Saturday, July 28, 2007

The Life of the Chinese Gold Farmer

Really interesting article in the NY Times Magazine about Chinese gold farmers. Gold farmers being those who gather up gold in online games like World of Warcraft and then sell them to other players for real money.

At the end of each shift, Li reports the night’s haul to his supervisor, and at the end of the week, he, like his nine co-workers, will be paid in full. For every 100 gold coins he gathers, Li makes 10 yuan, or about $1.25, earning an effective wage of 30 cents an hour, more or less. The boss, in turn, receives $3 or more when he sells those same coins to an online retailer, who will sell them to the final customer (an American or European player) for as much as $20. The small commercial space Li and his colleagues work in — two rooms, one for the workers and another for the supervisor — along with a rudimentary workers’ dorm, a half-hour’s bus ride away, are the entire physical plant of this modest $80,000-a-year business. It is estimated that there are thousands of businesses like it all over China, neither owned nor operated by the game companies from which they make their money. Collectively they employ an estimated 100,000 workers, who produce the bulk of all the goods in what has become a $1.8 billion worldwide trade in virtual items. The polite name for these operations is youxi gongzuoshi, or gaming workshops, but to gamers throughout the world, they are better known as gold farms.
Interesting topic and raises lots of questions.

First, should this be legal?

On the one hand I think it should. If people are willing to pay real money for gold, why not allow them? If their time is limited and they don't want to deal with the boring parts ("the grind"), why not allow them to do this? The benefits of what you can purchase with gold in the game are already limited:
I don’t really consider buying gold in WoW “cheating.” None of the best stuff in the game can be directly purchased. Having mounds of gold helps, but without a solid support structure (guilds) and some ability to play the game (else said guild would probably not want you), being King Midas is pretty pointless.
On the other hand, I think maybe it should be illegal. It doesn't seem fair to the players who spend all their time building up their characters to have other players be able to just buy theirs. And shouldn't the game developer decide if should be legal?

But, if it is illegal, who is more to blame, the buyers who create a market for it, or the farmers which supply it? Like drugs this is a two way street. If you really want to stop it you should go after the players that purchase the gold rather than the Chinese who farm for it. No company wants to go after their customers though.

Secondly, what is impact of this on the environment? If people are paying for virtual goods rather than going out and buying real products, won't this reduce the impact of consumption on natural resources? Isn't it better for Americans to be purchasing fake gold from Chinese gold farmers rather than real physical goods at Wal-Mart that were created at Chinese factories?

On the other hand, running virtual worlds has a real world impact. How much natural resources and energy are required to make and run the computers and servers that allow the virtual world to exist? The environmental gain might not be as large as it seems, as an avatar in a virtual world has been estimated to use as much energy as a Brazilian.

Third, what kind of job does it create for the farmers? Is it a good job for the workers and better than the jobs they would have otherwise? Seems like it would be safer and more enjoyable than a factory job.

Worker makes "only" 6.25% of the money that they are eventually sold for, is that a "fair wage"?

Is it fun and rewarding for workers? Depends on how it is setup. When working as a team with each player having specific roles and skills and doing "power leveling", it appears to be a very fun and rewarding job. When killing the same monsters over and over in a repetitive manner to maximize money gained, it isn't much fun or very rewarding.

It also shows the find line between playing and working. Surprisingly, many workers also choose to play the game in their free time.
It may seem strange that a wage-working loot farmer would still care about the freedom to play. But it is not half as strange as the scene that unfolded one evening at 9 o’clock in the Internet cafe on the ground floor of the building where Donghua has its offices. Scattered around the stifling, dim wang ba, 10 power levelers just off the day shift were merrily gaming away. Not all of them were playing World of Warcraft. A big, silent lug named Mao sat mesmerized by a very pink-and-purple Japanese schoolgirls’ game, in which doe-eyed characters square off in dancing contests with other online players. But the rest had chosen, to a man, to log into their personal World of Warcraft accounts and spend these precious free hours right back where they had spent every other hour of the day: in Azeroth.

At the end of almost any working day or night in a Chinese gaming workshop, workers can be found playing the same game they have been playing for the last 12 hours, and to some extent gold-farm operators depend on it.

Fan himself is a striking case of how off-hours play can serve as a kind of unpaid R. and D. lab for the farming industry. He is that rarest of World of Warcraft obsessives, a Chinese gold farmer who has actually bought farmed gold. (“Sure, I bought 10,000 once,” he said, “I don’t have time to farm all that!”) When Fan shows up at the wang ba after work, it is a minor event; the other Donghua workers pull their chairs over to watch him play — his top-level warlock character is an unbelievable powerhouse that no amount of money, real or virtual, can buy.
Fourth, what is the impact of gold farmers on productivity?

Is this really a good use of these workers' time? Doesn't seem like it, as the game company could choose to sell the gold directly to customers, and these gold farmers could then be doing something else creating additional value.
Only a few companies have found a way to make R.M.T. part of their business model. Sony Online Entertainment, which publishes EverQuest, has started earning respectable revenues from an experimental in-game auction system that charges players a small transaction fee for real-money trades.
Makes you wonder though, if a company did do this, would its impact be seen in worker productivity numbers?

It also reminds me of something I read once (but can't remember where), suggesting that instead of paying people welfare, the government should just bury money in the ground and give everyone the opportunity to support themselves by digging it back up.

In one way this is completely ridiculous, as why would you want to bury it when you could just give it to them directly? In another way it makes a lot of sense, as it forces people to actually go out to earn their money by digging it up themselves rather than getting paid to do nothing. I am reminded of this because it seems to me that the Chinese gold farmers are digging up money out of the virtual ground.

And finally, can this be thought of as a form of foreign aid? Rich kids giving money to support 3rd world workers?

Overall a very thought provoking enjoyable read.

via Freakonomics

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