Gold farming

Gold farming is playing a massively multiplayer online game to acquire in-game currency that other players purchase in exchange for real-world money. People in China and in other developing nations have held full-time employment as gold farmers.

While most game operators expressly ban the practice of selling in-game currency for real-world cash, gold farming is lucrative because it takes advantage of economic inequality and the fact that much time is needed to earn in-game currency. Rich, developed country players, wishing to save many hours of playing time, may be willing to pay substantial sums to the developing country gold farmers.

History

What began as a cottage industry in the late-nineties with players using eBay and PayPal to sell each other items and gold from Ultima Online and Lineage, the sale of in-game currency has become increasingly more commercialized with the growing popularity of massively multiplayer online games.

Today's gold farming may have its origins in the MMORPG Lineage. 2001 reports describe Korean cybercafes being converted into gold farming operations to serve domestic demand. This model, with full-time gold farmers working long hours in cybercafes, was outsourced to China and initially served demand from Korean and Western players. This type of operation was experiencing swift growth c. 2004. In 2011 The Guardian reported that prisoners in Chinese labor camps were forced to engage in gold farming for the benefit of prison authorities.

Academic studies of gold farming reveal that the social networks of gold farmers are similar to those of drug dealers.

Figures

While reliable figures for gold farming are hard to come by, there are some estimates of the market for in-game currency.

In 2005 The New York Times stated that there were over 100,000 full-time gold farmers in China alone. And in 2006 sales of such virtual goods were thought to amount to somewhere between 200 and 900 million USD.

Another estimate, drawn from 2005/2006 data, valued the market at not less than USD200 million per year and suggested that over 150,000 people were employed as gold farmers with average monthly earnings of USD145. This same report estimated that 80% of all gold farmers were from China a fact which has led to prejudice towards Chinese players. 2008 figures from the Chinese State valued the Chinese trade in virtual currency at over several billion yuan, or nearly USD300 million.

Rules and enforcement

Many game developers expressly ban gold farming in their game's EULA or terms of service.

Game developers such as Blizzard and ArenaNet are combating gold farming by including real-money transaction systems within the game environment itself. This makes it more difficult for third-party gold farming companies to compete with the in-game market, but individual players still work as gold farmers (especially in developing countries) by trading game items for real money.

Law, regulation and taxation

Awakening to the idea that virtual goods can have real value, some governments have taken action in this area.

Australia

In 2006 a spokesperson for the Australian Government stated normal earned income rules also apply to income from the sale of virtual goods.

China

The Chinese government banned using virtual currency to buy real-world items in 2009 but not the reverse.

Japan

In response to increases in gold farming, in 2006 the Japanese Government urged the computer gaming industry to self-regulate as well as vowing to investigate this species of fraud.

Korea

A Korean high court's 2010 ruling means that exchanging virtual currency for real money is legal in this country although subject to taxation.

United States

A United States Congressional committee investigated taxation of virtual assets and incomes derived from them in 2006, and the IRS has, in its National Taxpayer Advocate's 2008 Annual Report to Congress, expressed concern that virtual worlds are a growing source of tax noncompliance.

Lawsuits by game companies

Zynga, the makers of FarmVille, successfully sued to stop online sales of its in-game currency.

Jagex, the makers of RuneScape, have engaged in actions against several gold farmers and bot programmers including lawsuits.

Game sweatshop

A business producing avatars and in-game currency in MMORPGs is a game sweatshop. Workers employed by these companies either collect in-game currency (known as gold farming) or generate high-level avatars (known as power-leveling). Such organizations are referred to as sweatshops because the gold farmers are usually paid very low wages.

Effects on MMORPGs

Game sweatshops can affect a game's economy by causing inflation. They may degrade the game experience for users, too, as was noted in a legal case against IGE.

Development Potential

Gold farming has been discussed as a tool for socioeconomic development by the World Bank and University of Manchester professor Richard Heeks. The money involved is small enough to flow easily from many first-world players, and large enough to make a difference to the people doing the work. Gold farmers receive a higher percentage of sale revenue from their work than do farmers of fair trade coffee.

In the media

On an episode of The Big Bang Theory Sheldon was playing World of Warcraft with Leonard, Howard, and Raj. Sheldon got a sword of high importance and sold it on eBay. Leonard revealed himself as the winner of the sword auction when he announced "I am the sword master!"

Neal Stephenson's 2011 novel Reamde has a plot centered on T'Rain, an online game that encourages gold farming, but whose players become vulnerable to losing control of their own data after being infected by the REAMDE "ransomware" virus, written by gold farmers who aspire to a higher-stakes income model.

Cory Doctorow's 2010 novel For The Win is based around gold farming and the fictional growth of unionisation among workers in developing country economies.

Alan Harris's radio play The Gold Farmer was broadcast on BBC Radio 3 as part of The Wire series on February 6, 2010. It features a man who plays an online role-playing game and whose next door neighbour is a gold farmer.

A 2006 art project by UBERMORGEN.COM, Chinese Gold, used found video and machinima to document and explore the Chinese gold farming phenomenon.

See also

• Gold farming in the People's Republic of China
• Powerleveling
• Virtual currency
• Virtual good

External links

• Current Analysis and Future Research Agenda on "Gold Farming": Real-World Production in Developing Countries for the Virtual Economies of Online Games Richard Heeks, Development Informatics Group IDPM, SED, University of Manchester, UK - 2008
• Gold Farmers - Website of Ge Jin, a PhD student from UCSD who made a video documentary of gold farming in rural and suburban China.