Friday 8 April 2011

A study of economics usually reveals that the best time to buy anything is last year

The nice people at thought you fine folks might be interested in their article on making money in virtual worlds. Seems slightly unlikely, it’s not really aimed at keen players; there’s no guide on how to make gold (or plat, or ISK, or unpleasant secretions, or other in-game currency of choice), more a brief introduction for someone unfamiliar with these MMOG things.

Rather more interesting, Scott Jennings recently linked to The Financial Life (And Death) of an East European Gold Farm. The author of the post, Prof. Richard Heeks, also linked to a working paper of his from a couple of years back, Current Analysis and Future Research Agenda on “Gold Farming”: Real-World Production in Developing Countries for the Virtual Economies of Online Games. It’s a weighty paper, touching on the parallels between the growth of gold farming and real-world agriculture (introducing some splendid terms such as “gold horticulturalism” and “gold market gardening”) and, as the title suggests, the viability of gold farming as full- or part-time employment in developing economies.

Heeks perhaps slightly downplays the links between gold selling and more nefarious activities such as fraud and account hacking, but then as he points out there is almost no serious research on gold farming to be able to definitively quote numbers to either support or disprove such links. Another difficulty is the pace of change in MMOGs; at the time of writing in 2008 regarding the free-to-play model: “though relatively little known in Western online gaming, Asian gaming has made significant use of the free-play, item-pay model in which gamers pay little or nothing to join the online game, but then pay real-money (typically deducted from pre-paid cards) to buy items in-game” . Of course it’s now much more common in the West, but companies are still getting to grips with various implementations without even factoring in third-party RMT. It certainly seems like an area in which more research would be useful, and if someone would just like to send over a truck full of money we’d be delighted to put it to good use…

Update: In a curious case of synchronicity, Tobold points out an Ars Technica piece on an infoDev study from yesterday, Converting the Virtual Economy into Development Potential: Knowledge Map of the Virtual Economy. Wider in scope than Heeks’ paper, looking at other online activities as well as gold farming, it’s interesting how the lines blur between legitimate “crowdsourcing”-type activities such as Amazon’s Mechanical Turk and shadier “cherry blossoming”, artificially bought “astroturf”-style publicity such as Facebook “likes” or Twitter followers. Likewise RMT in MMOGs, from developers selling cash/items themselves through gold farmers actually playing the game to bots and hacked accounts; from the study: “One industry expert suggests that manual farms produce 30 percent of the virtual currency sold by retailers, bot farms produce 50 percent, and hacker groups “produce” 20 percent by stealing it from other players.” I couldn’t find the source of the quote from a very quick search, the paper suffers from the same problem as before of lack of hard information and reliance on estimates and surveys, with small sample sizes in some cases, but if the estimated $3.0 billion per year value of the gaming service industry (mostly gold sales) is anywhere near accurate, then it’s approaching the $5.5 billion received by countries that produce coffee beans, and gold farming needs to be viewed as a sizeable global industry rather than a couple of randomly named characters spamming adverts in Ironforge.

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