Article 11
Real money and the virtual economy
In the world of Azeroth, life can be cheap but saving up for that much desired
epic mount can take months of labour. Welcome to the World of Warcraft,
currently the world's largest MMORPG (Massively Multiplayer Online Role Playing
Game). In the World of Warcraft, the auction house presents the avid window
shopper with a cornucopia of wonders, from fabulous swords to armour guaranteed
to make you the hardest elf in your neck of the woods. To purchase such wonders,
the player needs gold, something that requires quite literally hours, days or
weeks of in-game labour. However visit Ebay or Eye on MOGs, a price comparison
engine for virtual commodities, and you have the opportunity to convert real
life earnings into virtual gold, platinum, ISK or Credits, depending on the
virtual world that you alter ego(s) inhabits.
The world of Real Money Trading has come a long way since its fledgling days
when gamers departing from a virtual world would use websites like Ebay to
convert their in-game assets into real world money. Today it is a multi-billion
dollar industry, with industry insiders like Steve Sayler of IGE estimating that
as much as $2.7 billion will change hands within this secondary market during
the course of 2006. This lucrative industry is now catered for by companies like
MMORPG SHOP, Mogmine and MOGS, which have entire infrastructures set up to
'farm' for in-game gold and valuable items. Not only can you purchase in-game
spending power with real world money from such sites, but many are service
driven, for example offering power levelling to fast-track your avatar to new
heights of maturity, turn you into a master craftsman in days rather than
months, or boost your reputation within the world you inhabit. Sites like
Mogmine offer specialised services like fruit picking, specified item farming,
or will take your character through that instance that's been weighing so
heavily on your mind.
What we are experiencing here is a whole new type of economy where the border
between the real and virtual world is blurring. There are currently hundreds of
companies catering to this phenomenon, with some virtual items being sold for
hundreds or even thousands of dollars. Virtual real estate is earning real world
money, with people like 43-year-old Wonder Bread deliveryman John Dugger
purchasing a virtual castle for $750, setting him back more than a week's wages.
According to Edward Castronova, an economics professor at Indiana University who
has performed extensive research into online economies, Norrath, the world in
which EverQuest takes place, would be the 77th richest nation on the planet if
it existed in real space, with players enjoying an annual income better than
that of the citizens of Bulgaria or India. A visit to GameUSD indicates the
current state of virtual currencies against the US dollar, demonstrating that
some virtual world currencies are currently performing better than real world
currencies like the Iraqi Dinar.
Real Money Trading and gold farming are met with mixed feelings in the gaming
world, with some gamers criticizing the fact that real world wealth can affect
in-game prestige and capabilities. Critics of the secondary market believe that
such activities within the virtual economies intrude on the fantasy and provide
the more economically empowered with an unfair in-game advantage. However this
ignores the real world fact that earning money and advancing one's character
within a virtual world takes a good deal of time, and some gamers have more
money than time on their hands. The average age for gamers is 27, and
approximately half of all gamers are in full time employment. For a group of
friends playing together, it can thus be relatively easy for the cash rich to
fall behind the time rich in terms of gameplay, as they are obliged to spend the
lion's share of their time working their real world jobs while friends are
spending time levelling their characters. For such individuals, for whom time
translates into money, a few dollars is a small price to pay to ensure virtual
survival the next time they enter an instance with their high level friends.
Companies set up to farm virtual commodities are furthermore criticised as being
little more than sweatshops, an attitude encouraged by the fact that many of
these companies reside in low wage economies like China. However, pay and work
conditions in such companies, where workers are paid to spend their days playing
enjoyable, stimulating games, cannot compare to that of their compatriots who
spend their days mindlessly producing the components that go into our computers,
or the trainers that we wear while playing. Essentially the objection is a moral
one, with many Westerners objecting to low wage economies catering to this type
of leisure activity. Often workers are paid partly in kind, with food and
accommodation included in remuneration packages, with the pay received thus
presenting largely surplus. While pay may not equate to Western standards, this
type of economic activity reminds us that we are living in a continually
globalising economic environment where quality of life and spending power should
be taken into account as much if not more so than say a straight dollar for yen
exchange rate. Companies like Mogmine provide their staff with health benefits,
holiday pay and share options, along with the chance for advancement within the
organisation. Brian Lim, CEO of Mogmine, comments that 'many mid- and high-level
management started out as gamers and now they have equal or more pay than
respectable managers in more conventional businesses.' Within these lower wage
economies, these thus represent desirable jobs.
Other complaints centre around the negative effect of such farming activities on
in-game economies. At Mogmine, Brian Lim's gamers play the game as it is meant
to be played, but hone good techniques for gold generation along the way, thus
ensuring that the work remains interesting to staff. Jonathan Driscoll comments
that competition for resources has always been a feature of gameplay, and points
out that his World of Warcraft farmers do their work within instances, and thus
do not impact on others' gaming experiences in the least. Complaints that
farmers are responsible for in-game inflation smack of sour grapes when compared
to common factors like players with high level characters acting as benefactors
for their low-level alts, and thus facilitating the unrealistic in-game spending
power of such low level characters. While some developers do not condone real
money trade on their servers, others like MindArk, with their game Project
Entropia, have included the secondary market as a part of their services. Even
Sony Online Entertainment, who until recently stood staunchly against real money
trade, have jumped on the band-wagon with the release of their Station Exchange
service, actively facilitating Real Money Trading in Everquest 2. Other games,
like the upcoming Roma Victor, embed the secondary market as part of their
financial model rather than relying on the common subscription model, with
players purchasing Sesterces to play and advance in the game.
Such trading of virtual goods for real world money is potentially just the tip
of the iceberg for the development of virtual economies where people come
together within virtual worlds to promote and trade real world products. Games
like The Matrix Online already sell advertising space to real world companies to
promote their products to gamers who spend their leisure time within the world.
We are thus embarking on an entirely new type of economic activity, where real
and virtual worlds are meeting within an economic sphere. As a fledgling
economy, it is difficult to chart where this phenomenon may take us, but the
sheer weight of currency being spent and earned within these economies and the
development of services to monitor real to virtual exchange rates and market
prices indicates that they are here to stay.
Resources referenced
Castranova, Edward. 'Virtual Worlds: A first-hand account of market and society
on the cyberian frontier' [December 2001]
C NET - Real money in a virtual world [http://news.com.com/Real+money+in+a+virtual+world/2030-1069_3-5905390.html]
The Daedalus Project, revealing the psychology of MMORPGS [http://www.nickyee.com/daedalus/]
GameUSD, a virtual world versus USD currency tracker [http://gameusd.com/]
WIRED - The Unreal Estate Boom [http://www.wired.com/wired/archive/11.01/gaming.html]
Wikipedia - Real Money Trading [http://en.wikipedia.org/wiki/Real-money_trading]
Acknowledgements
We would like to thank Jonathan Driscoll from MMORPG SHOP, Brian Lim from
Mogmine and Hayden from MOGS for their insider's view of the secondary market,
which proved invaluable in writing this article.
Co-authored by Rachelle Benson of Benson Cairns
