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Gold farming is a general term for an MMORPG activity in which a player attempts to acquire ("farm") items of value which are sold to create stocks of in-game currency ("gold"), usually by exploiting repetitive elements of the game's mechanics. This is usually accomplished by carrying out in-game actions (such as killing an important creature) repeatedly to maximize gains, sometimes by using a program such as a bot or automatic clicker. More broadly, the term "gold farmer" could refer to a player of any type of game who repeats mundane actions over and over in order to collect in-game currency and items. An organization which organizes farmers is known by some as a sweatshop, though the less value-laden term is "workshop" or "gold farm".

Once a gold farmer or workshop has created a stockpile of currency, they will try to sell it. This then becomes "gold trading"/"gold selling"; also known as secondary real money trading. In practice, the term gold farming is often used to cover both making the gold and selling it. It may also be used to cover two other separate activities: powerleveling and the creation and selling of high-level character accounts.

Contents 1 The History of Gold Farming 2 Gold Farming Overview 3 Game economy impact 3.1 Inflation vs. redistribution controversy 3.2 Fighting the farming effect economically within the game 3.2.1 In-game actions taken by specific online game companies 4 eBay and auction sites 5 Rules and enforcement 6 Real world taxation, law enforcement 7 Online gaming limits 8 References 9 External links

[edit] The History of Gold Farming

Gold farming can, approximately, be divided into three phases^[1]:

• Phase 1/Commercialisation: online game players began to barter items during the 1980s. At some point in the late 1980s, in-game items began to be sold for money. Full commercialisation began in 1997 due to two factors: the launch of Ultima Online as the first true MMORPG, and the launch of eBay. Gold farming was still a relatively small activity: a cottage industry undertaken by players in the US and Europe who saw a way to make extra money.
• Phase 2/Offshoring: from 2001/2002, entrepreneurs in the US and South Korea saw the opportunity to make more money from gold farming by hiring players working on low-cost locations; especially China. One brokerage in particular, IGE, was massively successful, earning millions of dollars per month, and dominating the market.
• Phase 3/Challenges: from 2005/2006, gold farming faced a series of challenges: game companies began to ban accounts and take legal action; eBay was persuaded to stop listing online game currency and items; games were redesigned to make gold farming and trading much harder; and entry of lots of new firms led online currencies to devalue heavily against real currencies. Lots of new brokerages, each with their own web portals and customer relations teams, were set up. Gold farms began to shift to lower-cost locations.

[edit] Gold Farming Overview

According to estimates, at least 400,000 people worldwide were employed as gold farmers as of late 2008, with the global trade worth at least US$1bn per year^[1]. These statistics could underestimate the size of gold farming: some estimate there are more than 1 million gold farmers in China alone, with the trade worth more than US$10bn per year^[2]

There are reports of gold farming in developing countries including the Philippines, Indonesia, and Mexico. VietNam has also reported a growth in gold farming^[3][4]. However, China is by far the major location, employing an estimated 80-85% of all gold farmers.

Chinese gold farmers typically work 10-12-hour shifts. Average earnings are around US$150 per month with (limited-quality) food and accommodation provided; more skilled farmers who can farm more in-game gold will earn more. Separate from the gold farms - which are often in low-cost, outlying locations - are the brokerages, typically based in city centres and employing well-educated customer services staff earning around US$350 per month^[5].

Ge Jin, a 30-year-old Shanghai native, made a documentary on "gold farms" in China as part of his doctoral research at the University of California, San Diego showing the actual conditions and lives of gold farmers.^[6] Anthony Gilmore is making a feature documentary, "Play Money", on the same subject.^[7]

See also: Video games in the People's Republic of China

[edit] Game economy impact

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Gold farming entails the harvesting of gold or other items, which are then sold to players and/or farming organizations. As the vast majority of gold farming takes place as a solo activity, the range of gold and other items that may be acquired by a gold farmer is limited. Craftable items (that is, items which are produced through application of player skills) are among the most commonly farmed items. Equilibrium value of crafting materials, quest items, and low to mid-range equipment is reduced due to the extra supply, and player-crafted equipment may then be produced at a lower overall cost. Once the items accumulated by a farmer change hands to a second party, there is increased demand for expensive or rare items.

The common perception by the community is that gold farming is damaging to the gaming economy as a whole.^{[citation needed]} For those interested in farming gold via solo activity (or when purchasing top-end items), this can be true. On the other hand, some in-game activities can be specifically tailored to take advantage of such situations, and tend to be more profitable as a result of farming activity (for example, the decreased cost of farmed items is counterbalanced, to a degree, by the subsequent increase in demand for those items).

Many companies have attempted to block the use of gold-farming services by specifically stating in their software license agreements and terms of service that any and all game assets (from the player's characters themselves, to any items that they may be carrying) remain the sole property of the company itself, and taking aggressive action to close the accounts of any that are found to be using gold-farming (or similar) services. The true impact of such measures is unknown, although it is not uncommon to see a major game publisher announce the closure of accounts numbering in the tens of thousands.

There is a growing backlash against gold-farming services. Many game-related sites exclude advertisements from gold-selling services. An organization has even been established as a resource for webmasters who wish to avoid gold-seller advertisements. Other sites sell information on how to make gold quickly in-game, teaching gamers the secrets of gold farmers. In addition, many fan sites that use the Google Ad service to pay costs ask users to report gold-farming ads shown in these adverts. This shortcuts the farmers, while keeping players aligned with the EULA.

[edit] Inflation vs. redistribution controversy

There is an ongoing debate in the online gaming community over how gold farming affects economy of the game (i.e. the prices of goods and services).

Ultimately, total money supply in the game is controlled by three factors:

1. The first is the collection of raw currency or items, obtained by dispatching NPCs or completing in-game quests and killing enemies. These all generate "money".
2. The second is what is referred to as a money sink designed to absorb currency and items back into the economy. Typically, a money sink will take the form of vendor NPCs, which buy and sell the player's items and offer services such as repair or transportation. Another "sink" is the use of skills, most of which cost money to acquire and use.
3. A third, and often overlooked factor in the "game economy" is the generation of "scarce resources." These are rare items that players can't make or produce easily. In some games this includes raw materials ("rare ingredients") that are used to manufacture value-added products. The distribution of the rarest goods is most affected.

What gold farming ultimately does to the games economy is cause "economic growth". More players are playing more often, which generates more currency and more items and creates value added services. This can add to the volatility of the markets but because the economy is ultimately balanced by a computer algorithm it does not necessarily result in spiraling inflation. It is more likely to cause a combination of inflation/deflation by redistributing wealth.

The most prominent effect of gold farming on the game is probably the way that it redistributes wealth. When players can buy gold with real-world cash a concentration of wealth occurs where more of the wealth is controlled by fewer players who can afford it.

Players with extra gold can use that gold to become still more wealthy. This is not unlike the real world where the more investible cash someone has, the more money he or she can invest for a return. In economic circles this phenomenon is related to differential accumulation theory.

The pool of wealthy players will also tend to bid up the prices of the rarest items, because those are the items whose supply the general population the least control over. They're generated at fixed low rates in the game (e.g. "drop-rates"). At the same time the prices of more common items will decrease because supply increases as more items are generated.

Players trying to work their way up through the ranks by producing their own goods and services run into deflation, often dumping items for little or no profit or even sometimes for less than they cost to produce. It takes those players longer to acquire the rarest and most powerful items.

[edit] Fighting the farming effect economically within the game

Cooperating (e.g. guilding, sharing, etc.) and bartering ("trading") are ways to fight the farming effect. Sharing and bartering reduce the demand for gold, which in a market system has the effect of reducing the relative value of purchased gold.

These strategies are effective because players are bypassing the currency system. Shared and bartered goods are unavailable to those who have purchased gold. The reason that sharing cash also helps is that more cash is in circulation at any given time because people will save less. It's comparable to the effect of a central bank that lowers interest rates and expands credit. The total money supply has not changed, but more of the money is being exchanged.

In a recent study conducted on the buying habits of players from gold farmers, two major purchasing groups were identified. The first group made one or two large purchases in a 90-day time span. The second group made consistent smaller purchases through the same time span. It was suggested to discourage the first group that loans of the in game currency could work. This would have two effects. The first effect is to fulfill the players need to make a large purchase. The second effect is since this would be a loan, more gold would be pulled out of the economy in the long term than was originally put in thus maintaining a more stable economy.

[edit] In-game actions taken by specific online game companies

• World of Warcraft has introduced "Guild Banks", where members of a guild can cooperate by donating useful items and extra money for each other to use. This reduces the demand for gold and reduces the value of gold purchased with cash. They also use the in house created Warden anti-cheat program to detect sellers.

• In the MMORPG RuneScape, unbalanced trades became limited for accounts on January 2, 2008. Jagex, the company that hosts RuneScape, also altered a few other parts of the game to cut down on possible Real-World Trading (RWT) attempts, requiring a balanced stake to be made when fighting a player or entering a tournament. At death, defined in RuneScape as having your HP (Hit Points) depleted, a gravestone will appear so that you can not complete an unbalanced trade by dying, unless skulled from the RuneScape Bounty Hunter, the reduced area of the Wilderness that still allows PK'ing to a degree. (Player Killing.). This change, while not very popular among the players, has caused a significant decrease in the number of gold farming activities within the game. Jagex's RuneScape development staff recently pulled ideas and suggestions from the official forums to get an idea of what might make players more satisfied, and eventually released that the original unbalanced trade limit of 5,000 GP (Gold Pieces, or the unit abbreviation for coins) can be increased depending upon how many QP (Quest Points) a player has.

• Star Wars Galaxies has recently added the "Warden Program" into the game. Instead of taking hours to file tickets against in-game farmers and spammers, players who were selected were given the power to mute suspected farmers and automatically mark them for later investigation by Game Masters.

[edit] eBay and auction sites

The sale of virtual items and assets found its way into auction sites such as eBay from the late 1990s. Although it was a common sight to see gold farmers list their virtual items on these sites, the sale of these virtual items did not actually take place there. More commonly, these sites were used by gold traders to facilitate the sale on their own website.^{[citation needed]}

In order to prevent legal entanglements and EULA violations, eBay delisted all virtual property auctions from 2007. Items and property related to Linden Labs' Second Life are exempt from this policy. eBay spokesman Hani Durzy explained the logic behind the apparent double standard: "If someone participates in Second Life and wants to sell something they own, we are not at this point proactively pulling those listings off the site...We think there is an open question about whether Second Life should be regarded as a game."

[edit] Rules and enforcement

In most games, gold farming is specifically prohibited by the game's EULA or terms of service and is grounds for termination of the account. However, in general enforcement is sporadic, due to the effort required to investigate farming activities and the large negative impact that the termination of a compliant user account has compared to the minor positive impact of the termination of a gold farmer^{[citation needed]}. In addition, most MMORPGs require ordinary players to spend large portions of their time on repetitive actions (farming), making it difficult to distinguish between those who are farming for their own use and those who are farming for real-life profit.

It is possible to attack the gold-farming problem by data mining transaction logs for suspicious activity. This forces gold farmers to obfuscate their activities by moving gold through many different accounts on its way to the paying client. However, it is always possible to trace the movement of objects in an MMORPG, so all clients can be identified whenever a gold farmer is found. Currently not every MMORPGs appears to be banning clients just for buying items from gold farmers in exchange for real-world items or money. However some MMOs such as Rohan:Blood Feud, RuneScape ^[8] and Guild Wars actively ban accounts^[9]. Similarly Final Fantasy has also begun banning large numbers of accounts for Real Money Trading (RMT)^[10].

In response to on-going customer complaints^[11] World of Warcraft has recently banned in-game advertisements for gold farming, as well as applying a patch to minimize in-game spam. Blizzard has now also taking legal action actively pursuing cases in court to those who do^[12], and has been banning large numbers of accounts for farming virtual items for exchange with real world money^[13][14]. On May 30, 2007 players of the game launched a class-action suit against IGE ^[15] for breaking WoW's EULA and damaging the game for "honest players"^[16]. These actions are reflected in Blizzard's Terms of Use, "Ownership/Selling of the Account or Virtual Items" which clearly disallow sale of transfer of Virtual Items in the "real world"^[17] IGE, however, counterclaim that since player data is owned and held by the MMO company players have no legal ownership of their own characters – or possessions – and therefore cannot demonstrate material harm or damages, and therefore have no standing to sue.^[18].

According to recent posts on its forums Blizzard now views gold farming as a bannable offence and will be seeking to remove all such accounts that sell WoW content for real money from the game.^[19]

Some MMOs also take action against the buyers of farmed goods, with varying measures being taken. Members of the Eve Online GM team have expressed a preference to simply remove any purchased game currency from the buyer.

[edit] Real world taxation, law enforcement

Awakening to this widespread practice in many online games governments are now investigating these practices^[20]. In Australia the ATO has already stated it views all such income, whether from the real economy, or virtual, as taxable income^[21]. The U.S. Congress, too, in a reversal of its 2006 views, is now contemplating once again applying a tax on virtual goods which are traded for real-world money, similar in a sense to the tax applied to goods traded online.^[22] MMO Companies that wish to allow any legitimate trade may then be required to build in systems to track all such trades.^[23] For the IRS in the United States taxation of virtual assets has become not a matter of if they will be taxing them, but when taxation will begin.^[24]

Law enforcement agencies have also begun to take an interest in investigating and tracking these activities, not only because of fraud and money laundering opportunities ^[25], but because these agencies will be required to take a view since public policy has shifted to include virtual assets as real world income revenue for many governments. The internet security company Symantec recently made predictions that that "These transactions can be conducted worldwide without the oversight that typically accompanies international bank remittances." They then gave the example of how the China Central bank & finance agencies has called upon companies to stop trading in QQ coin "presumably to curb the unregulated exchange of currency".^[26] Apparently a lot of the activity so far has been targeted at Second Life and World of Warcraft known to be popular targets for trading in game gold and items.^[27] Further according to Symantec increasing use of tools claiming to enhance player's gaming is being used to illegally install software on players computers to steal players accounts, "Gamers will also use cracked software that allows them to run games without having the disc in the machine. These all make it much easier for cyber criminals"^[28].

The Korean government recently has enacted legislation that has banned the exchange of virtual goods for real money^[29]. Though websites who conducted this trade banded together to mediate with the legislators which eventually resulted in the bill only outlawing use of game exploits, prosecution for which could result in a $50,000 dollar fine and jail for up to five years.^[30]

In more significant development for gold farming operators throughout China, the authorities' concern over recent fraud cases has led, according to its news agency, to "growing calls for virtual property to be defined and bound by laws that will protect it from theft and plagiarism". Wang Xiaodong, a lawyer on intellectual property rights (IPR) from C&I Partners (Guangdong), told China Daily yesterday believes a specific law crafted by the Supreme Court of the People"to protect virtual property in the future."^[31]

In a recent move the British Government is now seeking "firmer hand in policing activities within virtual worlds":

Issues such as child pornography, identity fraud, money laundering and copyright infringement in virtual worlds are all "causes for concern" that need to be controlled, a government minister said. ... Lord Triesman refused to be drawn on whether specific legislation was planned, and also declined to comment on one of the issues most keenly debated by observers of virtual worlds, namely whether money made in such worlds should be taxed. That was a matter for the Treasury, he said.^[32]

Moves by governments to further involve law enforcement in virtual worlds could conceivably have a direct impact upon gold farming especially where the trade in currency or items is unlicensed and therefore illicit in the of income revenue agencies.

Further pushes to regulate virtual currency now are being argued for in online law services, such as Internet Business and Law Centre:

From the perspective of law enforcement, it is important to know the location of servers which provide virtual money services, especially since they may be located in a different country. Law enforcement needs to influence legislators when drafting future legislation. This is important as law enforcement will need powers to recover data which is stored in a different jurisdiction from where the offence is being investigated. Barriers need to be broken down and trust built up between industry and law enforcement to make service providers more accountable for data crossing their networks.^[33]

Making MMOs accountable for data-exchange tracking of virtual items and currency will likely require a very different approach towards gold farming, both in games where sale of items of permitted by the terms of service, such as Second Life, and where item trade is prohibited by a virtual world's Terms of Service. Whatever the outcome of these changes it's likely that what goes on in virtual worlds will be of greater interest to governments and law enforcement alike.

[edit] Online gaming limits

As far as gamers farming items for themselves goes, in China, gamers under the age of 18 will have difficulty playing online for the long hours required to farm any significant amounts. According to a CNBC news report^[34], a new mandate by the Chinese government requires online games to have monitoring software for users younger than 18 with built-in warnings to stop and exercise after three continuous hours of play, and to stop playing after five hours. Gamers must wait a minimum of five hours before returning to gameplay, or the system will not reset. Minors who violate this new mandate may be required to attend an Internet Addiction Clinic if they don't reform. Also, to play online, gamers will be required "to register with a real name and ID card number so that the system knows if they are under 18 or not"^[35].

[edit] References

China govt steps up limits on online gaming - Gamespot

Gold Farming study - Law of the game.

[edit] External links

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• Analysis Current Analysis and Future Research Agenda on "Gold Farming": Real-World Production in Developing Countries for the Virtual Economies of Online Games - By Richard Heeks Development Informatics Group IDPM, SED, University of Manchester, UK - 2008
• RuneScape development diary: RuneScape vs. Real-world Trading
• Gamespot article on gold farmers
• World of Warcraft Gold Farmer Study
• 1UP article on slave wages
• Eurogamer on the stereotype of Chinese players as gold farmers
• Yi-Shan-Guan - An article from The Daedalus Project by Nick Yee that deals with the racialized narrative we tell about gold farmers and what that typical narrative leaves out.
• Ge Jin - a PhD student from UCSD makes a video documentary of gold farming in rural and suburban China. A video link to youtube can be found on this website.
• NYTimes article
• MTV News on The Real Price Of Virtual Gold- Half a million Chinese laborers spend their days killing World of Warcraft monsters for actual income. But is it exploitative?
• [1] Korean Gold Farming Regulation
• Online Gold Farming More Than A Game Story about Korean gold farming regulation, from public radio's "Marketplace"
• Poor earning virtual gaming gold