Real money and the virtualeconomy

							Title:
Real money and the virtual economy

Word Count:
1297

Summary:
In the world of Azeroth, life can be cheap but saving up for that much
desired epic mount can take months of labour.


Keywords:
world of warcraft


Article Body:
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.