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China Bans Gold Farming
InformationWeek is reporting that the Chinese government has declared a ban on the sale of virtual goods for real currency. This move is poised to shut down a several billion yuan a year business that has been growing by leaps and bounds every year. "The trading of virtual currency for real cash employs hundreds of thousands of people worldwide and generates between $200 million and $1 billion annually, according to a 2008 survey conducted by Richard Heeks at the University of Manchester. He estimates that between 80% and 85% of gold farmers are based in China. [...] Game companies typically forbid gold farming but committed virtual currency traders find ways around such rules. Some game companies have recognized the futility of trying to ban the practice and have built virtual commerce into their game infrastructure."
The trading of virtual currency for real cash employs hundreds of thousands of people worldwide and generates between $200 million and $1 billion annually, according to a 2008 survey conducted by Richard Heeks at the University of Manchester. He estimates that between 80% and 85% of gold farmers are based in China.
Dear god! Eight tenths of one billion dollars is a lot of cash!
The Chinese government estimates that trade in virtual currency exceeded several billion yuan last year, a figure that it claims has been growing at a rate of 20% annually. One billion yuan is currently equal to about $146,000.
So what is it, hundreds of millions or hundreds of thousands? Because one is a nice chunk of change while the other is, across China's population, laughable.
These numbers just aren't adding up here. There seems to be a large disparity between what the Chinese government reports and what Heeks' study finds. It's entirely possible that Heeks' is stretching stats to make his research sound more important and news worthy. It's also possible China is understating the impact their ban will have so they can "cure you of your illnesses." The reality is probably both a little of column A and a little of column B.
Some game companies have recognized the futility of trying to ban the practice and have built virtual commerce into their game infrastructure.
And now China will realize that futility. One would think that China would enjoy the tax on those who report this income but now it's just going to all go under-the-table. Hell, I'd say tax it but I'm certain China wants to look like the caring government attempting to heal the afflicted youth.
My work here is dung.
My understanding is that most of the gold farmer "workers" work on a quota system. Of course the quota will get moved up depending on possible performance. It's not about maximizing yields, it's about hitting the quota dependably.
When labor is that cheap, it's probably more effective to hire additional workers than it is to squeeze every last drop out of the ones you have.
Anecdotally, back when I played MMOs, I was once asked to hold onto some surplus in-game cash for a farmer. He wanted to set it aside so if he had a bad day, he could use it to get over quota and avoid punishment.
I recall reading an article about this somewhere (Gamasutra?)... the gold farmers didn't want to make too much gold for their bosses, or their coworkers would get mad. Excess earnings in a session were hidden to (1) save for a bad day (2) sell independently for income or (3) play the game themselves. It was a really interesting look inside gold farming at the basest level.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
This reminds me of the old Carlin skit on prostitution:
"Selling is legal, ****ing is legal. So why isn't selling ****ing legal?"
This is still a hundred times better than working on a farm for a living. Life is hard in rural areas, and making any kind of living outside of farming is a huge step up from what your parents likely did. Even if the work is hard and demanding by our standards, people in the 'first world' live decadent soft lives that don't know what a real lifetime of work would look like if it slapped us in the face.
One reason might be that building an industry that is entirely reliant on the whims of a foreign company could leave them holding the bag for thousands of idiots who thought they had a job.
Nerd rage is the funniest rage.
In full disclosure: I work in the financial industry currently.
This ban has nothing to do with gaming, gambling, or local economy.
This is likely a direct response to MASSIVE money laundering.
Joe has $100,000 worth of illicit cash.
Joe strikes a deal to buy $100,000 worth of virtual currency in WoW. Joe smuggles the money. (Many times Joe can even hire the kid down the street and pay him cash...)
Joe turns around and over several months sells the gold BACK to the gold farmers and claims the sales as legitimate income. Selling it at a 50% loss he can convert $100,000 into $50,000 of legitimate funds. Even more so when he acts as a virtual broker (IGN anyone?).
While this is a simplified scenario but we are talking BILLIONS of dollars a year are now going through these kinds of channels.
I've seen locally here in the US $300,000 attempts and laundering money this way (through a combination of FF Online, LOTRO, and Maple).
While it is getting easier to deal with this now that the gaming companies are willing to share some data I can only imagine how hard is must be in Asian markets where channeling cash to chinese gold farmers is easier with the shorter phsyical distances. Oddly though, in my experience, I have seen more Korean and Indian gold farmers then Chinese.
Never had a problem with gold farmers, never will, but I have serious doubts that this ban has anything to do with gameplay.
I think this is in response to the forged bonds that were intercepted in Italy. They are worried about organized crime shifting large sums of money (which require laundering) through the virtual economy.
If I am an evil overlord and I have to get 4 billion to my agents around the world the easiest thing to do is buy a billion dollars worth of WoW gold, have all my agents log in with characters. Divvy up the gold then have them sell it off locally or back to the gold farmers at a loss.
No quicker way to distributed that much real world money then through a network of games.
-=[ Who Is John Galt? ]=-