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The Road to Eldorado

Last week, we kicked off our four-part weekly feature series on gold trading – the grey market for in-game currencies, services and items in MMOs – with an introduction to a shady business that's outwardly condemned by players whilst being supported by 30 per cent of them.

Future instalments will look at real-money trading from the perspectives of MMO players and developers, but this week, Nick Ryan talks to the the farmers, spammers and website entrepreneurs who fuel this trade. Are they evil hackers and credit card fraudsters, downtrodden workers, or neither? And what do they have to say for themselves?

What do 'gold sellers' actually do? Sit in a den somewhere, plotting crimes and flogging victims' credit card details, in order to fund their drugs and prostitution empires … or is the picture of the hard-pressed Chinese worker on the edge of starvation wages more accurate?

The truth is, probably, a mixture of both, with many 'legitimate' gold farming and selling businesses keen to distance themselves from the criminal element in the industry. No-one knows for sure, precisely because the 'industry' is so fragmented and located in hard-to-get places (such as the aforementioned China).

Few things seem to vex us more, though, than the appearance of a gold seller. When the newly-updated World of Warcraft official forums started to carry sponsored ads a few months ago, there was an uproar (and hilarity) when a hosted ad offered gold "As Low As $3/1000 WoW Gold" with less than 5 minutes delivery time. The irony was not lost on the message boards and red faces ensued at Blizzard (which has long-maintained an aggressive stance against real money traders).

Or take an example from my own realm on World of Warcraft. One player took over three pages to complain that a hacked character was using a 'speed hack' to farm mining nodes:

"I landed and saw a rich saronite vein," wrote the player, "and I was grabbing my mount to go get it when all of a sudden [I] get shocked [sic] by a flying human being flying with an amazing speed I never ever seen before and without any kind of tools, mounts or engineering material.

"This human landed on the node I was going to, she mined it and instantly flew away to the last node I just passed, I saw how it disappeared in a matter of second [sic] and she was gone. I mean the speed she collected all the veins is about 1000g every 20 min … I want these kind of cheaters removed from the game. Taking all my veins!! it is not fair! all the veins belongs to ME!"

Yet if player whingeing (sorry, feedback …) about both the farmers, and the sellers they work for, is anything to go by such incidents are by no means unique.

Money makers

'Gold sellers' or real money traders (RMT) make their cash in three main ways:

1. Selling in-game currency: this is similar to buying foreign currency in the 'real world'. You buy via a (gold seller's) web site at a clearly stated (real-to-virtual) currency exchange rate, with payment typically made via PayPal or credit card. You sometimes get the cash sent in game mail, but since MMO companies tightened up their procedures you usually get a message and are told to "meet" one of the gold farmers in-game. The money is then delivered. According to just one estimate, in mid-2008, you could buy 5m Runescape gold for around US $20. (Is it delivered in a brown paper envelope, under a virtual table, I wonder…?)

2. Power-levelling: payment is again made via a web site but this time you give the gold-farming firm your game username and password. Their staff then "play" your character in-game, "levelling" it up. Once the character has reached the agreed level, it is handed back. This is where many MMO firms contend that hacking comes into play: you're trusting a virtual stranger with all your details.

3. Selling Accounts: "Want to play an MMO but don’t want to start at Level 1?" says 'Extreme Gamer' who runs the WoW Gold Facts review site. "You can purchase MMO accounts that have characters at high levels, with coveted items, mounts and what-have-you. Alternatively, if you want to sell your account to another player, the RMT site can act as your middle man. Price will depend on what level the character is plus the items and gold in its inventory. I’d say the range could be anywhere from US $100 for a so-so account to US $1500 for the cream of the crop."

So amidst this crop of hackers, cheats and bots, are there any which are running a reputable business? E.G. claims that "they’re usually the old-timers of the industry like IGE and MySuperSales. I reviewed both sites in the past for my site and both did not fail. They weren’t perfect but they delivered and I didn’t have to go through the agony of following up and threatening a chargeback. As for the nature of the business being illegal or not, I am not aware of any ruling by any court that states that it is illegal. We’re talking about corporate EULAs. In my opinion, their current terms and conditions makes the publishers look greedy."

Gold farming vs Gold selling

Gold farming companies are what you might call the 'sweatshops' of the MMO world. Farmers don't sell direct – they run their high-level accounts and grind long shifts to acquire gold, currency, items, etc.

The gold-farming firm (workshop) which employs the gold farmers has a relationship to a gold seller (the broker), usually the website that the player ends up dealing with. Gold selling companies are borderline legit, sometimes borderline criminal, depending on your definitions and their actions (and geographical locations and laws in those countries).

They buy the gold from the farming companies, put on a markup (see table, end) and they are the ones you see spamming in-game. A game account to them is far less valuable than to a farmer, who needs a high-end character in order to farm most efficiently.

Gold farmers very much fit the profile suggested in this recent Guardian article.

The Brit

Contrary to popular belief, not every gold farmer is Chinese. Nor a hardcore hacker. I spoke with 'Paul', a long-time British gamer now in his 40s who had engaged in RMT for many years.

"I've played online games for quite a while now, starting with the text-based MUDs [Multi-User-Dungeons] in the late Eighties, then moving on to Meridian 59, the first graphical MORPG, in 1996. At that time there really wasn't any trade in virtual items or cash, basically because there weren't enough players. However, the situation changed when
Ultima Online [UO] was launched a year later," he says.

"UO had few of the restrictions that World of Warcraft [WoW] has. Anyone could use any item. There were no levels or quest rewards. Anyone could kill anyone else and items could be looted off your body or stolen from your pockets. Also, you could build your own housing or buy houses for cash. There was no restriction. You could own lots of houses or buy huge castles. But there was a land shortage. All the good land for housing was taken, so the prices of housing in prime locations rocketed. Location, Location, Location. UO housing was not just for vanity. The bigger your house, the more stuff you could store in it. And you could place your own vendors."

As Paul explains, to excel at the game you needed power scrolls which could be looted by killing huge bosses, requiring hundreds (not just 25) players to slay. Moreover to cast any spell magic users needed herbs, which were available only from the game vendors, in limited supplies.

"Thus, we had a situation in which I needed cash to buy armour, weapons, houses, crafting materials, power scrolls and even herbs for my mage. I had a skilled miner, who could dig up precious ore, for weapons, and I had a character who could tame dragons to kill big monsters for magic items and even power scrolls. However, I had nowhere to sell this stuff, since houses for vendors were far too expensive.

"So, I bought a house off eBay. It was in a prime location, with a nice vendor area, and it cost me UK £300. I set up my vendors, and filled it up with goodies for the discerning passer-by. I sold out in a day. I needed more stock, so I turned to automation. I automated my miner, and left him bouncing around to the best mining locations. He mined day and night. When I was actually playing, I went out with my tamer, a dozen dragons in tow, and killed monsters like there was no tomorrow. I sold ore and magic items and the money rolled in."

Paul then smiles. "In fact so much money rolled in, that I started selling it on eBay. It wasn't much in real terms. I was making maybe UK £100 a month and had two boxes running macros.

"Then a few things happened. UO started to crack down on macros, and reduced tamers to only one dragon. Plus people were leaving the game to go to EverQuest, which had a far superior graphical interface and was easier to play. People are shallow like that!" he laughed. "My supply of goods dropped, and my customer numbers dropped. The price of UO gold on eBay plummeted. And I had a baby. It was all too time-consuming for too little reward. I left UO."

Paul moved to EVE Online, the space simulator from CCP which has a highly-developed economy (EVE even has an official company economist). As he explains: "Essentially, nearly everything desirable in-game is constructed by the players from ore, which could be mined: ships, weapons, various add-ons to make you faster or more powerful. All of this could be bought off the market. You had to have the skills to use the item though, and skill training cost more money.

"I wasn't getting very far in EVE, which is a harsh game for newbies, so I spent UK £50 to buy a few hundred million ISK [the in-game currency], and bought myself some decent ships.

"Now, in EVE, the best ships, Tech 2, were the most desirable and expensive. However they could only be built by people who had the appropriate Tech 2 blueprints. These could then be rented out to other players for serious money. I went into blueprints in a big way. The only way to get Tech 2 blueprints, aside of buying them – and no-one was selling – was to win them in a kind of lottery. This depended on the number of research agents you had, so I bought all the lottery tickets I possibly could by setting up loads of research agents.

"Then I waited. Over the course of a few months I accumulated a number of Tech 2 modules, until finally I got one of the coveted ship blueprints. I was in business. Since I still didn't have much time, I rented my blueprints out to another concern who actually made, and sold, the ships. They gave me a share of the profit, and I sold it on eBay. Life was sweet."

Paul admits that he never made as much from EVE as he did from UO, probably because the subscriber base was lower, "plus the Chinese 'macroers' had moved in to mine vast quantities of ore and flood the market. This pushed the currency price lower. I reckon I made UK £50 a month or so for a couple of years, but the advantage was that it took me no time at all."

As he reflects, all this came to an end when eBay stopped selling virtual items of any sort. "Plus my manufacturers decided to go into business on their own. Time to go. I sold my ships and my blueprints and liquidated the profits. And that's about it. I've never played WoW seriously enough to be a gold farmer, and to be honest I think that the number of Chinese gold farmers make it hard for an independent to succeed. Plus Blizz[ard] go on banning sprees periodically."

Chinese farmer

But what about the 'real' Chinese gold farmers? Who are they? A fellow WoW player told me how his Chinese flatmate got chatting (in Chinese) to some other Chinese players on his realm. One of them turned out to be a young man who farmed, professionally, for gold. My friend and his flatmate both chatted to him for many weeks. Mr Li, that friend, said he had an eye illness and found it very difficult to get a real job. Gold farming was a way that he could contribute money to his family. His account was frequently banned by Blizzard and he had to keep buying new accounts and levelling up a new character to keep farming.

"I met him in-game many times," says my mutual contact. "My Mandarin is very bad but we always managed to communicate. Even though he had quotas to reach every day he often took time to help us in a dungeon and never asked anything in return. And he is by far the most skillful player, with several different character classes, that I have ever met."

Eventually he hooked me up with Mr Li, 23, who was living with his parents in an unnamed Chinese city. We spoke via a translator over Skype during two different sessions.

"When I finished high school and wanted to find a job I went with friends to a gold farming workshop [the term used for gold farming businesses]," explains Li, the gold farmer. "I found out about it from an advert in a newspaper. After a short interview [where he had to pass some basic computer tests] I was given the job."

I asked him why he wanted such a role in the first place. "It's hard to find a job here and this job is easier to get [than others]. Also when I got the job I was quite young and I liked to play games."

As he went on to outline, the company boss (he didn't reveal the name of the outfit "a very big company") rented computers in an internet cafe. "The computers that he rents are set up to only play WoW. The first gold farming company I was in was really big: I guess that this company owned at least 10,000 gold farming accounts. In my workshop there were 40 people who took turns to farm, some in the daytime, some at night. So the accounts are used for farming non-stop for 24 hours per day, 7 days per week."

Most of his fellow players were young: the oldest was about 35. The company was so big they never even met their boss.

Mr Li says when he was farming WoW pre-Burning Crusade, he used two level 60 mages to work the back door part of the Stratholme dungeon. "I did this instance again and again to get gold and loot. Other people used rogues to do herbalism, mining or finding rare monsters to kill. But I only used mages for farming."

Although he started playing in the internet cafe, later he bought his own computer so that he could play at home. "I could play half of the time and do farming half of the time," he says. "That way it is more comfortable and more convenient." His parents knew what he did and had even given him his own room "to do this work to help me earn money for our family."

When asked about his pay, he says there was no hourly wage in China. "I was paid by the day. Every day the workshop set a minimum amount of gold that we must deliver. If I can reach this target every day then I get the standard salary. If you get more gold then you get more pay. But it's so hard to get more gold and you will be so tired."

I wondered if he could make a decent living from all this farming. "Yes, but every day I feel very tired. You can imagine, every day I need to do at least 10 hours farming. I'm always looking at the computer screen and always seeing the same instance and the same mobs. So I feel very tired," he repeats.

Nor did he much like the job in the end. "The thing I like is playing the game. Some people are happy when they get new gear from an instance. It's the same thing for me: I'm happy to get gold in the game. But I don't think it's worth the hassle. This is only a game. I always feel that I'm wasting my time doing this job."

He believes that this boss was rich, though, and earned a lot of money from the business. "They must have the capital to rent the computers and advertise in the newspaper and rent a room for people to stay in. The boss must be rich to have the business relationship with the top people in the company who organise the business, run the website and sell the gold to European customers."

Li denied they were using hacked accounts, as often contended by players and MMO companies alike. "All our business was done by cash. We never dealt with credit cards. On Chinese realms, customers pay by cash, not credit card," he reveals.

When his European WoW account was banned by Blizzard, he switched to these Chinese servers, playing on his own and no longer with 40 colleagues. There, he says, he saw a very different attitude from the MMO company. "In Chinese realms you won't get your account banned for gold farming. It's treated as a very common thing in the game. In European realms, at the beginning it was fine and they didn't ban accounts. But later Blizzard banned so many accounts of Chinese gold farmers."

Now he sees the price of MMO gold plummeting, just like the real world and says he wanted to do something different with his life. "I don't want to do this for ever. I'd like to find a job that I really like and is suitable for me, so that every day I will have a real sense of achievement."

The Big Business

After speaking with Mr Li, I spent some time hunting down a gold selling company that would talk to me, direct. It wasn't easy but in the end one, SwagVault, agreed to talk.

'Sophia', a Chinese graduate in English who specialised in marketing (and didn't play MMOs herself), told me something about the company's background. She says it was set up in April 2004 in Washington, USA, with branches in both China and Europe. It started out by selling WoW Gold on eBay, later expanding into a "full featured website covering virtual currency [as well as power levelling, game guides and other services] for all the major MMOs in order to serve the US and European customers."

"As of June 14, 2007 the [SwagVault] website ranks in Alexa at 27,671," she tells me, "challenging IGE at 26,737. Today, it is one of the biggest currency sellers in North America with more than 420,000 customers. During 2004-2008, we have satisfitely [sic] finished 18,047,550 currency orders and done 1,407,503 power-leveling services with 99.5% eBay positive feedbacks."

It is now the largest gold seller in China. Sophia's colleague, Benjamin, then explains that the company doesn't "farm" the gold itself, it "sells" it.

"We purchase the gold from tens of thousands of farmers. And we resell it via retail platforms like www.swagvault.com. So to some extent we are an 'exporting company'," he claims. "The only difference is that the goods are virtual and the procedures are operated in an digital environment."

He confirms that "gold farming” has become a huge, almost-invisible industry in China. "Besides the North American and the European markets, there are also a lot of gaming workshops supplying in-game currency to the Japanese and Koreans, too. The yearly turnover for all these enterprises combined is estimated at over 10 billion US dollars. World of Warcraft players make up 70% of this RMT activity. So Blizzard really creates a miracle! I really can’t believe that a game can generate such a large market."

The demand for RMT was there, Sophia insists, because some players simply lacked the time for 'the grind'.

"For various reasons, it’s no doubt that some players spend much less time than the others. To gain the balanced gaming experience as well as the influence of physical world, those players, who lack time and fail to get enough virtual currency at the common speed, will choose to purchase in-game currency with real cash, so as to break this barrier to pursue a fair entertainment environment. Therefore, the so-called Real Money Trading, as a matter of fact, is a way to makeup the shortage of time with real cash. So to some extent, as long as the online game exists, such demand will accompany it forever. This is also the foundation that the RMT industry comes in to being and become increasingly booming."

Sophia dismisses any notion that what SwagVault was doing was in any way immoral, or linked to hacking and credit card fraud.

"SwagVault will strictly adhere to any recognised ethic moral criterions and related laws," she replies. "And our staff who provide these services are all professional online players with many gaming expertise [sic], instead of hackers and villains. Our objective is to help those players who can not maximum [sic] their gaming experiences as time shortage or other situations, to experience the gaming fun. We assured all our customers that we will do not use [sic] any hack or other illegal actions in game to break the gaming environment. And basically speaking, I do not think any illegal company may develop or exist in such a long time.

"Our products are virtual but our customers are real and we have no excuse to do illegal business with them. We have our own corporate culture," she claims, calling it “IPEC” (Integrity, Practicability, Efficiency and Creativity).

Whilst some smaller firms might try to scam their customers, Benjamin maintains the majority are doing their best to attract the new customers and maintain their old ones.  "To get a new customer, usually, they have to spend 30-50 US dollars on Google Adwords. Sometimes even higher. So the smaller sites can’t afford the advertising cost, so they just spam in-game."

The much-publicised banning sprees from Mythic, or Blizzard, only served to push gold sellers towards illegality, he suggests.

"Each time when Blizzard massively bans the farming accounts and trading accounts, the gold sellers and farmers will suffer from great loss. They have paid for the Classic CD-Key, the Burning Crusade CD-Key, Wotlk CD-key and 60 days Time Cards. The total cost is over 100 USD. In addition, they have to level up their farming accounts(high-level accounts farm more gold); they spend a lot of time farming gold; and time is money! I estimate that Blizzard itself has got millions of US dollars from the farmers. And to save the cost, some farmers might use stolen accounts or bots to farm gold, which is illegal and causes great harm to the game."

Sophia then adds that SwagVault is not your typical image of a gold farming workshop, or shady network of gold sellers linked to organised crime. "I want to confirm you that our staff are all mature and work eight hours every day, five days a week as well as enjoy all kinds of pensions, insurance or bonus that the labour law prescribes. Their salaries are no less than the labour provision. We are a legally-registered corporate, our site is a e-commerce platform. Except some specific teams which serving customers directly [sic] are professional gamers, most of the rest staff are talented in e-commerce."

Benjamin went into further detail about the core workers. "Most of the [gold] farmers themselves are young people from rural areas ... they have no opportunity to receive university education or professional training. Currently, they can get a relatively decent salary compared to those who work in factories or construction sites. This salary consists of basic payment, plus bonus for each gold they farm. So the skillful farmers can get more money, ranging from 250 USD to 400 USD per month."

He estimates that there are over one million gold farmers in China today, all farming on North American and Europe online game servers. There are over 60,000 registered suppliers in what he calls "Chinese Purchase Platforms" [the brokers selling you the gold].

"The smaller farming workshops maybe only have five to 10 staff, while the large ones  employ more 1,000 farmers. They work in shift, 12 hours per day. Frankly, it’s very tiring and boring to sit down before the computer to kill the monsters and grind gold day after day. But anyway, gold farming allows young people a job and able to afford the basic expenses for their family. Many farmers start their own farming workshop," he adds, "after accumulating a certain amount of funds and experience."

Most of these "staff" lived in China, whilst some were in other developing countries. The biggest hurdle seemed to be the account bans that were regularly handed out – thus causing customers "financial pain" if they had paid for gold via PayPal, and not then received it – but she also mentions something quite curious, too.

"We have an accordant standpoint with game operators like Blizzard, NCsoft etc: what we do are trying to establish a fair and equal gaming environment instead of spoiling it." Was she affirming what Mr Li, above, had said: that there might be a different approach to gold selling on some realms [of WoW] than others? And that the MMO companies might one day shift their position on real money trading?

Sophia was circumspect: "Any market is based on need at first. As long as gamers or players have demand on virtual currency or other game value-added services, we will develop along with that. In my opinion, there are possibility that the MMORPG operators will cooperate with RTM companies in future."

For now, business remained highly competitive. "Currently, the RMT industry is still in its babyhood. Since the threshold of inception is very low, as a result, the number of practitioners in this line is huge and the competition is cutthroat."

[Box Out] Gold farmers' pay

Dr Richard Heeks of Manchester University has compiled fascinating research into the gold farmers' life in developing countries. In his report, Current Analysis and Future Research Agenda on "Gold Farming": Real-World Production in Developing Countries for the Virtual Economies of Online Games, he makes the following observations:

• From 2005, He (2005) reports 100 World of Warcraft gold would sell to players for US $10. Of that the wages paid to the gold farmer would be US $1.40. There was thus a more-than-600% income on top of wages to be divided between the gold-farming firm and the broker. Based on the other figures given here, the broker would probably have gotten the lion's share of this.

• From 2006, a Chinese entrepreneur with "over 40" staff reported doing US $11,500 of business each month. If we take 40 as the number of staff, that means per capita productivity of US $3,450 per year. Average staff salaries were US $140 per month. That suggests a 100% overhead on salary costs to cover other costs plus any profits (Honge 2006).

• From 2006, Yee (2006) reports 1,000 World of Warcraft gold would sell to players for US $66, of which US $25 would be paid to the gold farming organisation.

• From 2007, Dibbell (2007) reports a 10-worker Chinese firm turning over US $80,000 per year. In that firm, 100 World of Warcraft gold nets the farmer US $1.25, the firm then sells it on for $3.00, and it is finally sold online for US $8.00.

[Box Out] China and MMORPGs

MMOGs are extremely popular in Asia, for a number of factors. In China, there are over 23 million MMO players, according to sources I spoke to. And there are also a lot of gold sellers, too. "But in China, because the farmers and the gamers live in the same countries, so  the value of their “time” is not so different as the economic levels gap between China and USA or Europe," says Benjamin from SwagVault. "As a result, the profit is far lower. In addition, most of the players are young students and they don’t have too much money. So they are inclined to farming the items and leveling up by themselves or exchange with others on C2C platforms. Last but no least, there are still few Chinese gamers that have online payment tools, like e-banking, credit cards or PayPal. So the market is still by far smaller than USA and Europe. But the situation are changing rapidly. I think China will become the global largest MMOGs market and RMT market in 10 years."

Part I
Part II
Read: Part III
Part IV

This article first appeared on Eurogamer.net

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