The gold rush in cyberspace

Hundreds of thousands of young people in China now make a living by playing computer games. And the stakes are high. Simon Wilson reports.

What's happened?

The Guardian published a news story last week in which a Chinese ex-prisoner told how he and 300 other prisoners had been forced to spend their nights playing online games at a re-education-through-labour' camp in Heilongjiang province. While there, he was made to become a so-called "gold farmer" a gameplayer who spends hours playing on behalf of someone else and then sells them any treasure, points, or status (gold') they amass in the game. In this case it was corrupt prison officers rather than the forced labourer who benefited. The case has thrown a spotlight on the practice and ethics of gold farming.

How did gold farming start?

According to Richard Heeks, a professor of development informatics at Manchester, and author of the most in-depth academic study of the phenomenon, gold farming has its roots in the late 1990s. Players of the games Ultima Online and Lineage started selling each other virtual goods and gold via eBay. The phenomenon grew alongside the surge in popularity of online games especially massively-multiplayer online role-playing games' which operate persistent' virtual worlds, complete with economies, property, and even currencies. In the early 2000s, the first expansion of gold farming was in Mexico and Central America, close to the main customer base in America. These days, 80% of gold farmers live in China.

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How widespread is the practice?

The uncertain legality of gold farming makes it hard to gauge. In most virtual worlds, the activities associated with the practice including buying virtual currency (game gold') with real money are against the usual terms and conditions governing the purchase of the game. However, if time-rich, cash-poor players sell their services to cash-rich, time-poor players, more of them stick with the game, which helps the games' publishers. Estimates of the number of people employed as gold farmers typically in factory-style workshops crammed with computers and young Chinese men range from 100,000 to 400,000. Richard Heeks reckons the true figure could be even higher, and estimates that the average income (as of 2008) is US$145 a month.

Isn't this exploitation?

Not necessarily. According to Cory Doctorow, a novelist who interviewed gold farmers as research for a book set in the gaming world (For the Win, hailed by Tim Harford in the FT as a "fantastic economics primer"), the farmers themselves are "a lot less worried about being exploited in real life than they are about being hunted mercilessly in the game. They encounter an awful lot of racism when they move around in games. Anyone with a Chinese name or talking in Chinese is accused of being a gold farmer. If you are on a server where players can attack each other, people try to kill you. They had stories about being exploited, too, but a lot of them are 17 and still can't believe they are being paid to play video games all day."

A benign phenomenon then?

There's no doubt that with little regulatory oversight, working conditions in gold farms vary massively. Some must be hideously grim places to work and (for many of the young workers) live. The success of the sector has led to criminal gangs and scammers getting involved, including the corrupt prison officers described in The Guardian story. Whatever the games' publishers' attitudes towards gold farming, gaming studios in China are legitimate businesses, and taxed as such notwithstanding the abuses perpetrated by corrupt prison officers. The first World Bank report on online gaming and social media in the developing world (The Knowledge Map of the Virtual Economy, published in April) concludes that gold farming is having a strongly positive impact in Asia. That's because far more of the earnings generated remain within the developing country than is the case in many other developing-world industries.

What did the World Bank find?

That the industry is mostly based in Beijing and Changsha, the capital of Hunan province; that it's worth $3bn, and that the size of the potential customer base is 120 million online players worldwide. According to Vili Lehdonvirta, the report's co-author, it is wrong to view the industry as mere exploitation. "Certainly it's not a dream career, but the players' earnings are not at sweatshop levels." The average wage of a gamer is $2.70 an hour, one dollar more than Beijing's minimum wage for part-time factory work. The sector also creates work in administrative and marketing functions, often for women. Richard Heeks, himself an avid gamer, concludes that gold farming is "anything but a here today, gone tomorrow blip". Rather, it is an early example of "virtual offshoring". This is set to become increasingly prevalent as people spend more of their lives working and playing in cyberspace.

When does 'virtual' become real?

The world's legal systems and indeed criminal justice systems are struggling to keep up with the blurring of the real and the virtual. In the winter of 2005, a Shanghai man called Qiu Chengwei called the police after a friend stole' his virtual sword in the game Legend of Mir 3. Qiu had earned his prized possession nothing more than a flickering image on a screen through long hours of play. But when he lent it to his gameplaying friend, the man promptly sold it online for $871. Police refused to investigate as no real' crime had been committed. However, they were later obliged to get involved when Qiu broke into the other man's house and stabbed him to death in a frenzied rage.