Hacked - Beaming in the Metaverse

Episode Date: February 1, 2023

A conversation about all the conversations we aren't having about Roblox. Featuring Quintin Smith of People Make Games. Check out How to Fix the Internet by the EFF: https://www.eff.org/podcast Learn more about your ad choices. Visit podcastchoices.com/adchoices

You've hit on something super interesting here because the way you are viewing Roblox is a little bit wrong in a way that I think is so emblematic of why this platform is dangerous because you're referring to Roblox as if it was a game. This started out being about how kids are hacking each other in a video game. But I pretty quickly realized that almost every part of that premise is just a little bit off. First off, on Roblox, which is what we're talking about here today, they don't call it. it hacking. They call it beaming, which is very cyberpunk and I'm here for it. Second of all, as our guest this episode just made clear to me, Roblox isn't really a video game. And third, how the users hack each other is only part of a much bigger story. Do you know much about Roblox, Scott? Well, no. I know the software language or the development language it was

written in. Loua has become quite popular after Roblox made a popular. I know the Kim Kardashian scandal, which if you had, if I was a betting man, I would say it was a paid stunt. Interesting. Just for extra, extra media. But, but that's just my own theory and holds no credibility, so please don't sue me. But yeah, that's, that's about it. So the fact that neither of us sounds like knew a ton about it, nor did most of like the games journalism industry, is maybe one of the more interesting things about it, because as our interview this episode, Quentin Smith of People Make Games explained to me,

there is a whole demographic of people to whom Roblox is a really big deal. I think you would be hard pressed to find a child in America who isn't either playing Roblox or their friends are playing it, right? Kids. 200 million monthly active users, over half of which are under the age of 12 and 80% under the age of 16.

In April, Roblox Corporation told Bloomberg that, quote, two-thirds of all U.S. kids between 9 and 12 use Roblox, and it is played by a third of all Americans under the age of 16. These are wild numbers. I got under Roblox because I read a piece about beaming on Roblox, all the inventive ways that users, mostly kids have figured out how to kind of social engineer each other and fleece each other for like classic game stuff, items, skins, cosmetics, and Robux, the game's in-game currency.

I thought that was pretty much it, elaborate in-game hacks, but make it kids. But while reading about all that stuff, I got on to Quentin's journalism about Roblox, specifically its economy, this economy that runs on user-generated content made for and largely buy kids, which then takes all the same interesting discussions we've been having for years about the power dynamics between platforms and creators and just magnifies them because you're talking about kids, doing labor that is monetizable. I wanted to understand a little bit more about the place where all of this was happening.

This is, I don't know what we call it, hacking on roadblocks, beaming in the metaverse, whatever this is, here on Hacked. Tell me you downloaded and installed Roblox and played it. I bumped around in a little bit. I tried to explore the verse

a little bit, yeah, just on iOS. It's an interesting experience. I get the appeal, which we'll talk about. To a kid, is very, very cool. I see the allure

of this thing. Have you ever played it? I have not, but now I'm intrigued. Do I click the download button? I think I do. I think you do, man. I think you get that download going.

I think I do. I need to do this. Normally we is pull back the curtain a little bit here. So the way this normally works is we go do an interview and then we pepper quotes from that interview into our conversation. But while I was listening back to my chat with Quentin, I felt like we were kind of losing something by leaving, you know, like 80% of it on the cutting room floor. They're going to change the game here.

We're going to play an interview on a podcast, which, no one's ever done before. What he and I didn't talk about was the sort of more social engineering hacking side of Roblox. So we're going to chat about that a little bit now, get our feet under us, then we're going to go to break,

and when we come back, we're going to listen to my chat with Quinton. And you and I can chat about your thoughts on that interview, maybe in the next chat episode. Sounds good, chatty chat. Yeah, I'm into it. A little chaty chat.

Are you a big in-game cosmetics guy, Scott? Oh, in all the free to play as I play, am always I got the latest drip always you got that drip I got the drip now I got that leather duster I honestly and truthfully as a game developer I whenever I play a game a lot even if it's free to play I feel duty bound to buy something just is essentially sure my way of saying I appreciate and respect the value that you guys have created for me here's a bit of money It doesn't mean that I'm like, I buy the latest bundle and the latest pack every time. But, you know, if I play a game for a year, I probably have spent between 10 and 50 bucks.

Which feels like a pretty fair tradeoff to me. Yeah. Like I buy a traditional console game for 80 bucks. Get a years worth of content out of it. I play a free to play game. I could play it for months, if not years and never pay a cent. Seems reasonable to tip. Totally.

And you get a nice hat out of it or something. You get some boots. I get that. I think the tip is almost a perfect analogy there. Like, I do see it as a bit more of a tipping culture in free to play. Like, I'm like,

thanks. Like, I hate pay to win games because I don't want to be, like I started playing Marvel Snap on my phone. It's like a card game. Honestly, I didn't love it, played it a little bit,

but apparently, apparently, and this is again, you know, just what I've seen and read online is that it's largely, it's a lot easier to be really good at if you get into the economy of it and buy a lot of things.

And I'm not, I'm not there for that style of game. Even though I do play magic cards, which is legitimately a pay-a-win game. Yeah. There is some deck building and some like theory crafting and stuff like that, but then there's just overpowered cards that cost a bow to a load of money. So yes, I get that I am a conundrum.

You contain multitudes. Yeah. And several leather. duster cosmetic items. So for anyone that doesn't know, once you're on, you're faced with this big selection of games and experiences that you can play. Those games are not made by Roblox. They're made by other users using tools provided by Roblox, which we'll get to later.

The other kind of content, aside from games, comes in the form of cosmetics and items for your avatar to wear. Those are bought and sold using the game's in-game currency Robux. where as long as you use their tools and their currency, you can create and sell just about anything. That part isn't super unique to Roblox, the sort of speculative economy buying side of things. I think of Eve Online is the first one that pops into my head

when I think of the history of that. I'm not sure if Wow had secondary markets or not. It did. I don't know if you can think of anything prior to those too. It did. You could buy stuff not from Blizzard, but from other users, right? I remember this is just me digging deep in my brain, but I remember World Warcraft had, I remember there was like, I don't want to call them sweatshops, but there were organizations of people that literally just mine resources in the game and then you could buy those resources rather than grind them out yourself.

Interesting. And I think there's been a lot of games that have had issues like that, like especially, like I remember Wow had like a character. aftermarket where you could buy pre-built characters. So like if you didn't want to level up a, I don't know, a wizard or I don't remember any of the character types that didn't really play a ton of while. A paladin. Yeah, if you didn't want to spend 800 hours of your life, you could just send somebody $2,200 and buy their character.

I remember there was like a whole economy and market around that. There was transacted in real money. You see a lot of those interesting edge cases in Roblox. Something like the, one of the famous ones is the purple Sparkle Time Fedora, which due to its limited availability and those secondary markets, in order to buy today, you would have to purchase in Robux the equivalent of, it's $105,772 US dollars. That's an edge case, but there are, again, a lot of items floating around this world worth. Hundreds, thousands of dollars. I used to play a ton, like, way back of Counterstrike and CSGO. And I know that skins in that game can sell for obnoxious money.

I buy it. Like $10,000 for a specific knife skin and things like that. And they're all super limited and a lot of them are aged out. And like they're a flex in the game to have a specific skin. And I'm not dunking on it. Like, I get it. spend a lot of time in this game. It's a social space.

Like you want to, you want to be able to customize your experience. That makes sense to me. It is very different than the tipping thing we were talking about. Wanting to buy something to toss a little bit back to the dev is different than wanting to get to have the purple Sparkle Time Fedora so that everyone can see you in the Purple Sparkle Time Fedora. I just like saying that.

But they're different. They're different kind of motivations. Totally. Because those items can be bought and sold to each other, the value becomes essentially like speculatable. You can bet that someone will be willing to pay more for it tomorrow than you did, and that can be why you buy it. Taking the two things we now know about Roblox, let me paint you a picture and see if it sounds appealing to a very young fledgling hacker looking to make a buck. You've got a space full of users, a subset of which are walking around in wildly expensive items, and you know statistically that most of these people are children.

A, and this is a weird thing to say about kids, but like a famously duper. demographic. Sure. They lack the life and street skills to see a con when the con's coming. It's a perfect recipe for some social engineering. It's not the kind of six and seven figure prizes we typically talk about in this show, but it's more than a big enough incentive for a kid to try and hack another kid on Discord. Most of this all unfolds in that satellite community of, like I said, Discord servers and secondary websites that orbit Roblox. The ground floor of this is like a basic fishing scam rolled out on Discord. They follow some kid with flashy gear off of Roblox following the username into some Discord channel

where they social engineer them into revealing enough personal information that they're able to crack their account. One of these little beamers that IGN talked to had developed like a custom script essentially. It's pretty impressive that if he could get the victim, the other user to deploy it, engineering them on Discord would then give him access to, you know, the standard stuff, username's passwords, logging them off, auto and verifying their email. IGM was able to confirm that one heist saw a 13-year-old making off with $6,000 by getting someone to run the script. Wow. Quote, their parents had no idea.

Once they got a hold of the victim's account, there's then a bunch of different ways they can try and move their winnings. If it's small, you can probably just sell it without worrying about Roblox trying to track the item down. But check out a website called All-Emberg's. RO. Place. I'm here. I'm here. You can bring that up in front of you. Here.

What are you looking at? I'm looking at white sparkle time fedoras for $2,900 bucks. A black of Valk for $23,000? It's essentially a stock market for Roblox items. Prices fluctuate over time. People try and, you know, essentially make profit off of arbitrage on this thing. You can try and move something you've maybe hacked off another user through any number. of the middlemen operating on Discord who will facilitate trades, hold money and items in escrow.

There's always eBay. But since Roblox will help victims of theft to track like high value stolen items, even those bought and sold outside of Roblox, there's now like another market for just pure laundering services, services that anonymize the ownership. If you want to launder an item, really destroy that chain of custody is a really interesting solution I bumped into that uses a Roblox gambling site called RBX Flip. I know if you want to check RBX Flip.com. It is the self-described original Roblox Casino.

Users make bets with items. And then the site flips like an algorithmic coin to see who wins the full pot. Both items are then given to the winner. It's basically just gambling. So it's like Russian roulette, but with Roblox items. with Roblox items. Interesting. And importantly during that process,

the item is briefly handed over to RBX's bots, destroying that chain of custody and making it vastly harder for Roblox Corporation to track, becomes this like custodial black hole. Whether or not the utility of these sites to folks who are hacking is a feature or a bug is a matter of debate. As Roblox becomes more and more popular and more and more people develop, you know,

tools and websites, all to facilitate the kind of commerce that's happening on the platform, a subset of users, as always, is going to find the weird and interesting hacks that let them exploit those tools in pursuit of cash or Robux or just a really cool purple hat. So that is a very brief primer of the hacking that goes on between users of Roblox. I'm looking at a site. I pulled up some CSGO items. there's a there's a knife skin that apparently is valued over 1.5 million what like a decal for a knife like a skin yeah just 1.5 million US at least yeah apparently the owner turned down an offer of 1.2 million

euros recently oh that was going to be my next question is does it have any like trading volume essentially like I could post anything online for a million and a half dollars are there buyers for a million and a half dollar knife decal. Apparently, the owner turned down 1.2 million euros, which is about 1.5 million U.S., which is a lot of money. And apparently the owner of this in paid over $100,000 for it seven years ago. I'm not even mad. So I guess if you're talking about speculation there, they did well.

Yeah. They did really, really well. Is this NFTs? This is Maybe this is the inspiration for NFTs. Someone looked at CSGO knife decals and was like, we can fuck up culture for a year and a half with this. This is going to be sick.

We need to get Twitter to have a different shape for your Twitter photo. And then we'll charge a million dollars for interesting monkey faces and digital punks. Oh man, all those CSGO bag holders must have been really pissed when they didn't get a custom profile picture shape. On Twitter, exactly. But I guess they get the flex in the game of having the $2 million knife skin. That doesn't bring us back to our interview this episode with Quentin, but I'm going to take us back there now. Items like CSGO daggers are a tiny sliver of the content on Roblox. Next, in the back half of this episode, we got to talk about the games and experiences on Roblox.

because those are the things that bring people to this platform, which are made by its users, the majority of which are kits. A brief aside, on an annoying subject, when the kind of people who like to talk about the idea of the metaverse in the future talk about the idea of the metaverse today, Roblox, specifically this thing, is typically the first example they point to.

And it's really the example they use to explain how the idea of a metaverse is any different than a video game. Because though Roblox has games in it, it is different than a video game. The majority of its value economically comes from its role as a platform that facilitates content creation and sharing with tools. That makes sense? Yeah, it's like an ecosystem. Exactly.

So rather than creating a space, they created an ecosystem that allows people to create spaces. That makes tons of sense. Totally. While researching all those like very hacky, hack, cybercrimey type things that go down on Roblox, I bumped into this really good essay by our guest, Quinn Smith, on the fantastic YouTube channel People Make Games. As he explained to me, Roblox isn't just a story about teens beaming each other for fedoras. It's a story about these much bigger, more interesting questions regarding labor and power dynamics between platforms and creators. And for me, that conversation really became about balancing the kind of weird monetizing child labor of it all.

Honestly, how much I would have loved this as a kid. I would have adored Roblox. Like you can make games and share them with your friends. If it's child labor, they made it fun. It's very, very strange to think about. Wait, I got a quick point of reference. I just need to understand. Do if I'm a child and I have a Roblox account that allows me to create games,

which I believe needs to be a premium account, correct? I believe so, yes. Do I get compensated for the stuff that I make in any way? It is monetizable, as Quentin explains, using Robux. And the trick is that the only way to consider, convert Robux back into cash is through Roblox. So all of the stuff we talk about when we talk about app stores versus developer shares of a piece of software, you know, how much profit goes to who, just gets magnified in this

very intense way in this ecosystem because there are kids making content, making money off it. Kids can make a buck doing this, but they're making a buck on some very strict terms set by Roblox. And that's where some really interesting questions emerge. So I don't know if we want to jump into this right now, but my initial thought, you see you found Quentin on his YouTube channel. YouTube is a platform that allows people to monetize content while also

precisely leveraging and making profit from it. Precisely. And also dictates the terms of how the monetization occurs. Precisely. How does this differ in any, you know, concrete way? First and foremost, I don't want to, I don't want to say how old Quentin is, but he is definitely an adult man. Okay. And the majority of the people who are creating content for Roblox are very much minors.

And there's almost no other situation where a child does a bunch of, of labor, which is what this is, game development. Of course. Yeah. A significant portion of which is going into the pocket of someone else. It is a lemonade stand with a boss. Of course. Being operated by a child.

It's more like a lemonade empire where you show up and say, I would like a lemonade stand and they give you instructions on how to build one and the wood to put it together. And then maybe one of those kids started. employing other kids and now you have child bosses working for a cut of revenue generated using these tools provided by Roblox so like this is this is the 21st century version of like young entrepreneurs like it really is and as an entrepreneurial kid I would have loved yeah that's kind of the issue sounds like something I would have adored over a

over a job, you know, stocking shelves or pumping gas at 10 years old or 12 years old or whenever I started work. I would have been super into this. And we get to this at the end of the conversation. I'm really excited something like this exists. But no one is having the same. We all have conversations about how whether or not the 30% the app store keeps is a fair cut. And there's a lot of discourse about that. about whether or not the 20 to 30% cut that steam keeps. We have a lot of discourse about this. We're not having a conversation about the cut that Roblox is keeping. And its users are primarily children.

And they're getting paid out about 27%. So it's not that this thing is bad or shouldn't exist. It's really cool. It's just that there's a really big conversation we're not having. Interesting. I like that. Yeah, yeah. So after the break, my conversation with Quentin about how this window into a potential future works,

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It's practical, actionable, intelligence from experts in the trenches. Register now at arcticwolf.com slash hacked. Roblox looks like a video game. And then you describe it to someone and it doesn't really sound like a video game. So the obvious question is Roblox a video game? Roblox is a platform that contains video games that all kind of feel like the same video games. So what Roblox is is it is a platform where you can log in and then kind of like you were into the Apple store or something, you can see a whole selection of games that you can play.

And one of the reasons, arguably the biggest reason that Roblox has seen the success it has, with I think the last number I saw was 200 million monthly users, meaning if it is a video game, it's the most popular video game on the planet. Yeah, the reason for that popularity is all the games on Roblox are free, or at least initially, and then once they get you in the door, that you get hit with some quite predatory monetization in cases. But yeah, so Roblox is a platform that offers two things for free. One of which is all of these free games, and the other of which is the opportunity to make

your own games for free, using Roblox's proprietary tools in Roblox's proprietary engine, which is a kind of, if you play a lot of video games, you'll find that playing Roblox can feel quite, sort of quick and dirty, but the advantage to that is you can play it on anything, and I believe a great deal of Roblox users, most of whom are children, are playing Roblox games on their phones. Interesting. So it has an incredibly low barrier of entry and a great deal of free content essentially. That's right. That's right. Yeah, you could you could feasibly, and I think many children do, play Roblox for years without paying anything. And one of the great things about it, though, is also all of these games have baked in multiplayer technology. So not only can you play games for free,

you can log in with your friends and just jump between games together, you know, it's it, I've seen Roblox referred to as, you know, a metaverse. And while that is a made up term that doesn't exist and arguably will never exist. In as much as the metaverse does exist, Roblox is arguably the world's most successful example of a metaverse. You know, you jump into a world with your friends, explore it for a bit, jump into a different game with the same friends. And it really reminds me of when I was exploring VR chat, you know, just jumping between worlds and seeing which one was about before moving on to the next one. I want to, I do want to talk about the metaverse side of this because I have a working theory. No, not in a, oh God,

not in a positive way. I have a working theory that Metaverse. versus less of a design term and more of an economic understanding of these systems. Oh, sure, yeah, yeah. It's certainly designed by people who are thinking money first. So I want to talk about that economy and how it works, because I think that's where a lot of the really interesting stuff comes from. But before we get to that, give me a little bit of a sense of the scale of this thing. It's popularity. And I guess importantly, who is playing it. Yeah, so Roblox is almost inconceivably large. Certainly so, considering how little you see it being talked about.

But yeah, with 200 million monthly users, it's enormous, you know? Like, I think you would be hard-pressed to find a child in America who isn't either playing Roblox or their friends are playing it, right? It's just that Roblox has kind of gone under the radar for a few reasons,

one of which is that it looks like crap software and the other of which is that it's mostly being played by kids. And also it's kind of inscrutable. Like, you know, you started this interview by asking me what Roblox saw. What Roblox is, it looks like a video game. But is it? Well, it's kind of a platform.

But it's all using the same kind of, it all feels the same. Yeah. So it's basically this impenetrable thing that kids are doing that no one, even in the tech industry fully understands. And so generally, I think journalists kind of just were content to let kids get on with it. And then suddenly we turn around and Roblox is. you know, being publicly floated on the stock market as this multi-billion dollar company that for a second there was the most expensive video game company of any kind in human history.

The stock price has gone down since then. But yeah, it's, it's certain, in answer to your question, Roblox is far bigger than you expect, given how little people are talking about it. I was compelled by that ranking essentially of like market cap valuations of large video game companies. And some of them are cheating to say that Microsoft is a large video game company is like say Apple is a large headphone company. It's like you're not really capturing the scale of what's going on here. Then you get into the large video game holding companies, your Ubisofts, your electronic arts that hold companies that hold companies that somewhere down the line make video games. Yeah. The only one on that list that looks like it makes one game is Roblox.

They're a company called Roblox that makes a product called Roblox. They're the only one that even sharts. And it's strange at first. And it kind of comes down to that economy that they've built inside of Roblox, this currency, the products that you can buy with it, and then the tools to make those products. So can you kind of give people like an econ 101 class on the Roblox economy? Just how does this thing work? What is the currency people are spending?

And what are they buying with it? Absolutely. So the way to think of Roblox and the reason it got valued so much when it became publicly traded is because Roblox actually has more in common with a platform, something like Amazon or Uber or YouTube, than it does in a video game company. So Roblox is a, in the same way that Amazon, you know,

is a shop webfront that sells physical products. Roblox is a storefront that sells games. And all of the games that are on Roblox.com are made by Roblox users. Interestingly, Roblox Corporation doesn't make any games themselves. For the entire time this company's been running, all of the successful and popular games have been made by Roblox users. Now, where this starts to get sketchy is that Roblox users who make games on Roblox, and let's imagine that you have made a game on Roblox and people are playing it

and they're making purchases in it. That money that they're buying stuff in your game with is not done with US dollars. It's done with Roblox, which is Roblox's. internal currency. And more interestingly, you, the designer of the game, are not being paid in real currency. You are also being paid in Robux. So Roblox has created a closed economy where Roblox are constantly circling around. And as a designer, once you've got your successful game and you're being paid in Robux, you are unfathomably wealthy on the platform. You know, you can take those Roblox and you can pay them to other Roblox developers to work on your next game. Or you can purchase

ludicrously expensive cosmetic items for your Roblox character, which we can get to you later if you like, but I think that's one of the most unethical things about the platform. But if you actually want to get paid for this game that potentially you've spent years making, you're going to have to ask Roblox to turn your Roblox that you've collected on your account into actual cash. And at this point, the money gets substantially devalued.

So the minimum with drawl about on Roblox, as I understand it now, is 50,000 Robux, which is worth around 500 US dollars if you wanted to buy that many Robux from Roblox Corporation. But when you turn that 500 USD worth of Robux into US dollars, it becomes devalued and you only receive 175 US dollars. Because Roblox buys Robux from you at a much cheaper price than they will sell Robux to you. Did I get that right? You did. I think you got that right. What is that, that's a bad ratio.

What is that a function of? Is that sort of that pie chart of Apple gets this much, we get this much? Is that it? Or is that just them saying, we're the only place in town that will buy Robux from you because we're the place that issues them. We can buy them for whatever we want. Like, where is that ratio coming from? Because it's bad.

Yeah, it's awful, right? So within the video games industry, Steam is a video game marketplace that sells PC games. And the company behind Steam, which is Valve Corporation, has gotten some, flack for only giving game developers 70% of the sales price of their game, meaning Valve are taking yonk 30% of each sales price. And lots of game developer, I can actually give you this number, only 3% of game developers in the games industry believe that is fair. Roblox don't give you 70%. Roblox give you, they say, 24.5%. So almost three quarters of the revenue that your game is generating, that's going straight to Roblox Corporation. And they would say that's because they're giving you the tools to

make the game for free. They're hosting your game for free. They're showing your games to other players for free, which is questionable because actually Roblox's storefront discoverability is quite poor, just like Amazon and just like Amazon, that's something you, as someone working on the marketplace, has to give them money to increase the visibility of your product to do. But yeah, so Roblox Corporation claims they're giving developers 24.5% of the revenue, but actually, if you look at Roblox's financial records, for every dollar that goes into the Roblox ecosystem that Roblox players are putting into Roblox.com, just 17 cents makes it back out to developers.

And then if you ask yourself, where does the other 83 cents go? That's going to go to some of Roblox's hosting, but the rest of that is going straight to Roblox Corporation. Wow. I want to move on to what kind of content people are making because I think that's really important to this. But I'd never really consider the argument. The App Store takes 15 to 30%,

depending on how big of a company you are, steam takes their 30%. But neither of them are, like to play devil's advocate, neither of them are making the tools that you are using to make the experiences on their platform. And that is, I guess, their argument being worth an additional cut, basically a mirror image of the store cut. Does that, how do you, how does that argument stand up to you? I agree with that argument. I think it's true that Roblox Corporation deserve a larger cut for giving you free hosting and for giving new free tools that they've designed themselves. This is all proprietary technology. But one thing that makes me feel uncomfortable about all of this is as an adult man who has

worked as a tech journalist for 20 years, I had such a hard time figuring out exactly how the Roblox store front foot works, you know, even a simple question. And I think that's got a, and I think that's partially by design, you know, if I as an adult looking at Roblox cannot figure out how much one Robux is worth, because Roblox Corporation, and sell it at different rates. What chance do kids have of understanding whether they're being exploited or not? You know, like, it's hard enough for game developers who are working on, you know, platforms that are not almost deliberately confusing like Robots Corporation to figure out whether,

okay, if I work on two years for a game, if I spend two years working on this game, am I going to make money from it? Roblox adds an additional layer of obfuscation by forcing you to first to transact in their fake currency. And also remember that these are. Roblox Roblox's CEO has talked about how this is a platform designed so kids can make games for other kids. So if anything,

surely the economics of the platform should be simpler if we're dealing with children. But actually it's more complicated. I have a pretty easy time understanding how making a game on Apple's App Store or Steam works. I had a nightmare of a time figuring out precisely how Roblox

pays its developers. Sure. The obfuscation is kind of the issue. So I jump into Roblox. I'm exploring. What kind of experiences am I going to have and I'm using experiences carefully? I know that's the word everyone prefers. Yep. And then you mentioned skins. So in terms of what people are making in this thing and what people are selling, what are the goods in this little economy? The really pithy line from internet culture journalist Ryan Broderick that I like is Roblox is like video games, but worse. So in terms of what you can play, you can play everything, you know, whether you're into strategy games or role-playing games, platform.

you know, multiplayer shooters, battle real type stuff. Roblox's tools are flexible enough that all of these games exist. So you can play a weird floaty simulacrum of anything that you would otherwise enjoy playing as a video game. And then additionally, one of the things you can choose to spend money on are cosmetics. And this is one of the, I think genuinely quite cool things about Roblox is that in addition to being able to make games, players can make cosmetic items,

whether that's a hat or a sword or a handbag or a skateboard. And then you can pay for these cosmetics to dress up your avatar. So when you go into a game, your player character looks kind of cool. And then your player character will, by and large, look the same no matter what game you're playing. So if you buy a cool hat, you get to look cool in front of your friends in all the worlds you explore. That's really nice. The cosmetics store has other, like, deeply skeevy aspects to it, like the fact that when Roblox sells limited edition collectibles, where the value of that collectible is ultimately set by the free market.

So if they sell, for example, only a thousand hats that are tie-ins with the YouTuber KSI, once those thousand hats are gone, the buying price goes from $2 or $10 or whatever to whatever players are willing to pay for it, which is sometimes $15,000. There are items on the Roblox store that are worth, you know, hundreds of thousands of dollars. There's not many of them, but what becomes horrible about this is it means that, I mean, oh, there are so many different angles from which this is problematic. Like, first off, it means that game developers who have been paid in Robarks might be encouraged to speculate on items and treating them like a stock market, which people not only do, but some people have made real money doing. But also, in a children's game, it is so unsafe to let kids have items on their account that are worth $10,000.

Because then you are saying to any hacker or scammer, hey, if you can get into this child's account, you can have $10,000, which is basically putting a bounty on the head of any child. child who wants to make a big purchase. I'm glad you brought that up. Because that was sort of what grabbed me about this, is that it seems like they'd built this sort of vast simulation of a free market economy and then just sort of like shoved a bunch of children into it, like Lemmings and sort of like, go nuts, have fun. And just so you know, there's also a whole ecosystem of Discord channels you can hang out

in that we have no purview over. Weird websites for like tumbling essentially these goods to hand them between different accounts. Can you talk to me a little bit about that larger ecosystem of stuff surrounding Roblox? And then I guess just what you were talking about with scams and hacks, the way people have found to exploit this economy that's been built. Sort of talk about the fringe edges of this thing a little bit. Yeah. Oh, goodness gracious. Well, it's a community with a lot of fringes. I mean, there are 200 million users, as I keep saying. And the thing that kids want more than anything else to appear cool and have an edge.

So it's naturally developed large communities within... So naturally large communities within Roblox have developed of kids who have ways to exploit games at the more gentle end of things or just take over other people's account. I believe, and I could be wrong on this, but the term for this is beaming. It's the idea of having a hack

that you can use on another player's Roblox account. And there are large Discord communities of beamers and Roblox. who like to brag about the accounts they get and the items that they can steal. So if I'm being charitable, Roblox Corporation are to some extent of victim of their own success because a lot of the features of Roblox

that we mentioned in our journalism on People Make Games are not obviously bad, but then become bad if the platform is worth a lot of money. For example, you know, if Roblox Corporation chooses to sell a cosmetic item for, I don't know, Easter, and then it only sells for a month and then they never sell it again. That's kind of like a fun extra.

And then maybe if players can trade items between one another and sell them for Robux that they've gotten from designing games, that doesn't seem bad either, right? But then as Roblox gets incredibly popular, you know, if there are only 2,000 sets of these Easter Bunny ears or whatever in existence, and if players suddenly show up who have, you know, 15,000 US dollars worth of Robux

and are willing to pay that for some bunny years that no one else can have, suddenly that becomes a security issue because suddenly hackers can show up and if they can get into any of these accounts, they can make tons of money. Equally, you know, like Roblox want to charge fees

when Roblox users are selling cosmetic items between one another, right? So that again, doesn't, that again seems a really reasonable thing for a business to do. But then naturally, you're instantly overnight going to create a whole bunch of third-party websites that enable players to trade items

without going through Roblox's official storefront, which means that Roblox take a cut. If an item is worth $10,000, you're offering $1,500 to anybody you can do anything to get around Roblox Corporation's cut. Likewise, Roblox Corporation

used to have a forum where players could talk to one another and discuss things like, I don't know, what was wrong with the platform or, you know, being say, like, not liking how a famous Roblox developer spoke to you. But when you have 200 million monthly users, running a forum is

a ludicrously expensive effort, which is why Roblox Corporation, as they got more popular, shut their forums down, which now means that the Roblox community has to talk to one another on Discord. And Discord, it famously, has absolutely no moderation at all. So Roblox Corporation have built this child-safe environment, but whenever areas of it can't keep children safe anymore, they just stop taking care of it. And yeah, then the communities leave Roblox Corporation and will go to other areas of the net. And then suddenly Roblox Corporation is facilitating children. talking to one another with no moderation at all.

I was struck by, I don't have a question written down for this, so this might be rambly, but when you build this much of an economy inside of an experience that looks a lot like a game with real, real money and real, real assets being sort of sent back and forth, think about rules in game design is that people will butt up against them

and they'll optimize the fun out of a system. Players are always finding the edges of a rule set and just sort of testing them a little bit. When those rules also define like economic conditions of actual transactions between each people, it almost feels like you're teaching people how to butt up against like economic laws and being like, no, hacking and like the gamification of hacking in a weird way. And I'm curious if long term you're going to have kids who are used to like, nah, just play the game, go do an experience, beam some folks and get their stuff from them all feels like part of the same experience.

And then they get kicked out in the real world. and they don't really appreciate the stakes of what they were doing. Like, I'm used to beaming on folks. And it's like, oh, that's out here. We call that a crime. Okay. Listen, Jordan, you've, you've hit on something super interesting here because the way you are viewing Roblox is a little bit wrong in a way that I think.

So, but in a way that I think is so emblematic of why this platform is dangerous. Because you're referring to Roblox as if it was a game. and then the trading of Robux back and forth and buying and selling is part of that game. It's not. It's absolutely not. Roblox.com, you need to think of it like Amazon, like a storefront.

And then underneath that, there are video games. However, the way that you look at Roblox.com and you assumed that it was a video game economy that maybe you could make real money from. It's not that. It's a real money economy. It just uses the corporation's fake currency. But, like,

All of this is partially by design, right? So, like, for example, we spoke to a video game designer. Like, even all the language we use is wrong, right? Because you think of these kids as people who make games in Roblox. They're not their working video game designers. And at the beating heart of this corporation and its success is the question of child labor. Because you would look at Roblox.com and see kids making fake money, making these fake video games and think it's like, I don't know,

a slightly upgraded version of your nephew, playing with an easy bake oven at home. And it's not. Whoever's making games for Roblox is working as a real game designer and they are in cases earning enough money to pay off their parents' mortgage.

These are children who have found a way to escape labor laws and enter the workforce at points under the age of 16. And it raises a question that our society has never had to deal with before, which is what happens if kids choose

to enter the workforce. Like, all of our child labor laws are there to prevent people from forcing kids to, I don't know, work in a lumberyard or something. But we've not yet had to reconcile with the question of what happens if a company makes labor so fun that kids choose to do it? And then wraps it in this kind of language of like, it's just creativity. It's just learning programming from a young age. No, I've spoken to these kids and lots of them are trying to make money and work

at jobs and that job is making games for Roblox and most of them fail because you know most people who do any creative enterprise fail. But this the fact that you were asking that question in the language of like, but this is just a video game, it's not, it's not, it's not, it's a labor market full of very young game designers. It just all has this weird like bubbly UI that makes it seem like what these kids are doing is like yeah like I say playing with the, you know, play, You know, it's like watching your kids play with a plastic drill set or something. And that's not real. That's what Roblox looks like.

But Roblox is very, very, very real. So if I'm making the mistake, I like that, if I'm making the mistake of applying game design logic to what is fundamentally an e-commerce platform. Yes. And 50% of the user base of this is under the age of 12, roughly speaking. The really important question becomes, I'm 32. Do kids know they're not? What is the sense among children and the very young user base that's using this and making some of this content?

what this is. Did they think of it as a video game? Do they think of it as Amazon? Like, their sense of what they're doing becomes kind of really important in this whole equation. Yes. Yeah. I think that's a great question. And I think, I mean, kids will just accept whatever's in front of them, right? I think they think of Roblox as Roblox. If you go up to a 14-year-old, they're not going to, do you remember, do you know how much you knew about the labor market when you were 14? You didn't know. I didn't know. I didn't know. I didn't. know what that word meant. The kids just think of Roblox as Roblox and they know it's a place that they can work and if they're lucky and work hard, they might make a lot of money and be able to drop out

of school, which is something that a lot of successful Roblox designers are able to do. And to clarify, the most successful Roblox designers are suddenly at the age of 20, you know, in charge of a successful video game development career while most of their peers, if they didn't have Roblox, would be like entering college and studying game design. getting their first entry-level job, you know, years and years later. But I think your question of, you know, how do kids... Your question of do kids think of this as an e-commerce platform? I don't know.

But I do know that so long as we're not having that discussion of what do kids think of it as and what should they think of it as, those definitions are being defined by Roblox Corporation and to some extent the user base. And the user base aren't going to be necessarily informed as to whether they're being exploited or not. and Roblox Corporation have, you know, a massive profit-focused bias towards defining it in the friendliest, most bubbly way possible, which is exactly what they've done. I kind of want to turn a little bit to your experience of all this, because before we started recording, you were talking a little bit about feeling like you sort of stumbled on a real story here, which is the sheer amount of economic activity and time and cultural value that's just being shoveled into this thing that the media at large isn't really talking about. And then you made a video about it and it went on YouTube, which I would say is like a very important part of the Roblox community. Talking about Roblox, sharing video content about Roblox is a big part of Roblox.

So just talk to me about that experience about putting this story out into the world, really kind of what that story was about and how the community replied to it. So when we put our journalism out there, the response was fascinating and immediate. So the first video that we did was really just looking about, was really just looking at the economics of Roblox. It was saying, hey, the reason we first looked into it, in fact, was simply that this idea that Roblox Corporation was now this $40 billion corporation and they were paying game developers a third, less than a third in fact, of what would be considered the industry standard. We thought that was a story. We looked into the various ways that Roblox is arguably exploiting child labor.

And the response was immediate and from two sides and the video went quite viral. From the adult games development community, you know, outside of Roblox, people who, you know, make and play, you know, what would be considered like adult video games or mobile games or whatever, everyone immediately said, holy crap, this is horrible. How did I not know about this? We need to be having a conversation about this. And at the same time, the Roblox community responded to our video by saying, yeah, this is true and kind of interesting, but you do not know the whole.

half of what's wrong with this platform. And so we did a follow-up video, which is titled, Roblox pressured us to delete our video, so we dug deeper, in which we did a quick and dirty roundup of everything that Roblox users said was wrong with the platform, which we hadn't covered

at all, which included, Roblox has now a size where kids don't make games by themselves but work for one another, and then that being a question of like, what does it look like to have kids managing other kids or kids working for adults or adults working for kids? Not all which are horrific questions that Roblox Corporation can't answer. It went into the, oh God,

the child's safety aspect of the platform. And we spoke to a young girl who was groomed by a Roblox developer who since our reporting has been arrested by the FBI. Yeah, we looked into Roblox's cosmetic economy, which is where robots sells items to children that are valued in tens or hundreds of thousands of US dollars, which I think should not be allowed. And we looked into the black market surrounding Roblox where adults, mostly, which are trying to be. trying to, and sometimes succeeding, making real money by treating Roblox like a stock market. Because again, this looks like a bubbly video game website, but it's not. It's, it's an e-commerce platform.

You just described, you're just describing all of the stuff that goes wrong in a normal economy has sort of emerged inside of this economy. They've built a pretty good simulacrum of the real thing. Yeah. Oh, it's, so many of these people are learning from one another. I was on a podcast shortly after we were released our reporting. where I was talking to a tech reporter. And when I was describing how the Roblox storefront used to have genres, right?

So if you wanted to play an action game or a role-playing game, you could click on those tabs and see those kinds of games. That has been removed by Roblox Corporation since then. I have absolutely no idea why. Discoverability on the platform is awful now. You can only see, you know, the top 100 or so most popular games right now. But Roblox has since incorporated a feature where you can pay them Robux to feature your game. And I thought that was pretty foul.

But when I was talking to another tech journalist, they said, oh, so it's just like Amazon then. And I hadn't connected the dots. But he said that, yeah, Amazon now has a whole secondary economy of paying the people who are already selling things on a platform to advertise to make themselves more discoverable to users. A question I was curious to get to. And I'm not actually sure that there is an answer to this now. In light of what I kind of understand this now to be is, is there a good version of this? Like, is there a good version of an economic system of user-generated content primarily being consumed and generated by children in an economy that functions with, like,

essentially a real currency, a bad currency, but a real one? It's not a good currency. It doesn't work well. But is there a good version of this, or is there a good version of this? Let's go there. I think there is absolutely a good version of this. and I think it is so far in our rear-view mirror that I can't tell you. So when Roblox started, the history of Roblox Corporation is actually really interesting.

When it started, it was just some relatively awful free tools that let people make games. There was no money involved in any way. And then after a while, they said, okay, you know what? We'll give the most popular Roblox game. I think I might be getting elements of this wrong. But broadly, we'll give the most successful Roblox games, like tickets and then you can use tickets that you've earned on other people's things, but there was no way to turn tickets into money.

And then they started saying, well, actually, hey, wouldn't it be cool if you could turn tickets into money? And, you know, and so piece by piece, they turned Roblox from, you know, like the video game equivalent of, this is a very rude analogy, but the video game equivalent of Microsoft Paint into, at some point it became Amazon. And it's like, okay, you can, you can, we might disagree on where along that line is the appropriate thing. But by and large, you know, I personally, as a video game journalist, I'm of the belief that today, you know, music and movies have been left behind us, the cultural

art form that is mostly used by children, and children are mostly connecting with games. And I think it is great to have free tools to let kids muddy around in game development, so that by the time they finish high school, maybe they've got some experience in game development already and they understand some basics and stuff like scripting and coding and 3D modeling. I think that's really great. I don't know if it's great to, you know, be having kids working what is essentially a second job that they never see any profit from at age 12. I think that's bad. But, you know, I definitely do think there is a good version of this.

And especially during the pandemic when Roblox was free entertainment that let kids hang out with other kids for free, I think that's really, really good. You know, but yeah, there's some bad stuff going on. Yeah. It's so brave of you to have the courage to say that child labor bad. Yeah, I know, right? Really changing the game with that point of view. But it is something that's true. I mean, but as much, I've talked a lot about our Roblox reporting since then,

and no one I've spoken to, not even people who are specialists in labor, has been able to answer the question of at what point do, at what point does letting a child do a creative exercise turn from something cool they are allowed to do to a job? At what exact point does it become labor? Because we've just never really had to engage with that problem. And the Roblox Corporation, who are arguably, you know, the people who have the biggest responsibility to answer that question

have absolutely no interest in doing so. It ain't great. I recently read a book on the history of Sesame Street, and it is, I was genuinely moved to tears by how much the people behind it cared and felt they had a duty to children. And I don't know what the exact opposite of that is, but it feels to me a bit like how Robloch Corporation is acting today. Now that there are adults kind of peering over this fence into this weird little Roblox playground that has been created, what would be first push? You got to change something tomorrow. we get one little bit of incremental progress.

You have a magic wand. You can cast a spell to fix one thing in Roblox. It's a tough question, but what would you change? I know exactly what I would change. I would pay developers in US dollars first, which for me, small change. For Roelox Corporation, horrific thing they would never ever do. For two reasons.

First off, the reason Roblox would hate that is that giving developers real cash means that they are far less likely to take their pay and spend it within Roblox. but also I think they would realize how much money they're making. Because again, that ratio of like, okay, I have 97,000 robots. How much is that in US dollars? It just doesn't feel like real money.

And I've spoken to developers who say they would never spend, for example, $40 in real life, but they would spend $40 worth of Roblox without even thinking about it. It's the same reason that arcades want to give you tokens that you then thoughtlessly spend. It's because it's not, it is literally not real money. So yeah, I think if Roblox were to simply pay the people working for it and generating revenue for it with actual US dollars, that would be an enormous first step towards treating them with respects. And I can think of nothing that the company is less likely to do. Thank you for your time, Quinn. I really appreciate it.

Where can people find these two fantastic videos that we've been talking about and just your stuff in general? If people want to see these videos and a whole bunch of other documentaries like me talking about gender and sex. in VR chat or us looking at another creepy storefront, which is Steam on the PC. They can do that on the YouTube channel. People make games. And if they click subscribe, that would really make my day. Amazing. Thank you so much. Thanks for listening, everybody. So a quick edit.

I believe I said Roblox devs get 27% while discussing this with Scott. There's a bunch of different numbers floating around on that. Roblox's line is that it is 30%. Quentin, I believe, said 24, 25. That ambiguity is he kind of explained comes from the fact that the conversion rate of Roblox back to USB is not fixed. According to games industry.biz, the actual number has fluctuated between 22 and 36%. Depending when over, I think, the last three years you sort of measured it.

So do with that what you will. This was a fun one. It's a big, complicated subject, and I found myself kind of my feelings shifting as I, as I jumped perspectives back and forth from imagining myself as a kid and how I would have thought of this, to being an adult. who acknowledges that within the system, it means that other adults are making a buck off kids trying to make a buck. It's a lot.

And I appreciate Quentin being so generous with his time taking me through all of it. Also a little longer than we typically do. If you liked the interview format, give us a shout. And if you're down with Hacked and you want to support the show, Patreon.com slash Hacked podcast. Big old shout out to our new patron since the last episode. Splush. Thank you very much.

White Mantis. Thank you. Brinton Johnson. Thank you. Anna DiLorenzo, thank you. Justine Corbiel. Thank you. Leslie Ramage. Thank you so much. If you want to chat with us, we also finally wired up our Discord. You can find it through our Patreon or on our Twitter. We'll link to it. Trying to remember the link to it before this goes live at Hacked podcast. Since you're here in the final 30 seconds or so of this thing, like an hour deep, if you want to help her a little show out, the Patreon is not really your speed. Let someone know about it. We think, might like hacked, it would be in the world. Thank you so much for listening. We will catch you on the next one.