Saturday, February 18, 2012

Nothing for Money

Place yourself, for a moment, in the sweaty seat of a World of Warcraft player. Let me tell you a little about it. You are a level 85 hunter and you need more agility for an epic raid. The agility scroll costs 500 gold at the auction house, you're broke, and your guild is doing the raid in six hours. No way are you getting 500 gold in that time. So you log out of the game, wander on over to a website like, and fork over somewhere between $5 and $15 (That's USD, of course) for 10000 in-game gold.

That's right. You just spent real money for fake moneyMark Knopfler would not approve.

You may or may not have known this, but there is a major real market for WoW gold. In fact, the market to spend real money on in-game amenities goes beyond Blizzard Entertainment's powerhouse MMORPG, but some of the best examples I have seen are focused on this title. An actual industry has arisen based around "farming", the in-game practice of finding areas where enemies drop a lot of valuable loot and just killing and looting all day. The loot you want is partially determined by the economy of the server on which you're playing (yep, each server's in-game economy, including value of gold and prices of specific items, is unique and based on players' actions).

Farmers at work.
Photo source: The Guardian, March 2009
While some gaming enthusiasts might think this sounds like a dream job, let me burst your bubble now. I came across an article that appears to be from a few years ago written by a very experienced WoW player who compiled some information on farmers by communicating with them and observing them. The profits in USD from farming are not enough to support an American. However, in some parts of Asia where a dollar can buy more and some people still have the capital to buy up a few computers and WoW accounts, people are hired to work up to twelve-hour shifts of farming. At the end of one player's shift, another takes over and plays the same character, meaning that these accounts are played essentially around the clock. Each employee has a quota of gold to deliver and has little time to do anything else in the game but farm. The work is demanding and little actual fun is had.

Does that sound crazy? It gets crazier. The UK newspaper The Guardian reported last year that at the Jixi labor camp in China, prisoners had among their daily toil long gold-farming shifts. Playing video games in prison may sound like a nice change from hard manual labor, but one prisoner reported
"If I couldn't complete my work quota, they would punish me physically. They would make me stand with my hands raised in the air and after I returned to my dormitory they would beat me with plastic pipes. We kept playing until we could barely see things."
All I can say to this is wow. Video games as forced labor. All because people are willing to turn real gold into fake gold. The article suggests that the labor camp's most lucrative operation was WoW farming.

These are some extreme examples of a little corner of a larger industry of "virtual goods". I have found a couple of different definitions of what qualifies as a virtual good, but as nearly as I can tell, a virtual good is any non-physical object purchased for use in an online game or community (this is how it is defined on Wikipedia). Some might extend the definition to any digital good, but I choose to stick to this more restrictive categorization. Other examples of virtual goods appear within the gaming world; it is possible to purchase well-equipped characters in your games, if you don't feel like going through the effort of leveling up, questing, and all that strenuous activity. Once a WoW rogue sold for almost $10,000. It isn't limited to characters either, and the prices that digital objects can sell for range on the obscene: one man, in a game I've never heard of called Planet Calypso, spent more than $300,000 on a digital space station. Apparently he planned to tax players in the game to use it; the expense, to him, was an investment on which he expects returns.

Now, most of these games require the user to accept a license agreement that prohibits the commercial exchange of in-game property, but that doesn't stop people from trying. Some companies fight back. Zynga, the publisher of Farmville (that bane of Facebook), sued the site I mentioned at the beginning of this post for selling their in-game credits (that's right, even on a game as innocuous as Farmville, there is a market for virtual money).

So people are willing to spend a lot on what is essentially some ones and zeros on a memory device. Through gaming, relatively inconsequential information gains massive value. This occurs outside of gaming as well. Have you seen those things on Facebook telling you to buy virtual gifts? I haven't seen so many as I used to (maybe that market has dried up), but Facebook reported that a full 10% of their 2007 profits came out of virtual gifts. Apparently, at least for a time, it was seen as perfectly reasonable to spend money send someone a low-quality image of a rose. In fact, the blog I linked there about Facebook has another post suggesting that virtual gifts are an example of disruptive innovation. They compare it to the advent of mini-mills in the steel industry in the early twentieth century that reduced the market control of bigger steel corporations. They point out that the disruption was more a result of new business practices rather than new technology. What were they disrupting?

Putting it into perspective, buying a virtual gift really isn't significantly different from buying a Hallmark greeting card. The value of the materials you are actually buying is similar, being practically nil in both cases. The value of what you are buying is much harder to quantify; it is a demonstration of thought, coupled with emotions and other ethereal things. I guess virtual gifts disrupt the market of greeting cards.

Similarly, any virtual good you purchase isn't literally nothing. Buying gold on WoW is just a way to enable a player to spend less time trying to make money and more time doing stuff in-game with money. If they are already paying fifteen a month just to have access to that virtual world, why shouldn't they pay a little more to enhance that experience? I am trying to suggest that the purchase of virtual goods in a video game seems, in my opinion, to be economically on the same grounds as purchasing a video game in the first place.

There is a lot more to be said on this. I haven't even looked at the world of virtual goods in the smartphone sector (fart apps, anyone?). The market overall is growing. Still, buying virtual goods seems like paying money for nothing to me.

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