Gold Farming Research – Part One
We have found the good research about gold farming at . But there has no published version of HTML. So we have decided to republished it here as a series posts as following.
Current Analysis and Future Research Agenda on “Gold Farming”: Real-World Production in Developing Countries for the Virtual Economies of Online Games.
Abstract
From the start of the 21st century, a new form of employment has emerged in developing countries. It employs hundreds of thousands of people and earns hundreds of millions of dollars annually. Yet it has been almost invisible to both the academic and development communities. It is the phenomenon of “gold farming”: the production of virtual goods and services for players of online games. China is the employment epicentre but the sub-sector has spread to other Asian nations and will spread further as online games-playing grows. It is the first example of a likely future development trend in online employment. It is also one of a few emerging examples in developing countries of “liminal ICT work”; jobs associated with digital technologies that are around or just below the threshold of what is deemed socially-acceptable and/or formally-legal.
This paper reviews what we know so far about gold farming, seeking to provide the first systematic analysis of the sub-sector. It assembles available data at the sectoral, enterprise and worker level. Five main analytical lenses are then applied. Economic analysis shows how exchange rate variations and scale economies do and do not impact gold farming; and the strong influence of information failure in the purchase of virtual items: known as “real-money trading”. Analysis from the perspective of industrial sociology charts the commoditisation and globalisation of the sub-sector, while value chain models identify resource dependencies and power inequities. Enterprise analysis investigates enterprise entry, existence and progression, and outlines the competitive forces shaping the sub-sector’s development; particularly threats. Developmental analysis investigates the impact of this sub-sector in macro and micro terms. Finally, there is a sociological analysis of the role played by perceptions and other social forces.
In using a broad base of analytical perspectives, the paper aims to encourage, and provide a stepping stone for, further research on this growing phenomenon. It concludes by outlining and justifying a future research agenda.
Introduction
Technological change readily throws up phenomena that sit under the radar of academic research for many years. Gold farming is one example. As defined here, gold farming means the real-world sale of virtual goods and services produced in online games. For example, many online games have a virtual economy and an in-game currency. Gold farmers can play in-game to make some currency. They then sell that for real money – typically via a web site and using the PayPal payment system – to other players of the game.
This activity has been large enough to call an economic sub-sector – employing tens of thousands in developing countries and with global trade worth hundreds of millions of dollars – since at least 2003. From a development perspective, it is providing income, jobs and skills. It is thus offering one answer to the conundrum of how to create new livelihoods from the ICT infrastructure spreading throughout developing countries. And it is the first example of what will be a much larger set of economic activity in future; not just given the 80% per annum increases in global online gamers (White 2008) but as people spend more and more of their time interacting in cyberspace generally and in virtual worlds specifically.
Gold farming is thus an early example of online employment – what we might otherwise call “cyber-work” – in developing countries. It is also an example of what we might call “liminal ICT work”: work associated with information and communication technologies that is around or just below the threshold of what is deemed socially-acceptable and/or legally-permitted1.
Yet, to date, there has been practically no academic research on this topic. It has been noted in the mainstream media and, given the strong feelings it arouses, has been the subject of much opinionation in the blogosphere. But there does not appear to be a single journal article on gold farming2.
Box 1: Understanding Online Games
The first computer game – a version of noughts-and-crosses – was created in 1952, with the first two-player game appearing ten years later (Kelly-Bootle 2006, Damer 2007). Our story, though, really begins with the creation of MUDs – multi-user dungeons – in the late 1980s. These were text-based games run on networked mainframe computers that created imaginary worlds, including imaginary objects (swords, armour, magical rings, etc). Players started occasionally trading those objects for real money. MUDs gradually metamorphosed into MMORPGs – massively-multiplayer online role-playing games. To date the most successful example of these is World of Warcraft from US-based Blizzard Entertainment (part of Activision Blizzard). Players pay a monthly subscription fee of around US$15 and create a character that can then enter the virtual world of Azeroth. Their character (or “toon”) can be seen on-screen (as an “avatar”) and can travel through the virtual world killing “monsters” (creatures that inhabit the world which form a sub-set of all NPCs: non-player characters); undertaking activities like mining, fishing or crafting virtual items; and buying or selling items with other players. When a monster is killed it “drops loot”, i.e. the player can collect both in-game currency and valuable items. It is this activity that forms the basis of much gold farming. As a player’s character kills monsters and undertakes various tasks, its “level” (i.e. its strength, stamina, abilities, etc.) rises; from level-1 initially up to much higher levels.
The popularity of specific online games ebbs and flows. At the time of writing, World of Warcraft was far and away the largest MMORPG with over 10m subscribers, half based in East Asia. Second most-popular was UK-based Jagex’s Runescape with over 1m subscribers (Woodcock 2008). These are both examples of p2p – pay-to-play – games requiring monthly subscriptions, though Runescape – like a number of online games – has a free-to-play version that costs nothing to play but which restricts play to a small sub-set of activities available in the p2p version. An alternative model, much used in Asia, is “free-play, item-pay”, in which the full game costs nothing to play but in which full participation and rising to higher levels requires the real-money purchase from the game developer of in-game items.
Given the unwieldy nature of MMORPG as a term, in the text that follows, the term MMOG (massively-multiplayer online game: 94% of MMOG subscriptions are for MMORPGs (Woodcock 2008)) or “online game” will also be used.3
This paper therefore aims to provide the first broad-ranging academic review of this emerging sub-sector; given the calls for more theorised analysis of gold farming (Toscano 2007). It presents something of a smorgasbord of analytical foundations, each one of which is intended to form a launch pad for more in-depth research. It uses secondary sources as its base, though recognising the urgent need for additional primary fieldwork on gold farming (see Appendix 1 for more detail on sources).4
What follows, then, will firstly be an overview of gold farming – its origins; its activities; and a collation of what statistical data there is. Succeeding sections take, in turn, a particular analytical perspective and apply a first-pass examination of gold farming from that perspective. Section B picks an economic lens and analyses the income, expenditure and profitability of gold-farming enterprises; reviewing how those may have changed given the serious devaluation of virtual against real currencies in recent years. The presence of scale economies is investigated before analysing the sub-sector as a classic case of information failure.
Section C grows out of industrial sociology to perform a quasi-Marxist chronology of the sub-sector’s historical development, followed by analysis of gold farming’s global value chain. Section D takes a more mainstream business approach, looking at the kind of entrepreneurs that enter the sector, and at how we might measure the progress of their enterprises. It then performs a competitive analysis focusing largely on the many threats that make gold farming an uncertain and vulnerable affair.
Development studies and gold farming have so far had nothing to say to one another, so Section E’s developmental analysis is more formative than some of the others, briefly reviewing the macro-developmental impacts, and the micro-impact on livelihoods. The analysis ends with Section F’s return to sociology, discussing the perceptions and discourse on gold farming that have arisen particularly in the West; and what we can learn about relations between the real and the virtual.
The final section provides a short summary of the paper, and concludes with a discussion of the future research agenda on gold farming; not merely what that agenda might contain, but also the rationale for pursuing such research.
Because of the breadth of data items available in current literature, and given the formative nature of research and the many possible routes forward, the paper is liberally sprinkled with footnotes and boxes expanding on or sidetracking from the main analytical content.
1 Other examples would include sale of digital pornography (e.g. Barendregt 2006), and the unlocking or re-chipping of mobile phones (e.g. Hahn & Kibora 2008).
2 By comparison, for example, informal real-world gold mining in Ghana is on roughly the same scale in employment terms (Hilson & Potter 2005), but has been the subject of dozens of journal articles. There are interesting parallels to research between real gold mining and virtual gold farming.
3 Almost all discussion of gold farming relates to MMORPGs. However, it does spread beyond that. For example, one Hong Kong-based firm is offering power-levelling services for XBox-360 console online gamers (http://www.levelmy360.com/).
4 Because of this reliance on secondary, mainly-unrefereed sources, it is possible that this paper contains some “howlers”: significant errors or misunderstandings. Likewise because my own in-game experience is restricted so far to Runescape and World of Warcraft. Caveat lector.
Related posts:
