The economics of gold farming

Cottage industries have a way of becoming real industries, and one of the more surprising instances of such a transformation is the phenomenon of the "gold farming" factory. These businesses, mainly in China, are paid for gold — not real gold, but the virtual "gold" pieces used as currency in online role playing games like World of Warcraft.

Gold farming operations have been around for a decade or more, and as the business has grown, they have become more and more interesting as objects of economic research. There are many interesting anthropological angles on the industry — for instance, what drives people to pay someone else for status in a game instead of undertaking the work themselves. But this week's New York Times Magazine has an in-depth article on the opposite side of the industry: the young Chinese men who take home a meager paycheck from gold farming, "leveling" and even more elaborate systems of in-game services.

First, a note on the economics:

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.

This is a long article, and gives a close look inside the industry. Two surprising (maybe) facts: First, many gold farmers, after spending 12-hour shifts in the game world, spend their off-hours ... in the game world. Playing the kinds of strategies that get a lot of gold is very time-consuming, but doesn't touch many of the parts of the game that are the most engaging. So they go to internet cafes after hours and play their own campaigns.

Second, the resentment of the majority of game players who don't buy gold leads to abusive language and online predation:

It isn't that WoW players don't frequently kill other players for fun and kill points. They do. But there is usually more to it when the kill in question is a gold farmer. In part because gold farmers' hunting patterns are so repetitive, they are easy to spot, making them ready targets for pent-up anti-R.M.T. hostility, expressed in everything from private sarcastic messages to gratuitous ambushes that can stop a farmer's harvesting in its tracks. In homemade World of Warcraft video clips that circulate on YouTube or GameTrailers, with titles like "Chinese Gold Farmers Must Die" and "Chinese Farmer Extermination," players document their farmer-killing expeditions through that same Timbermaw-ridden patch of WoW in which Min does his farming — a place so popular with farmers that Western players sometimes call it China Town. Nick Yee, an M.M.O. scholar based at Stanford, has noted the unsettling parallels (the recurrence of words like "vermin," "rats" and "extermination") between contemporary anti-gold-farmer rhetoric and 19th-century U.S. literature on immigrant Chinese laundry workers.

The end of the article presents a kind of reductio ad absurdum case of the arbitrary online line between thrilling excitement and endless tedium, as one Chinese company experiments with long, coordinated tours of duty for their online warriors.