In the 1990s and 2000s, gold farming was the practice of playing a massively multiplayer online game (MMO) to acquire in-game currency later selling it for real-world money. People in several developing nations have held full-time employment as gold farmers.
Contents
- History
- Figures
- Rules and enforcement
- Ill effects on in game economy
- Law regulation and taxation
- Australia
- China
- Japan
- South Korea
- United States
- Lawsuits by game companies
- Game sweatshop
- Development potential
- In the media
- References
While most game operators expressly ban the practice of selling in-game currency for real-world cash, gold farming was lucrative because it took advantage of economic inequality and the fact that much time is needed to earn in-game currency. Rich players from developed countries, wishing to save many hours of playing time, were willing to pay substantial sums to gold farmers from developing countries. Trading of virtual game items or currency can take place between individuals or through gold farming businesses and gold sweatshops usually via online platforms.
By 2015, the term was being used to describe the wait times and chore-like activities required to enjoy some freemium mobile phone games without paying fees.
History
What began as a cottage industry in the late 1990s became increasingly more commercialized in the 2000s with the growing popularity of massively multiplayer online games.
While in the past players used eBay and PayPal to sell each other items and gold from games like Ultima Online and Lineage, contemporary, commercialized gold farming may have its origins in South Korea. 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 players. Gold farming in China was experiencing swift growth c. 2004. Cheap labor from inland provinces had washed into more cosmopolitan cities, and these real-life farmers were promptly pressed into service farming gold. In 2011, The Guardian reported that prisoners in some 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.
Although gold farming has since fallen out of favor, hiring another player to level up your avatar by increasing its supply of experience points may continue to be a popular practice. The term elo boosting may refer to a similar activity in games that features Elo rating system or some other competitive ladder system.
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 estimated that there were over 100,000 full-time gold farmers in China alone, and by 2009 the number had increased to one million. 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 200 million USD per year and suggested that over 150,000 people were employed as gold farmers with average monthly earnings of 145 USD. This same report estimated that 80-85% of all gold farmers were from China a fact which has led to prejudice towards Chinese players. 2008 figures from China valued the Chinese trade in virtual currency at over several billion yuan, nearly 300 million USD.
Rules and enforcement
Many game developers expressly ban gold farming in their game's EULA or terms of service. In order to combat this, game developers such as Blizzard and ArenaNet are attempting to discourage third-party gold farming by implementing official real-money transaction systems within their games. For example, in 2015, Blizzard implemented in-game items and tokens that cost players real money to purchase. These can then be auctioned off to other players for in-game currencies.
Ill effects on in-game economy
Gold farming and power leveling can affect a game's economy by causing inflation. They may degrade the game experience for users as was noted in a legal case against IGE.
These ill effects can occur whether or not such practices are sanctioned by the game operator. Citing such concerns, Activision Blizzard shut down their real-money transaction system for Diablo III in 2014.
Law, regulation and taxation
Some governments, perhaps recognizing that current regulatory systems may be ill-suited to address activities such as gold farming, have made statements concerning the sale of virtual goods.
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.
South Korea
A Korean high court's 2010 ruling meant that exchanging virtual currency for real money was legal in this country although subject to taxation. However, in 2012 this practice was set to be banned alongside a raft of other means to cheat in games, and gold farmers could face stiff penalties—up to $45,000 in fines and five years in jail.
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, filed a lawsuit to stop online sales of its in-game currency. The lawsuit never went to trial.
Jagex, the makers of RuneScape, have engaged in legal actions against several gold farmers and bot programmers.
On February 1, 2008, Blizzard Entertainment, the makers of World of Warcraft, won a lawsuit against In Game Dollar, trading under the name Peons4Hire. The court ordered an injunction that immediately halted all business operations within said game.
Game sweatshop
A business producing avatars and in-game currency in MMORPGs is sometimes labelled 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.
Development potential
Gold farming has been discussed as a tool for socioeconomic development by the United Kingdom's Department for International Development and University of Manchester professor Richard Heeks. The money involved is small enough to flow easily from many first-world players but 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
Neal Stephenson's 2011 novel Reamde has a plot centered on an online game that encourages gold farming.
Cory Doctorow's 2004 short story Anda's Game and 2010 novel For The Win include references to gold farming.
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.
Julian Dibbell's 2006 book Play Money: or, How I Quit My Day Job and Made Millions Trading Virtual Loot chronicle's the author's efforts to earn enough virtual money playing online games that he could quit his day job.