personal income tax rate of 20% on profits made from virtual currency.

Juliet Ye at The Wall Street Journal's "China Journal" blog reports: "The policy would cover China's legions of online gamers, who can use online virtual currency to buy better equipment and new powers for their online warriors. But it also affects millions of others who use virtual currencies on instant-messaging services and Web portals." The widespread use of virtual currencies in China spurred last year's restrictions on exchanging virtual currency into RMB. If the new law becomes a reality rather than a technicality in the lives of China's internet users, it will be a substantial change in virtual economics in the country.

Unlike Second Life's 2003 Tax Revolt, which (at the time) went unnoticed by the mainstream media, the current revolt over void/openspace simulator server pricing is drawing attention in places where a lot of potential customers are being exposed to it -- and it's early yet. More words are doubtless being drafted over the weekend to run on mainstream Web-sites and newspapers.

By mainstream (a word that has an awfully slippery definition), we mean widespread. There are at least three other effective and correct definitions of the word at least one of which conflicts with that, but let's just go with what we have and leave those other definitions for another time. You know what we mean.