Chinese gold farming (CGF), or gold farming refers to people in poorer countries who play Massively multiplayer online games for the sole purpose of generating the virtual currency in those games to be sold to other game subscribers (typically in other, wealthier countries). The term is not reserved exclusively for this practice as performed in China, but rather the term refers to the business practice when performed in game by a player from any country who's unable to chat in any of the common languages of the game. The actual nationalities of CGFs are typically indefinable in game. In some cases the term "gold farming" is used to describe the collection of virtual assets for real profit, but in most cases online players who say something along the lines of, "Want to come gold farming with me?" they do not mean to sell their virtual assets for real profit, only to generate the virtual profits for in-game use.
The amount of money involved is unknown, but is considerable. Wages are low, but comparable to other low skilled manual labor in China. The practice is exploitive with workers working 12 hour days for as little as $100 a month.
Gold farming in ChinaEdit
According to estimates, around 100,000 people in China were employed as gold farmers, as of December 2005[update]. Chinese gold farmers typically work twelve-hour shifts, and sometimes up to eighteen-hour shifts. Wages depend heavily on location and the size of the gold-farming company. One gold-farming operation in Chongqing in central China with 23 gold farmers was reported to pay its employees the equivalent of about 120 U.S. dollars per month, while workers at a larger gold farm in Fuzhou earn the equivalent of about 250 U.S. dollars per month. The rising prevalence of gold farming has led to the creation of gold-farm brokerages. There are gold farmers or gold farms in other countries as well, such as the Philippines, Indonesia, and Mexico. However only Indonesia comes anywhere close and even then it still is in a league below that of China.
Ge Jin, a 30-year-old Shanghai native, made a documentary on "gold farms" in China as part of his doctoral research at the University of California, San Diego. He is one of the many researchers who have investigated how farm owners manage their production and distribution of virtual commodities across the border between the virtual and the real as well as the borders between nations. His main aim in his research was also to delve into the background and lives of these workers: "I also tried to find out what this job, combining work and play, means to Chinese gold farmers and how it feels like to live at this peculiar intersection of the virtual and the real." Ge Jin's research is documented in his periodical online news articles, which can be found at Consumer Studies Research Network. South Korea is also notable for its level of gold farming, so much so that South Korea is currently considering legislation to regulate the exchange of virtual currency.
Game economy impactEdit
Gold farming entails the harvesting of gold or other items, which are then sold to players and/or farming organizations. As the vast majority of gold farming takes place as a solo activity, the range of gold and other items that may be acquired by a gold farmer is limited. Craftable items (that is, items which are produced through application of player skills) are among the most commonly farmed items. Equilibrium value of crafting materials, quest items, and low to mid-range equipment is reduced due to the extra supply, and player-crafted equipment may then be produced at a lower overall cost. Once the items accumulated by a farmer change hands to a second party, there is increased demand for expensive or rare items.
The common perception by the community is that gold farming is damaging to the economy as a whole. For those interested in farming gold via solo activity (or when purchasing top-end items), this can be true. On the other hand, some in-game activities can be specifically tailored to take advantage of such situations, and tend to be more profitable as a result of farming activity (for example, the decreased cost of farmed items is counterbalanced, to a degree, by the subsequent increase in demand for those items).
Many companies have attempted to block the use of gold-farming services by specifically stating in their End User License Agreements ("EULAs") and Terms of Service that any and all game assets (from the player's characters themselves, to any items that they may be carrying) remain the sole property of the company itself, and taking aggressive action to close the accounts of any that are found to be using gold-farming (or similar) services. The true impact of such measures is unknown, although it is not uncommon to see a major game publisher announce the closure of accounts numbering in the tens of thousands.
There is a growing backlash against gold-farming services. Many game-related sites exclude advertisements from gold-selling services. An organization has even been established as a resource for webmasters who wish to avoid gold-seller advertisements. Other sites sell information on how to make gold quickly in-game, teaching gamers the secrets of gold-farmers. In addition, many fansites that use the Google Ad service to pay costs ask users to report gold-farming ads shown in these adverts. This short-cuts the farmers, while keeping players aligned with the EULA.
Inflation vs. Redistribution Controversy Edit
There is an ongoing debate in the online gaming community over how gold farming affects economy of the game (i.e. the prices of goods and services). Ultimately, total money supply in the game is controlled by three factors:
- The first is the collection of raw currency or items, obtained by dispatching NPCs or completing in-game quests and killing enemies. These all generate "money".
- The second is what is referred to as a money sink designed to absorb currency and items back into the economy. Typically, a money sink will take the form of vendor NPCs, which buy and sell the player's items and offer services such as repair or transportation. Another "sink" is the use of skills, most of which cost money to acquire and use.
- A third, and often overlooked factor in the "game economy" is the generation of "scarce resources." These are rare items that players can't make or produce easily. In some games this includes raw materials ("rare ingredients") that are used to manufacture value-added products. It's the distribution of the rarest goods that are most affected.
What gold farming ultimately does to the games economy is cause "economic growth." More players are playing more often, which generates more currency and more items and creates value added services. This can add to the volatility of the markets but because the economy is ultimately balanced by a computer algorithm it does not necessarily result in spiraling inflation. It is more likely to cause a combination of inflation/deflation by redistributing wealth. The most prominent effect of gold farming on the game is probably the way that it redistributes wealth. When players can buy gold with real-world cash a concentration of wealth occurs where more of the wealth is controlled by fewer players who can afford it.
Because "it takes money to make money," players with extra gold can use that gold to become still more wealthy. It's not unlike the real world where the more investable cash someone has, the more money they can make with it by investing it for a return. In economic circles this phenomenon is related to differential accumulation theory. The pool of wealthy players will also tend bid up the prices of the rarest items, because those are the items whose supply players have the least control over. They're generated at fixed low rates in the game (e.g. "drop-rates"). At the same time the prices of more common items will drop because their supply rises. Players trying to work their way up through the ranks by producing their own goods and services run into deflation, often dumping items for little or no profit or even sometimes for less than they cost to produce. It takes those players longer to acquire the rarest and most powerful items.
Fighting the Farming Effect Economically within the Game Edit
Cooperating (e.g. guilding, sharing, etc.) and bartering ("trading") are ways to fight the farming effect. Sharing and bartering reduce the demand for gold, which in a market system has the effect of reducing the relative value of purchased gold. These strategies are effective because players are bypassing the currency system. Shared and bartered goods are unavailable to those who have purchased gold. The reason that sharing cash also helps is that more cash is in circulation at any given time because people will save less. It's comparable to the effect of a central bank that lowers interest rates and expands credit. The total money supply has not changed, but more of the money is being exchanged.
Some "In-Game" Actions have been taken by Specific On-line Game companies:
- World of Warcraft recently introduced "Guild Banks", where members of a guild can cooperate by donating useful items and extra money for each other to use. This reduces the demand for gold and reduces the value of gold purchased with cash.
- In the MMORPG RuneScape, unbalanced trades became limited for accounts on January 2nd, 2008. Jagex, the company that hosts RuneScape, also altered a few other parts of the game to cut down on possible Real-World Trading (RWT) attempts, requiring a balanced stake to be made when fighting a player or entering a tournament. At death, defined in RuneScape as having your HP (Hit Points) depleted, a gravestone will appear so that you can not complete an unbalanced trade by dying, unless skulled from the RuneScape Bounty Hunter, the reduced area of the Wilderness that still allows PK'ing to a degree. (Player Killing.). This change, while not very popular among the players, has caused a significant decrease in the number of gold farming activities within the game. Jagex's RuneScape development staff recently pulled ideas and suggestions from the official forums to get an idea of what might make players more satisfied, and eventually released that the original unbalanced trade limit of 5,000 GP (Gold Pieces, or the unit abbreviation for coins) can be increased depending upon how many QP (Quest Points) a player has.
- Star Wars Galaxies has recently added the "Warden Program" into the game. Instead of taking hours to file tickets against in-game farmers and spammers, players who were selected were given the power to mute suspected farmers and automatically mark them for later investigation by Game Masters.
eBay and Auction sitesEdit
The sale of virtual items and assets found its way into auction sites such as eBay. Although it was a common sight to see gold farmers list their virtual items on these sites, the sale of these virtual items did not actually take place there. More commonly, these sites are used to facilitate the sale on their own website. In order to prevent legal entanglements and EULA violations, eBay has recently delisted all virtual property auctions. Items and property related to Linden Lab's Second Life are exempt from this policy. eBay spokesman Hani Durzy explained the logic behind the apparent double standard: "If someone participates in Second Life and wants to sell something they own, we are not at this point proactively pulling those listings off the site...We think there is an open question about whether Second Life should be regarded as a game."
Rules and enforcementEdit
In most games, gold farming is specifically prohibited by the game's EULA or terms of service and is grounds for termination of the account. However, in general enforcement is sporadic, due to the effort required to investigate farming activities and the large negative impact that the termination of a compliant user account has compared to the minor positive impact of the termination of a gold farmer. In addition, most MMORPGs require ordinary players to spend large portions of their time on repetitive actions (farming), making it difficult to distinguish between those who are farming for their own use and those who are farming for real-life profit.
It is possible to attack the gold-farming problem by data mining transaction logs for suspicious activity. This forces gold farmers to obfuscate their activities by moving gold through many different accounts on its way to the paying client. However, it is always possible to trace the movement of objects in an MMORPG, so all clients can be identified whenever a gold farmer is found. Currently not every MMORPG appears to be banning clients just for buying items from gold farmers in exchange for real-world items or money. However some MMOs such as Rohan:Blood Feud, RuneScape  and Guild Wars actively ban accounts. Similarly Final Fantasy has also begun banning large numbers of accounts for Real Money Trading (RMT).
In response to on-going customer complaints World of Warcraft has recently banned in-game advertisements for gold farming, as well as applying a patch to minimize in-game spam. Blizzard has now also taking legal action actively pursuing cases in court to those who do, and has been banning large numbers of accounts for farming virtual items for exchange with real world money. On May 30th, 2007 players of the game launched a class-action suit against IGE  for breaking WoW's EULA and damaging the game for 'honest players'. These actions are reflected in Blizzard's Terms of Service, 'Ownership/Selling of the Account or Virtual Items' which clearly disallow sale of transfer of Virtual Items in the "real world" IGE, however, counterclaim that since player data is owned and held by the MMO company players have no legal ownership of their own characters - or possessions - and therefore cannot demonstrate material harm or damages, and therefore have no standing to sue..
According to recent posts on its forums Blizzard now views gold-farming as a bannable offence and will be seeking to remove all such accounts that sell WoW content for real money from the game. Some MMOs also take action against the buyers of farmed goods, with varying measures being taken. Members of the Eve Online GM team have expressed a preference to simply remove any purchased game currency from the buyer.
Real World Taxation, Law Enforcement Edit
Awakening to this widespread practice in many online games governments are now investigating these practices. In Australia the ATO has already stated it views all such income, whether from the real economy, or virtual, as taxable income. The U.S. Congress, too, in a turn-around on its views in 2006 is now contemplating once again applying a tax on virtual goods which are traded for real world money, similar in a sense to the tax applied to goods traded online. MMO Companies that wish to allow any legitimate trade may then be required to build in systems to track all such trades.. For the IRS in the United States taxation of virtual assets has become not a matter of if they will be taxing them, but when taxation will begin.
Law Enforcement Agencies have also begun to take an interest in investigating and tracking these activities, not only because of fraud and money laundering opportunities , but because these agencies will be required to take a view since public policy has shifted to include virtual assets as real world income revenue for many governments. Internet Security Company Symantec recently made predictions that "These transactions can be conducted worldwide without the oversight that typically accompanies international bank remittances." They then gave the example of how the China Central bank & finance agencies has called upon companies to stop trading in QQ coin "presumably to curb the unregulated exchange of currency.". Apparently a lot of the activity so far has been targeted at Second Life and World of Warcraft known to be popular targets for trading in game gold & items. Further according to Symantec increasing use of tools claiming to enhance player's gaming is being used to illegally install software on players computers to steal players accounts, "Gamers will also use cracked software that allows them to run games without having the disc in the machine. These all make it much easier for cyber criminals".
The Korean government recently has enacted legislation that has banned the exchange of virtual goods for real money. Though websites who conducted this trade banded together to mediate with the legislators which eventually resulted in the bill only outlawing use of game exploits, prosecution for which could result in a $50,000 dollar fine and jail for up to 5 years.
In more significant development for gold farming operators throughout China, the authorities' concern over recent fraud cases has led, according to its news agency, to "growing calls for virtual property to be defined and bound by laws that will protect it from theft and plagiarism". Wang Xiaodong, a lawyer on intellectual property rights (IPR) from C&I Partners (Guangdong), told China Daily yesterday believes a specific law crafted by the Supreme Court of the People"to protect virtual property in the future."
In a recent move the British Government is now seeking "firmer hand in policing activities within virtual worlds":
Issues such as child pornography, identity fraud, money laundering and copyright infringement in virtual worlds are all "causes for concern" that need to be controlled, a government minister said. ...
Lord Triesman refused to be drawn on whether specific legislation was planned, and also declined to comment on one of the issues most keenly debated by observers of virtual worlds, namely whether money made in such worlds should be taxed. That was a matter for the Treasury, he said.
Moves by governments to further involve law enforcement in virtual worlds could conceivably have a direct impact upon 'gold farming' especially where the trade in currency or items is unlicensed and therefore illicit in the of income revenue agencies.
Further pushes to regulate 'virtual currency' now are being argued for in online law services, such as Internet Business and Law Centre:
From the perspective of law enforcement, it is important to know the location of servers which provide virtual money services, especially since they may be located in a different country.
Law enforcement needs to influence legislators when drafting future legislation. This is important as law enforcement will need powers to recover data which is stored in a different jurisdiction from where the offence is being investigated.
Barriers need to be broken down and trust built up between industry and law enforcement to make service providers more accountable for data crossing their networks.
Making MMOs accountable for data-exchange tracking virtual items & currency will likely require a very different approach towards gold farming, both in games where sale of items of permitted by the terms of service such as Second Life, and where item trade is prohibited by a virtual world's Terms of Service. Whatever the outcome of these changes it's likely that what goes on in virtual worlds will be of greater interest to governments and law enforcement alike.
Online Gaming LimitsEdit
As far as gamers farming items for themselves goes, in China, gamers under the age of 18 will have difficulty playing online for the long hours required to farm any significant amounts. According to a CNBC news report, a new mandate by the Chinese government requires online games to have monitoring software for users younger than 18 with built-in warnings to stop and exercise after three continuous hours of play, and to stop playing after five hours. Gamers must wait a minimum of five hours before returning to gameplay, or the system will not reset. Minors who violate this new mandate may be required to attend an Internet Addiction Clinic if they don't reform. Also, to play online, gamers will be required "to register with a real name and ID card number so that the system knows if they are under 18 or not".
- ↑ http://www.mtv.com/videos/news/120059/is-mining-virtual-gold-exploitative.jhtml
- ↑ David Barboza (2005-12-09). "Ogre to Slay? Outsource It to Chinese", The New York Times.
- ↑ "Life at the gamers farm". we make money not art (2006-03-17).
- ↑ Ryan Paul, "Korea considering gold farming regulation", ars technica (December 27, 2006)
- ↑ "RuneScape news - Bots and real-world trading". Jagex Ltd. (2007-05-01).
- ↑ Emma Boyes (2007-07-30). "Q&A: Guild Wars' Jeff Strain". GameSpot.
- ↑ Razorwire : News : FFXI bans 5000+ accounts for EULA violations, releases report
- ↑ WoW Forums -> Blizzard complaining about Blizzard
- ↑ Blizzard takes on gold farmers - PC News at GameSpot
- ↑ Blizzard bans 30,000 World of Warcraft accounts
- ↑ IGN: Blizzard Cracks Down on "Gold Farming"
- ↑ https://netfiles.uiuc.edu/dcwill/www/IGEComplaint.pdf
- ↑ MMO Gold Vendor IGE Sued - Shacknews - PC Games, PlayStation, Xbox 360 and Wii video game news, previews and downloads
- ↑ Boston Herald - Video game fan asks court to ban real sloth and greed in Warcraft
- ↑ WoW Forums -> World of Warcraft Accounts Closed - 4/12/2006
- ↑ Japanese gov't looks into gold farming - PC News at GameSpot
- ↑ Virtual world: tax man cometh - BizTech - Technology - theage.com.au
- ↑ TG Daily - Congress ponders taxing virtual items
- ↑ Congress set to issue virtual taxation report in August | Tech news blog - CNET News.com
- ↑ IRS taxation of online game virtual assets inevitable | CNET News.com
- ↑ Computerworld - Rackets, muggings hit social networking sites
- ↑ Second Life and WoW Become Serious Targets for Money Laundering | Ten Ton Hammer
- ↑ WoW is a Target for Money Laundering,WoW Gold, Cheap WoW Gold, World of Warcraft Gold
- ↑ Second Life, WOW a target for money laundering - m-net - ICT business news and information
- ↑ Online Gamers Turn Tricks for Cash - OhmyNews International
- ↑ Marketplace: Online 'gold farming' more than a game
- ↑ People's Daily Online - Case stirs concern over virtual property protection
- ↑ Government to police virtual worlds - Times Online
- ↑ INTERNATIONAL: IT Crimes- Virtual money : Internet Business Law
- ↑ Hard-hitting News: Chinese Internet Deathcamp, In Graphic Video
- ↑ Chinese Government Limits Online Play for Kids | Game | Life from Wired.com
China govt steps up limits on online gaming - Gamespot
- Gold Farmers
- BBC Gold Farming OMFG
- Ni Hao (A Gold Farmers Story)
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