The End of Gold Farming?

Real-world laborers make real-world money in virtual worlds. But maybe not for long

Photo: Nameless Films

Real money: The film Play Money explores the thin line between virtual gold and real dollars.

Right now, thousands of gamers are doing menial jobs in their virtual worlds. And they're earning a living.

The process of contracting out a game's drudge work for real money is called "gold farming." This happens in the games that involve thousands of characters at a time, interacting in an online universe that players inhabit over the course of months or even years. Some tasks, such as gathering up virtual gold pieces, swords, and magic wands, can be done by any novice player who puts in the time. In other cases, you can hire a master player to surmount a game's challenges and raise your character to a higher skill level.

By any standard, gold farming is big business. Estimates range from a global workforce of 400 000 earning US $1 billion a year to a labor pool exceeding a million gold farmers generating more than $10 billion in annual, real-money revenue.

Yet the future of gold farming is uncertain. Some observers see it as a classic market inefficiency—a blip in the history of online games—that game designers can and should eliminate from their virtual worlds.

Edward Castronova, a virtual worlds economist at Indiana University, says it was Blizzard Entertainment's 2004 hit game World of Warcraft that turned the gaming industry on its head. Previous games had presumed their big attraction was their battles—seeking out monsters and killing them.

But in World of Warcraft, Castronova says, monster hunting was almost incidental to the larger quest, which made a player's status more important, pulling people deeper into the virtual world and thus increasing their demand for virtual goods. Eventually, players with more money than time sought ways to buy those virtual goods with their real-world credit cards.

Gold farming, in other words, was as natural a market response as putting up a lemonade stand on a hot day.

"Teens are cash poor and time rich," says novelist and celebrated blogger Cory Doctorow. Adult gamers are often the other way around. So long as youth in developing nations can make quick cash playing games they play for fun anyway, online "gray" markets will crop up that can compensate them—however meagerly, by developed-world standards.

Doctorow's latest thriller, For the Win (Tor, 2010), imagines gold farmers across the planet rising up to unionize and collectively improve the conditions of their labor. Researching the book—which is aimed at youngsters—Doctorow went to China, where an estimated 85 percent of the world's gold farms are based. Doctorow found "a gray-market activity [in which] everybody does it differently."

Yet though these gray markets are undoubtedly complex, they also still obey simple textbook laws of real-world economics. For example, when Blizzard increases the number of rewards, it adds more gold to the system, a sort of inflation that makes gold less scarce and therefore less valuable when exchanged for real dollars.

In some ways, gold farming has become more entrenched: Sony, for example, created its Station Exchange (now called Live Gamer Exchange), an auction site that the company says lets players trade avatars, items, and currency among each other for real money.

Yet in other ways, gold farming appears to be a temporary phenomenon, Castronova says. Virtual-world designers are now adding features that can cut gold farmers out of the picture. For example, rather than paying a third-party pro to ratchet up your character's level ("leveling"), a 2009 patch to World of Warcraft now enables players to teleport directly to battles that allow them to advance within the game faster. "Just press a button and boom, you're in a dungeon," Castronova says. "You can rapidly get everything you need to get a character up at a high level."

Virtual economies scholar Vili Lehdonvirta of the Helsinki Institute for Information Technology says that Castronova is undoubtedly right that new massively multiplayer online games will indeed avoid the inefficiencies that give rise to gold farming. But, he says, "the overall digital economy will grow. So even if individual opportunities are closed down by new game designs, there are always gaps that will be exploited."

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