Will the Real Virtual Sweatshop Please Stand Up?

The MMO-sweatshop meme is on the march again. Over the weekend MSNBC ran a column that led with an oblique reference to Blacksnow Interactive’s notorious Tijuana gold-farming maquiladora. And though the rest of the column focuses almost exclusively on the fascinating and hardly ever, ever, ever, ever, ever, ever discussed intersection of massively multiplayer games and RL legal systems (“Virtual Worlds Wind Up in Real World’s Courts,” reads the headline), you can bet that when the piece got Slashdotted and BoingBoinged, nobody wanted to talk about anything but Mexican MMORPG peons. And who can blame them? In a single 16-word synopsis, the tale of the Blacksnow sweatshop says more about virtual economies, digital labor, and hypermodern capitalism than 18 months of beardy Terra Novan brain farts combined.

Here’s the problem, though: As far as I know, every reference you’ve ever seen to the Blacksnow sweatshop derives its factual authority from a single, very brief article that ran in Wired two years ago, bearing the byline of yours truly.

And that article, in turn, was based entirely on what I was told by Lee Caldwell, Blacksnow’s “sales director” and a man later fined $10,000 by the FTC for defrauding customers of an online business that preceded Blacksnow. It so happens I still believe his account of Blacksnow’s Tijuana operations; the details he gave me were simply too robust and quirky to even tickle my bullshit detector, and I wouldn’t have published them otherwise. Nonetheless, the greater the weight of significance laid on the Blacksnow story, the more I wonder whether the word of a convicted fraud is quite equal to the burden.

I wouldn’t worry, of course, if there were reliable accounts of other such sweatshops that could pick up the slack. But despite MSNBC’s claim that “[d]igital sweatshops, businesses where Third World laborers play online games 24/7 in order to create virtual goods that can be sold for cash, are… on the rise,” the fact is, Blacksnow’s is the only remotely specific story I know of that fits the bill and stands on record. We hear lively rumors of Chinese adena farmers working out of large-scale, tightly organized commercial operations. And people who should know speak confidently of the existence of similar operations in other games. But unless a convincing first-person or otherwise eyewitness account of some such plantation makes it into print, I fear that sooner or later Snopes will catch up with my beloved MMO-sweatshop meme and declare it an urban legend.

Therefore I issue this challenge: If you are now or ever were an employee, manager, or owner of a Third World industrial MMORPG farming operation (a/k/a sweatshop), stand up and let your story be told. To me, preferably. And on the record, eventually. You will have the thanks of a grateful community of scholars and a shot, if you want it, at being more famous even than the famous MMORPG farmers of Tijuana.


Comments on Will the Real Virtual Sweatshop Please Stand Up?:

Jessica Mulligan says:

Have you talked to IGE? They quite openly discuss their Asian office that farms MMOs. Don't know if it fits your definition of a sweatshop, but it is a place to start.

Posted Feb 8, 2005 10:30:18 AM | link

Edward Castronova says:

I have to admit being rather flippant about the existence of sweatshops myself. And I have been starting to get doubts in my head.

I think if nobody comes forward with credible evidence, I'm going to stop saying they exist. I will, however, continue to point out the economic incentives created by the ability of low wage workers to produce and sell assets that have positive real-world value to high-income consumers.

[WoW fanboidom warning] My low-level characters in World of Warcraft could net about a gold an hour, I'm guessing, based on current in-world prices for raw materials. I'm sure higher level characters could do more. Listings on eBay indicate that on my server, sellers are asking about 25-33 cents (US$) per gold piece, suggesting a potential wage of at least 25 cents an hour, and perhaps as much as $2 or higher for dedicated high-level farming.

Interestingly, however, the eBay listings for my server show not a single successful gold sale in the last two weeks. Not one. Maybe Blizzard is winning the war against gold pharmers.

I'm glad Blizzard's winning, but it puts me out of a job! The absence of actual sales invalidates any effort at valuation. If nothing is transacted, the prices are not genuine expressions of value. They're hopes, not facts. So, forget I said anything.

(But this is a message for all the people out there doing OCRs of in-world auctions and then publishing these as "market data" - unless you get the prices and quantity of actual transactions, you've got nothing at all. The announced, requested, or advertised prices of things have no meaning unless someone actually accepts them. As a result, the prices of things listed on the SWG bazaar or the WoW auction house are not accurate indicators of the state of the market.)

Posted Feb 8, 2005 11:04:31 AM | link

IndyCCTX says:

Jessica, I'm afraid you're a bit mistaken there; I recently read an interview with the IGE head guy where he specifically states that office is customer relations people, not players. I found another article interviewing him saying the same thing, at http://gamesdomain.yahoo.com/feature/60347 so you can check it out for yourself.

In another interview, he talks about the sources of their inventory - http://www.gamespy.com/articles/584/584932p2.html - he also mentioned there that IGE refused to buy from some professional farming groups (if there are indeed sweatshops, they'd belong to that group), and those farmers started telling everyone in game that they worked for IGE in revenge. (The start of the interview is here: http://www.gamespy.com/articles/584/584932p1.html ).

Posted Feb 8, 2005 11:19:29 AM | link

Zonk says:

re: Edward's Comments

That is why, despite the game that surrounds it having questionable fun value, Final Fantasy XI's auction house is superior to SWGs and WoWs.

The ability to view the previous purchase prices of goods actually sold is invaluable both as a customer and as a researcher.

Posted Feb 8, 2005 11:28:48 AM | link

Lee Delarm says:

There is the confirmed existance of Adena Incorperated, who farms gold in at least 2 games of which I know, WoW and Lineage2. Both are quite evident, WoW having certain characters on every server with some crazy hours (24/7) and Lineage 2 is pretty obvious with the same bots. One infamous character working for them in particular is named "Loly" (named the same in all games). This is NOT a myth, I have personally seen this person in Lineage 2 and WoW doing the same activity (farming gold) and have heard reports of others.

Loly is controlled by a group of players who rotate on 8 hour shifts (assumably Korea). They are paid (according to *gasp* third party interviews) about 5000 Won a day ($5 US) for their work and they must meet a certain quota in order to get this pay. I have friends in and from Korea and they verify this is enough to scrape a living by on, not a very good one, but a living.

In the game Lineage 2 (which has FULL pvp everywhere) there are reports of players attempting to level or farm gold in the same areas that players such as Loly are in. These reports indicate that groups of such "farmers" gang up together and kill would be ACTUAL players to make sure they meet quotas. This may seem counter productive but if you think about it, they are payed based on the fact they farm money, not the number of players who play the game or the enjoyment of others.

The company Adena Inc is very real, I believe they started out in China and have multiple "bases of operation" situated in various places. You can google them for more information.

Posted Feb 8, 2005 11:41:37 AM | link

Thabor says:


"I have friends in and from Korea and they verify this is enough to scrape a living by on, not a very good one, but a living."

That seems rather doubtful to me.. Having been to Korean in September, prices for goods there aren't greatly lower than they are here. Just buying some juice at the neighborhood PC-Bang will cost you 2000 won.

Posted Feb 8, 2005 12:26:57 PM | link

Staarkhand says:

Sorry to get off topic here, but Ted, have you experimented with the Auctioneer UI mod?

http://norgs.internutter.org/auctioneer.htm

It's not a final solution, but can help with getting a grasp of what things are really going for in AH. Strictly in-game economics here, but possibly of interest.

More on track, in my experience the average gamer will either have never heard of "eBaying" (as secondary markets are inaccurately lumped), or accept currency farming as unassailable fact. The aforementioned "Loly" and others being on 24/7 on multiple servers, always in the same zone, is sufficient evidence for most.

Posted Feb 8, 2005 12:39:37 PM | link

Matt Mihaly says:

Edward wrote:

I think if nobody comes forward with credible evidence, I'm going to stop saying they exist.

Shouldn't credible evidence be a prerequisite of that belief to begin with?

--matt

Posted Feb 8, 2005 1:11:16 PM | link

Brandon Checketts says:

I can confirm the existence of a sweat shop in China. I run www.swg-bank.com and one of my suppliers currently farms credits in SWG, and will soon in EQ2. They regularly have tens of millions of credits available on most servers. The group seems to be fairly organized, but I'm not certain that they are an official company, because my payments go to (what appears to be) a personal PayPal account. I'll ask my contact some more information about their operations when I speak with him tonight. (Any specifics you'd liike to know? Please e-mail me and I'll see what I can do)

I'm certain that there are a number of organizations farming gold in WoW. During the beta I was selling gold on the three beta servers, and I received about a dozen emails from different people who were planning on farming WoW gold and were looking for a reseller. Also, regarding the sales of WoW gold, my IGE Affiliate program generated quite a few sales during January ... so I know people are buying. eBay is not a good place to look for WoW sales data because the sellers' accounts get banned, and the completed auctions are removed.

Posted Feb 8, 2005 1:22:49 PM | link

Edward Castronova says:

Staarkhand> Ted, have you experimented with the Auctioneer UI mod?

Nope, had not seen that. Too cool. Put it on the "Give to an interested student or do it myself when I get some time, like A.D. 2015" pile.

Posted Feb 8, 2005 1:36:54 PM | link

Edward Castronova says:

Matt> Shouldn't credible evidence be a prerequisite of that belief to begin with?

Julian's research and the written evidence that emerged surrounding the Blacksnow people were sufficient evidence for me, at first. At first, I also assumed that IGE was an admitted sweatshop, but now we can't say that (given their denial, we'd need other evidence). The failure of more cases to emerge has given me doubts.

I try to make a reasonable judgement based on current information, then update as information changes. I guess you could argue it was a leap to assume farming from the beginning, but again, at a conceptual (data-free) level, isn't farming way more plausible than not-farming? Look at the incentives. I think the burden of empirical proof has to be on the no-farming side. And what's happening is, that side of the question is indeed becoming empirically more persuasive (subject to the possibility that reports made in this thread may change things again).

Posted Feb 8, 2005 1:42:30 PM | link

William Huber says:

Some Chinese-literate FFXI players engage with Chinese 'gil farmers' on a regular basis. This thread on Alla Khazam's FFXI forum is one case.

There's an interesting border being created by the player community anger at for-profit resource farming - the differentials in the value of money between one region and another leads to a new kind of "border patrol": players do not want their play to be made equivalent to someone else's work.

Posted Feb 8, 2005 1:54:26 PM | link

Edward Castronova says:

William> There's an interesting border being created by the player community anger at for-profit resource farming - the differentials in the value of money between one region and another leads to a new kind of "border patrol": players do not want their play to be made equivalent to someone else's work.

Very insightful. I am telling you, PhD thesis questions are falling out of this area like, umm, what's a good metaphor...... like gin from a fourth martini?

Posted Feb 8, 2005 2:09:22 PM | link

William Huber says:

By the way, I am a little uncertain about the characterization of "sweat shop." In a sense, that's a term that may be getting some play in order to control the debate a bit - to suggest a top-down exploitation by sinister profiteers. The conversation described at the Allakhazam thread, in which it turns out that the farmer was also the 22-year old "boss" of the operation - reminded me of what I might expect a Tijuana-based operation to look like: an activity in the informal economy, perhaps in an Internet cafe, after school hours, coordinated among friends and acquaintances. A far cry from the real sweat-shops and maquiladoras of Tijuana. By using the term "sweat shop" as a buzzword, it rings the "cheap labor competitor" alarm, as in off-shoring. One friend of mine ended up being the liason between her US employer and a group of employees based in India, and was surprised to find working conditions that were, in some respects, better than those of the US workers whom they had replaced. This was, of course, strictly in the IT sector. Previously, she had expected, as she put it, a "sweat shop."

Posted Feb 8, 2005 2:34:31 PM | link

Dave Rickey says:

I had a long conversation with a Russian gentleman at E3 last year who claimed that he had 20 or so people working for him farming in EQ and DAoC, they sold their gains to him and he passed them on to larger (mostly american-based)organizations. What he described of the working conditions was pretty decent, really, at least relative to those normal for recent college graduates in Russia (which is how he described most of the people he dealt with). They mostly worked from home or net-cafes, and made as much or slightly more than they could expect to in more traditional employment (if they could have gotten it, he said the unemployment in his home city exceeded 25%). And he made enough to have shown up in LA to check out WoW and EQ2.

And that's really where it all stems from, the few dollars an hour a farmer can make may be starvation wages in the US and western Europe, but in much of eastern Europe and Asia it's a handsome sum. One that can support a complex business structure, in many cases. Given that, it would be surprising if there *wasn't* a lot of gold farming in these countries. It's no more surprising than the fact that many US game companies are quietly contracting with off-shore companies for art work (because the $100+/hour rates of most US firms can be undercut by a factor of 3 or 4, and still leave handsome wages and profits).

But I agree that it's time for some old-fashioned journalistic leg-work. Given how apparently wide-spread the practice is, it shouldn't be hard to track down a few actual farmers, and interview them.

--Dave

Posted Feb 8, 2005 3:00:47 PM | link

Timothy Burke says:

I think this is a general problem in the empirical social sciences. You can say, for example, that diamonds continue to be exchanged for weapons in parts of Africa, and that these diamonds are obtained through insurgents' controlling the labor (sometimes in borderline enslavement) of people in territories where they operate. But how do we know this? There are no convincing data sets that prove it. It's very hard for journalists to gather more than indirect evidence to this effect. There are very powerful economic interests that would like to claim that new monitoring instruments and controls have eliminated this traffic.

There are so many things that are important to understanding general global systems and highly local systems that are in any conventional sense unknowable in a satisfying or comprehensive way. The usual academic strategy in the face of that is to turn away from the problem entirely, or to use highly indirect and speculative methodologies to measure or describe illegal or illicit or secret activity, generally producing data that becomes very authoritative without really deserving to be so. But we turn to such data because we're desperate to describe processes whose signs of existence are all around us.

So take organized pharming by (presumably) low-wage employees. In WoW, what's the evidence? Well, you can go to Azshara or several other zones in particular places and find characters who almost invariably fit a particular pattern:

1) they're there all the time
2) they have gear which is wildly substandard for their level, and in particular lack gear that you obtain through quests
3) they will not reply to any attempt to talk to them
4) they often spam-challenge other players to duels if those players remain in the same area as them for any length of time (without ever saying anything about it)
5) The same characters sell large numbers of items on the Auction House for prices that are just under any other sellers in the case of leather or other routine drops, while selling blue and purple items at very high gold prices

Something's going on here. But there's no way to quantify it, or get beyond the apparent surface to the real-world practices. It could just be a single person pharming, it could be any number of things. I can't really think of any strategy outside of a lucky break by a journalist to go beyond a suggestive surface. It is easy to see, however, why many people find the "sweatshop" concept a seductively plausible explanation for what looks like extremely well-coordinated pharming.

Posted Feb 8, 2005 3:25:19 PM | link

Bill O'Neill says:

Edward wrote:

I'm glad Blizzard's winning, but it puts me out of a job!

God, I hope so. (Which begs the question: Does Edwards research encourage more people to sell virtual property for real cash and thereby contribute to harming the game(s) he researches/plays?)

This is a topic near and dear to me. When I quite playing EQ, I walked away from an account that had $3000 (at the going market rate) in gold on one character alone. Gave the money and equipment to a friend. Why? I play games to have fun, for the challenge. As a developer, i feel even more strongly about it.

Players get rather annoyed when they end up competing for game resources against a farmers who are in it for the money. Since the player is in their way, the farmers typically do whatever it takes to get the player to move on, ruining the game play experience for the other players (read paying customers). I perceive that the profit from farmers and accounts using bots is insignificant compared to the resources they use (bandwidth, etc.) and support cost for other customers affected by them (or those that have simply quit).
They also accelerate and contribute to mudflation.

We (as developers) looked at selling virtual items directly for cash ourselves. Although it's a nice way to make money, I believe it has two important drawbacks. We perceived that players are not happy in other games where items and accounts are sold by 3rd parties. We were also concerned of the definition of "virtual property". If the game developers themselves are selling items, then we are admitting that items have real world value. If a customer then accidentally loses (or deletes) their BFG sword and want a refund... - it's a customer service nightmare (and legal issue) that we'd simply rather avoid.

So, this seems to put me in agreement with Blizzard. A strong EULA and TOS, squashing 3rd party sales wherever they are found. As a developer, if I have to choose between losing a farmer or a player as a customer, bye bye farmer. Actually, not a choice, just simply bye bye farmers period whenever I find them. Our current policy is that virtual property may only be sold/traded using in game mechanics for in game money or items. Selling of accounts, in game items or gold/silver for real world cash will cause an account to be banned when we discover it. That includes the buyer (the demand side).

The truth of 24/7 MMO-sweatshops (organized farmers) is irrelevant. Since it is an undesirable possibility, it should be addressed as if it might be true. The issue concerns me enough that when we eventually ( this decade?) release our game, we may limit sales by location, say US and Canada only and allow/block connections based on geographical location. However, this presents the problem of routing through an allowed ip address range or blocking US service personal stationed overseas - still working on these. Of course, this doesn't help against the UO farmer, but one problem at a time.

Finally, part of dealing with this is understanding the root cause - some people have more money than time to play. The game needs to be enjoyable for a wide range of customers (does it really?) If a casual or new player isn't having fun, they might consider buying items or an account. Since we don't want that, we need to address those customer issues. But if we don't (or fail) and they don't like it, they are welcome to play someplace else. I don't want to scare/bully customers away, but no game can cater to everyone. This isn't meant to be a "my game, my ball" issue, just that if a customer doesn't like the rules, why are they playing the game?

Bill

P.S. If Make-A-Wish ever wants a donation of an account, items or gold - they need only ask.

Posted Feb 8, 2005 3:44:21 PM | link

Dave Rickey says:

The problem is that what the players *say* about eBay, and what they actually do, is a lot like porn: If you believed what people say, then only a handful of degenerates are responsible for the entire market. Nearly every male lies about his consumption of pornography, and many players lie about their involvement in the gray market.

These millions of dollars that are being measured by Ted and Julian are coming from *somewhere*. There are a *lot* of people out there buying these items, these accounts, this virtual gold. Either a handful of dot-commers are blowing their bubble payoff on virtual stuff, or many tens of thousands of people are spending a few hundred each.

We cannot just wish this problem away, and Blizzard is going to find (as SOE has found) that pushing the trade off eBay is just going to make it move elsewhere. The position of organized farmers and brokers is actually *strengthened* by taking eBay out of the equation.

--Dave

Posted Feb 8, 2005 4:08:05 PM | link

Thabor says:

"Finally, part of dealing with this is understanding the root cause - some people have more money than time to play."


That may be close to the truth, but its not exactly correct. You are trying to fight fundamental economic factors here, and you are probably going to lose in the long run. You would have to eliminate the demand for in game commodities to eliminate farming. That same demand though is critical to maintaining the longevity of your game. Lets face it, the end game is primarily about accumulation of items. Unless you are willing to eliminate trade inside the system you won't be able to eliminate trade outside of it.

Posted Feb 8, 2005 4:34:34 PM | link

Ola Fosheim Grøstad says:

What if the system guarantees that all trades are fair? I.e. of same value.

(WoW is too much of a virgin yet... wait 1-2 years...)

Posted Feb 8, 2005 5:01:20 PM | link

Staarkhand says:

"Unless you are willing to eliminate trade inside the system you won't be able to eliminate trade outside of it."

Not implying that you were, but: let's not make the mistake of proposing this as the reductio ad absurdum of curbing demand for secondary markets. That is essentially what Blizzard has done by making most high-end loot soulbound (untradeable) - you have to be there when it drops. It's balanced by making said drops more attainable (instances are the antithesis of rare spawns) so players aren't reliant on the economy to have a reasonable chance of outfitting themselves as they choose - they're simply reliant on other players for groups and a moderate amount of time invested.

Past lvl 50 WoW really has no internal market outside of a few epic items which are Bind on Equip (these will phase out as well, most epics are primarily for twinks), enchants (pretty low cost), and crafted items and materials. And folks don't seem to mind, although real end-game content is still needed to occupy the masses.

Posted Feb 8, 2005 5:50:03 PM | link

Jessica Mulligan says:

>"Jessica, I'm afraid you're a bit mistaken there; I recently read an interview with the IGE head guy where he specifically states that office is customer relations people, not players."

I stand corrected.

Posted Feb 8, 2005 6:15:31 PM | link

Thabor says:

"That is essentially what Blizzard has done by making most high-end loot soulbound (untradeable) - you have to be there when it drops."

Right they have limited the ability to trade which limits the secondary market. Depending on the implementation it could just be a change of mechanism and degree. Instead of paying directly for item you pay for the assitance in attaining the drop. Level limitations on items can serve a similar purpose by reducing the market.


It is certainly possible to do, I'm just claiming the the corresponding elimination of in game trade is detrimental.


"What if the system guarantees that all trades are fair? I.e. of same value."

I'm not sure how you could.. The valuation involves opportunity cost of real time versus real money. Its a very individual thing.

Probably the best you could do is limit the value.. Instancing may help with that by decreasing the ability to monopolize resources. Since there is still a rarity to it though. I could imagine it being worth farming.

Hypothetically take EQ2 where access is restricted to a periodic time frame per guild.. A farmer would want to cultivate a bunch of characters with their own guilds registered, and a stable of characters they could switch around for executing the raids.. With enough of an investment they could be raiding high end encounters several times a day instead of the intended limit of once a week.

Posted Feb 8, 2005 6:49:34 PM | link

Bala Pillai says:

Great discussion -- thanks all. I'm not a gamer but am into games, in particular Serious Games, in exponentially reducing change management costs and in increasing value exchange globally. Including creating opportunities in desolate low- economic-opportunities zones in the world. I see these being milestones on our path towards instantaneous synchronization of minds in halls without walls/mind colonies.

I see what is being mislabeled here as "sweat-shop labour" as the entry point for many in the developing world to be exposed in a fun way to connectedness and value-exchange.

While I see the arguments put forth above that enabling pharmed trading might reduce the experience of the game to many players, I would suggest that there is room for diversity -- let there be some who create games that weaves in this pharming dynamic and whatever dynamic that in turn spawns.

Posted Feb 8, 2005 7:22:00 PM | link

Petrus says:

The surely extremely dubious legal nature of such operations leads me to be rather skeptical that even assuming they do exist, an owner of one of these "sweatshops" would be willing to stand up and admit such. He would at the very least be running the risk of severe reprimand by international trade and/or human rights organisations, if it were to become common knowledge. It would almost be akin in my mind to somebody from central or south America making a casual and public admission that they made several million dollars from the cultivation/distribution of cocaine last year...not really very intelligent.

Posted Feb 8, 2005 10:35:01 PM | link

magicback says:

The operations are more like a Movie/Music/Software piracy ring rather than an sweatshops. There was a recent Wire article about how the piracy ring works, and in this case the food chain is similar. The Blacksnow era of pharming there were few willing freelancers, now there are plently of feelancers willing to organize. And they want to maintain a low profile.

Posted Feb 9, 2005 1:07:11 AM | link

magicback says:

Oh, forgot the main point: there are few pharming sweatshops anymore. You're more likely to see bot farms. Automation is now cheaper than off-shoring.

Posted Feb 9, 2005 1:51:57 AM | link

William Huber says:

One reason that a true sweatshop scenario is unlikely for farming, is that someone with the literacy and technical skills to do this sort of work should have access to more job alternatives than someone without education or highly marketable skills. Those in the garment industry, those in the real maquilas, are more likely to be in this scenario. Someone sitting on a networked computer, able to send messages freely to hundreds of people in real time, is not.

We can look at NGOs like Sweatshop Watch to get an impression of what constitutes a sweatshop and what its causes and consequences are. Important note: sweatshops continue to exist in the US and other parts of the developed world.

Posted Feb 9, 2005 1:53:42 AM | link

Ola Fosheim Grøstad says:

Thabor> Probably the best you could do is limit the value..

You can limit both value and transactions. Designers have more control over these issues than they admit, if they were willing to change the design... (they are not :)

Posted Feb 9, 2005 7:41:12 AM | link

Edward Castronova says:

There's no easy answer. I lean toward implenting a small open economy model, where domestic prices are basically set by the world price. The world price is beyond the local market's control, so that goods are imported or exported depending on whether the local price would be above or below (resp.) the world price. In effect, the dev = the world market, and stands willing to buy or sell any item at a fixed price in unlimited quantities. The rarity of an item then doesn't depend on the drop rate, only on the price. And you could make the price system fluctuate in somewhat predictable ways in response to players actions too, this doesn't have to be un-fun. But it gives the devs a clear valuation on each item, which then allows you to, say, put a bound on allowable charity transactions. You can give somebody 1 gold, but not 100 gold, nor 5 items worth 100 gold. If you exceed those bounds, welcome to the world of the Gift Tax. In RL, gift taxes are used to prevent abuses that arise from the free transfer of wealth. (I.e. say my nephew is in a low income tax bracket, I give him $100K, let him pay income tax and return money to me, my overall income tax burden goes down.) The problem in RL is, as here, the problem of defining what constitutes a "gift", legal "charity" and so on. Same problem in synthetic worlds. Every pharm transaction ends in what seems to be charity for someone; set bounds on the charity and the problem is controlled. To set bounds, you need to have a firm grasp of the value of things. So instead of controlling the market through drop rates, control it through world prices. You, as dev, get more control over what's 'rare' versus 'common' in your world (no blue items that everybody has), and you also gets this ability to control pharming at the demand side.

Blah, too complex for this hour.

Posted Feb 9, 2005 8:19:35 AM | link

Richard Bartle says:

Ola Fosheim Grøstad>Designers have more control over these issues than they admit, if they were willing to change the design... (they are not :)

Why should they compromise their designs because some people won't play by the rules? We don't change the laws of soccer because some referee fixed games.

Richard

Posted Feb 9, 2005 9:18:57 AM | link

Richard Bartle says:

Edward Castronova>You, as dev, get more control over what's 'rare' versus 'common' in your world (no blue items that everybody has), and you also gets this ability to control pharming at the demand side

This solution doesn't work for the case where people don't buy characters or accounts rather than goods. However, that problem is easily fixed by simply not allowing characters or accounts to be transferred between individuals (because the developer has to be complicit in this for it to work).

Richard

Posted Feb 9, 2005 9:29:48 AM | link

Ola Fosheim Grøstad says:

I think you also can reduce e-baying by designing in social mechanisms.

What if the gameworld consists of planets with a population of 400 players each, players are randomly assigned to planets. Trade between planets is impossible. All trades are logged, and logs are open to the public in a format that can be queried. Each planet has an elected police force which can confiscate resources and throw players off the planet whenever they like, but having a healthy population is necessary to keep the production up. Planets can be "destroyed" by other planets and pirates, so 70% of all production should be invested into public infra-structure and defense systems. A player will only be able to aggregate (limited) wealth after having made heavy investments in the public infrastructure.

Maybe it would still be possible to e-bay, but if the players of a planet dislike e-baying it would probably be easy to identify e-bayers, take their stuff and kick them out.

Posted Feb 9, 2005 10:23:52 AM | link

Ola Fosheim Grøstad says:

Richard Bartle> Why should they compromise their designs because some people won't play by the rules?

They don't have to, but they already do. Just think about protocols and clients.

Posted Feb 9, 2005 10:34:04 AM | link

Anony Mouse says:

I'm a MMORPG newbie (just got EQ2 for chrismas). I've followed some of the pharming threads with interest. I've never seen the activities described, but EQ2 seems to have a very sluggish economy so maybe the pharmers just don't get a high enough return on their time-investment.

I'm wondering how much in-game forensic work the gaming companies do. Players who participate in many asymetrical trades would be a good starting point. Sure, they could just be generous people (somebody once gave me an Adept I spell just because I showed good group etiquitte), but chances are at least some are delivery boys for a pharming company. Follow the delivery boys to the consolidators (the chars that accumulate the in-game wealth for later distribution), follow the consolidators to the pharmers, and follow the pharmers to the pharming grounds. Watch the pharming grounds for protectors (chars that keep the pharmers safe and use griefer-tactics to keep legit players out of rich pharming grounds). Follow the delivery boys to the other customers, follow the other customers to other delivery boys, etc etc etc. Eventually, you have the entire network of customers, dealers, and pharmers and then wham! mass bannination ensues. Granted, the pharmers will pick right up with new entry-level chars, but you've managed to cost them thousands of dollars in RL funds not to mention the time required to build the new accounts up to usable levels. More importantly, if enough customers get their accounts banned, word will spread and the practice will trickle off. In other words, treat the secondary market dealers like in-game organized crime rings. In terms of in-game "laws," that's very much what they are.

Hmm. Perhaps this would prompt a move to a more service-based economy. I could envision an MMORPG where the secondary market on items and geld is successfully throttled leading to companies like IGE selling "escort services." Lost that shard right under the uber-mob's spawnpoint? We'll send a L99 superdude out who will walk you right to it. Need a capable group that's guaranteed to do YOUR quests, stick with you until YOU level, protect YOUR character (to the "death" if necessary)? Want to go on a tour of the toughest levels, safe from all the skeery monsters? Call us- for just [insert amount here] RL-dollars per hour, we'll provide you with 1-2..5... as many capable players as you need to safely and quickly accomplish your goals. Heck, the "pservice" company doesn't need to have any game licenses at all. They can just be brokers, paying people willing to be "pservice" characters a little and charging people who need the "pservices" a lot. Heck, I'd shepherd a newbie around for a couple of bucks an hour. For fifty cents more, I'd provide pleasant conversation. I'm pretty sure I'd draw the line at sharing a room at the virtual Inn, but buy me a couple of Ogre Ales and who knows?

Posted Feb 9, 2005 10:35:31 AM | link

It's me again says:

Having played EQ for many years, I can't say that I have ever met a "group" of farmers. But I do personally know an individual who 3-boxes (three accounts played at the same time). He is able to clear about $150-200/week selling gold to IGE or others like them. If one guy can do this, just think what a team of 20-30 or more could do. If you don't think someone out there has figured this out and is running some kind of sweatshop, you are living in a virtual dream world. If there is REAL money to be made, someone is out there doing it. And they are probably lining up to play games and get paid for it instead of sweating in the fields over rice paddys.

Posted Feb 9, 2005 11:24:21 AM | link

Marshall Astor says:

From my years in MMO's most signifigantly in SWG, I never saw what appeared to be serious manual farming, but I did see a lot of AFK-bot actvity, usually farming low level NPC's for rare loots, which could be translated to millions of credits quickly. I did meet several individuals who apparently worked freelance for online sites that sold credits and accounts. I think they were mainly involved in power leveling services or were running mules to transfer credits. An interesting question would be: is your power leveler working as a mule in a credit transfer scheme, putting the status of your account at risk?

It was ridiculously easy to bot yourself in SWG, and it made powerleveling or credit/item farming super easy. I wrote macros to autolevel all of the melee and ranged professions in the game, and I could powerlevel or item farm with the minimum of observation, checking on the computer maybe every 30 minutes or so. I think that botting is more real than the idea of manual sweatshops in low wage countries. An individual with a couple of big monitors, kvm switch and 30 boxes could easily farm the economy in SWG, even now.

You could easily run two instances of SWG on the same machine, and /follow commands made it very easy to pair up your areattack bot with a friendly bot-doctor. Iactually contemplated doing something like this at one point to make my powerleveling more trouble free, but given the near invulnerability of the toon I was using, it wasn't even neccesary to pair up like that. I could see a single individual running 30 instances of SWG on 10 high end boxes, with each instance running in a windowed mode, for easy observation, like monitoring a security camera array. You wouldn't be that obvious as a major farmer, either. By running the toons on seperate servers, you woulnd't be attracting that much attention in any one place. No real expertise, or capital investment needed, either.

Also, I'd be willing to make the argument, that when excessive grinding needs develop in a game (SWG example: holocrons, Jedi, mind fire pike farming), then that will cause the population to become educated about botting, and through that process, virtual crime (in the form of bots that are operated for real world financial gain) finds a healthy incubator. Perhaps that dynamic needs to be factored into design desicions at an early stage.

During the height of pike farming and the fire pike auction market in SWG, I was able to finance all of my ingame activities, by just consulting on the value of pikes at auction. I would, on a regular basis, go into houses that had 100's of high end pikes with values into the 100's of millions and spend an hour or two typing out lists of starting prices and expected final prices. I was well compensated for this service, and I saw no evidence that the person was using their ingame fortune for any purpose, so I would presume that it was being used to make or supplement a real world income.

Posted Feb 9, 2005 11:28:40 AM | link

Nik Davidson says:

The resistance in the development community to this sort of practice is at times confusing to me. In my mind, this practice and the willingness of players to consume the fruits of it is proof positive that we have created something of value! Rejoice!

Rather than resist, obviate or co-opt. Behavior is a form of communication. The existance of a gold farming sweatshop communicates to the developer that play time has real monetary value to a player. The vocal opposition of many in the player community communicates that achievement has an emotional value that can be "cheapened" by the perception that peers can bypass the effort to achieve.

The evolutionary paths that exist are fairly clear - games can eliminate the means to bypass, by devaluing transferable currency and commodities, taking the "bind on pickup" to a more extreme implementation. Games can move toward a more skill-based, and less time-based advancement system. (ex: Puzzle Pirates) Alternatively, companies can co-opt the process, and take on the role of the IGEs of the world. Micropayment in-game gold purchases, item purchases, etc., are already staples of several Chinese and Korean MMPs. Designing games to support alternative business models may leave a bitter taste in a design purist's mouth, but c'est la vie.

Posted Feb 9, 2005 11:59:24 AM | link

Jeremy Neal Kelly says:

Edward Castronova wrote:

> In effect, the dev = the world market, and stands willing to
> buy or sell any item at a fixed price in unlimited quantities.

> You can give somebody 1 gold, but not 100 gold, nor 5 items
> worth 100 gold. If you exceed those bounds, welcome to the
> world of the Gift Tax.

I assume the developer is willing to trade with game currency (i.e., ‘gold’), rather than real-world money. This creates a sort of ‘gold standard’ for items within and without the game, but is such a standard necessary? Simply requiring that player transactions balance would seem to have the effect you desire.

> To set bounds, you need to have a firm grasp of the value of
> things. So instead of controlling the market through drop
> rates, control it through world prices.

Just to clarify, neither of the mechanisms you propose here (the gold standard, player trade regulation) control the ‘value’ of gold or items — that is subjective to the players. At best, they can only set relative prices. And in fact, that is my greatest concern with this system, and with Randy Farmer’s ‘KidTrade’ proposal, which it most resembles. By denying players the ability to trade according to their individual preferences, doesn’t it also limit their ability to (in the most general sense) ‘play’? Such restrictions might be appropriate for children’s games, but are they right for MMORPG?

Posted Feb 9, 2005 11:59:54 AM | link

Cory Ondrejka says:

>>"Jessica, I'm afraid you're a bit mistaken there; I recently read an interview with the IGE head guy where he specifically states that office is customer relations people, not players."

> I stand corrected.

Steve Salyer says that they have "never done that", yet we know that IGE used to offer "power leveling" services (although they don't know) so while they may not do it now, I'm afraid that I'm going to go with Jessica on this one.

"Blizzard is winning"

Do we have evidence of this other than Blizzard saying they're going to stop it? IGE and eBay have plenty of WoW gold for sale.

Posted Feb 9, 2005 12:12:02 PM | link

Thabor says:

"Why should they compromise their designs because some people won't play by the rules?"

Because the only rules players are obligated to follow are those that are part of the design. Designs have evolved to deal with inflation, twinking, player-killing, kill stealing, and any other issue that is percieved as problem activity. Why would this be any different? Without changing the design you are left spending lots of resources trying to police it, or you end up accepting it.

Saying something is against the rules has little to no effect when the design supports the behavior. Expect the players to exercise the maximum amount of freedom that the system allows.

To try and connect back to the real topic.. I think magicback is dead on. Farming may have started as small groups of people, but its evolved some since then. I think you will see more and more committed players engage in freelance farming to pay for their gaming time.

For a player that already heavily involved with in game economics and trade its a very small step to join in the secondary market in the real world. Like it or not these games don't operate in isolation from real world systems, they operate in conjuction with them.

Posted Feb 9, 2005 1:16:31 PM | link

Lee Delarm says:

Cory>Do we have evidence of this other than Blizzard saying they're going to stop it? IGE and eBay have plenty of WoW gold for sale.

By tracking some of the sales you can watch gold go up and down, sometimes within days, sometimes within hours, sometimes not at all. For some reason or other, the auctions with the clause "I'm selling my time" or similar claims thereof don't seem to get taken off, perhaps I was just missing the ones they did though...any confirmation? Who has hammer? :)

Posted Feb 9, 2005 1:30:26 PM | link

Lee Delarm says:

To go off topic a bit, I'll agree with Thabor and say that the only way a player will follow a set of rules is if those rules are coded in such a way that the player MUST follow them (i.e. bind on pickup) or that the alternative is disastrous.

I believe the route to go is a mix of both, which is somewhat implemented in some games, but mostly it's usually pretty lax on making certain decisions devastating to the player.

Ninja looting is a good example. This is when a character loots a presumably rare or valuable item after a long trek or hard boss battle while grouped with other players. This is about the only non-coded example that currently exists that I could even think of. In this case, a farmer of rare lewts would not find this a viable way of farming because most likely they would be kicked from said group and blacklisted, never to get another group again, much less another group for that same item (pharming it).

This example requires that the game is built around grouping however, something which many games nowadays tend to avoid REQUIRING because they're trying to fit into everyone's niche game (broader audience = more money). I'm sure there are more examples out there which could end the pharming of items and gold without hardcoding the penalties in or even having GM intervention. Of course, we all know relying entirely on the player can be a bad idea, so there has to be some incentive for them to follow certain rules (to avoid putting a nodrop/notrade tag on everything).

What do you think, can this be done?

Posted Feb 9, 2005 1:41:54 PM | link

Will Leverett says:

I would challenge anyone like IGE to make good on their public claim that they do not use or engage with any "supplier" who uses cheats or exploits, and make trasparent their details behind each of the transactions with "suppliers" with all games.

This claim makes for good PR, but at this point, that's all that it is. Our evidence indicates that exploitation is rule of secondary market trade, not the exception. This lackadaisical attittude is irresponsible and negligent, and only sponsors rampant cheating in the games they "support".

I would additionally call them out to actually work with developers who want their involvement, and that they respect the wishes of those who do not.

Regrettably, neither will happen, because at this time it seems as if these companies are completely content being parasitic enterprises working in a completely unregulated environment. Quite honestly, I'm sure they'd rather not be accountable for anything.

As far as the actual operations are concerned, there have been several contacts with people who allege they are within the industry. Once such incident was when we received a mail claiming to be a disgruntled former worker in such a sweatshop. He claimed that the "boss" of his shift has not paid him in several weeks, and that basically he was turning over detailed information on the accounts and characters used by this company, as well as detailing some previously unknown exploits that they used to accrue items and currency in the game.

Whether or not his story (or the any other like it) is true... I don't know. But his info was 100% accurate, and it led to one of the larger sweeps of cheaters in the game, and granted us insight on how to handle and fix some of the more nefarious exploits in the game.

Posted Feb 9, 2005 1:44:17 PM | link

Edward Castronova says:

Aha. This story seems pretty credible to me.

Posted Feb 9, 2005 1:54:23 PM | link

Marshall Astor says:

Regarding IGE's participation in online gaming. I found a long post on the WoW UI customisations board that indicates that thottbot.com is owned by a company that IGE just aquired, and is hosted on a server they own. Presuming that this is accurate information of course, it might be of interest to those of us studying and observing these things.

I'd post a linky but I don't think I have that privledge on this board so here is the text link if it is of any use:

http://forums.worldofwarcraft.com/thread.aspx?fn=wow-interface-customization&t=51267&p=1

Posted Feb 9, 2005 1:58:26 PM | link

Average Joe says:

It wasn't very long ago that the MP3 became mainstream. People love MP3's for a lot of different reasons; they're good quality, easy to come by, replaceable.

Soon the MP3 started to become popular and file swapping services exploded.
The Recording Industry caught on and was outraged, this MP3 thing is completely different than anything they had ever done before, and they convinced the courts it was costing them money.

Flash forward just a year or two - I saw a Napster commercial on the super bowl. Ipods were one of the more popular Xmas gifts this past year.

What happened?
There was a demand from the consumer.
Some computer wise folks found a way to meet the demand, and make a few bucks.
Big Business caught on and due to fear of lost profits, declared ware on the aforementioned entrepreneurs.
Big Business figured out how to make a buck off of the existing consumer demand.
MP3's are now widely available for a relatively small fee.


It seems to me that this same cycle is applying to the Virtual Items for sale industry right now. In fact, we are in the "Big Business goes after the enterprising...."

Common sense tells me that it will only be a matter of time until Big Business catches on. Sorry to the developers who are perusing this, but you may as well brace yourselves for the day the marketing guy rushes into the office exclaiming that he has found a way to make even more money off of the game.

Posted Feb 9, 2005 3:15:19 PM | link

Jeremy Neal Kelly says:

I have no idea whether firms (to choose a less loaded term than ‘sweatshops’) are significant suppliers in this market, but it sounds like the evidence in favor of this claim is mostly anecdotal. So here’s another perspective. Theoretically, firms exist because they can produce certain goods at lower cost than individuals. Is that the case here?

In many industries, start-up costs give firms a great advantage, but what does it cost to enter this market? For players (who already have computers and internet access) it is close to nothing. This seems to argue against the existence of firms in areas where MMORPG are actually ‘played’ (in the traditional sense), and for the creation of many small suppliers.

On the other hand, most people agree that wage differentials largely drive this phenomenon. This suggests that firms might form in poorer countries where wages are low, and farming capital (i.e., computer and broadband connection) are (for ordinary workers) relatively expensive. But is it that simple? Leaving aside botting and exploits, the cost of producing some item is the opportunity cost of the player’s time, less the benefit of any ‘fun’ they had while producing it. The time opportunity cost of workers in poor countries may be lower, but it seems unlikely that such workers would enjoy any part of this production. Ordinary players, by contrast, do enjoy at least some of it. So production costs may not be as different as they seem.

I can think of other, lesser advantages that might accrue to firms, and I imagine that some firm, somewhere, is trying to make this work. But I wonder if it’s actually such a good business model?

Posted Feb 9, 2005 3:31:02 PM | link

Brandon Checketts says:

It's a little difficult to generate some nubers, because I'm sure that not everybody agrees on exactly what characteristics a pharmer has, but they probably include some or all of the following:

- Playing a lot
- Having multiple characters or accounts
- Selling to the secondary market
- Macroing / using Bots
- Hiring Employees
- Using exploits
- Disrupting other players

Consider a player that runs a successful in-game business. He is able to accumulate significant in-game wealth by playing the game. I don't think most people would consider this player a farmer. Does he become a farmer if he sells his in-game assets on the external market? What if he is a merchant that makes the game world a better place? (ie: sells something that the player population wants). In my experience, this is where the majority of the currency for sale in the external markets come from.

Here are some real numbers from purchases made for my own operation for this year so far. I've categorized these as well as I can based on information that I had available during the transaction.

Self-proclaimed, large farmer:   24%
Guys who farm on one server:   16%
Players leaving the game:   23%
Smaller players, trying to earn a buck:   37%

Posted Feb 9, 2005 5:04:36 PM | link

Adam Miller says:

My impression is that the mental image of large, highly-organized sweatshops with rows of PCs and folks farming gold 24x7 is not accurate.

I bet the reality is more like large numbers of free agents working all over the world that occasionally hook up with a contact at one of the gold selling sites and dump their goods. I have no doubt there are lots of people doing this, but due to the volume, people might be overestimating how organized it is.

I have no data, just a hunch. Thoughts?

Posted Feb 9, 2005 5:27:41 PM | link

Jeremy Neal Kelly says:

Brandon Checketts wrote:

> ...I'm sure that not everybody agrees on exactly what characteristics a pharmer has...

I don't know about 'characteristics', but I define a farmer as anyone who:

1. is a net seller of game goods, and

2. plays more than they would in the absence of trade.

> Self-proclaimed, large farmer: 24%
> Guys who farm on one server: 16%
> Players leaving the game: 23%
> Smaller players, trying to earn a buck: 37%

Interesting numbers! Thanks for posting these.

Posted Feb 9, 2005 5:51:13 PM | link

Richard Bartle says:

Average Joe>What happened? There was a demand from the consumer.

There was a demand from the consumer that they could download free MP3s, but no demand from consumers that they stop.

With virtual goods being traded for real money, there is more consumer demand that this be prohibited than there is that it be allowed. It's all very well your telling us about the unstoppable power of consumer desire, but that doesn't work here quite like it does elsewhere. The problem is that what the majority consumers want - and many would pay extra for if they could have it - is for the other consumers to FOAD. What consumer power can the majority influence that would stop these other consumers from exercising their minority interest?

Richard

Posted Feb 9, 2005 6:28:36 PM | link

Brask Mumei says:

Richard> is for the other consumers to FOAD. What consumer power can the majority influence that would stop these other consumers from exercising their minority interest?

When you answer that question, maybe we can have the pre-Trammel Ultima Online back? After all, you'd have discovered how to prevent the minority of rampant pkers from ruining the day of the majority? And you'd have found how to do it without compromising the design principles with pk switches or safelands? Maybe that Play Nice Policy that worked so well for EQ and its spawn-camping problem?

- Brask Mumei

Posted Feb 10, 2005 12:22:48 AM | link

Edward Castronova says:

I'm starting to form a new image on the basis of this thread.

It's not a sweatshop industry. There are no returns to scale in terms of putting a bunch of people together in a room. [doh! Should have thought of this at a theoretical level!] It's more efficient to have the workforce distributed. And from a legal and regulatory standpoint, arms-length work agreements are better too - no benefits to be paid.

It's not a sweatshop industry, it's a cottage industry. IGE and its like act as clearinghouse for hundreds of thousands of tiny independent gold farmers. We could call them kulaks. Peasants. Sharecroppers. But not sweatshop workers.

Posted Feb 10, 2005 10:08:34 AM | link

Lee Delarm says:

What about this?

http://lineage2.gameamp.com/news/viewNews/152.php

(search for Adena Inc and view the cached version on google if this doesn't work)

Posted Feb 10, 2005 10:18:24 AM | link

Carl Short says:

Just another response to "Average Joe".

I think of myself as a pretty standard gamer. I work 40 hours a week (heh, at the same institution Ed does, actually) and play games as a way to relax in my free time.

I, and those I play MMORPGS with have no desire to see the developers of games we're playing buy and sell in-game virtual goods for cold hard cash. It's not a matter of being in the middle of a process, with the end result being x, y, and z, with z being acceptance and adoption of a modified model...rather, we choose the games we play on a number of factors, one of which is gameplay experience and purity of gameplay.

Maybe not by sitting down and making the conscious decision as a group to play Ye Olde MMORPG b/c its "pure," but I can tell you there are games our group doesn't play b/c of the conduct of the developers and publishing houses. Lineage 2 springs to mind in its creation of "endless grind," and the infamous Adena Inc.

On one level it's intellectual arrogancy, I suppose, in that we are concerned only with the intellectual exercise of gaming, everything else be damned. But another factor would certainly be that we do this for fun, whether it be the virtual e-penis comparisons, banter, or various other things a group of friends does online. And yes, this fun is certainly impeded when dealing with the side-effects that the type of transactions that you are proposing create.

Let us suppose that Blizzard suffers a change of heart, and allows a complete RL currency to in-game currency transaction system to be set up. They set the price of 100 gold to 33.33, or thereabouts, and make it so that you don't even have to run the transaction through the credit card company, instead, its billed at the end of the month in addition to the recurring monthly charge.

I'm not an economic theorist, but my lay-mans opinion is that this would prove disastrous to the long-term success of the game. You would lose accounts from players disgusted by the company, not to mention the accounts of the many teenagers/adolescents who pissed off mom and dad by running up charges on the charge card in excess of what they told their parents it would be. And while short-term you might make up enough to cover the cost of these accounts, long-term...well, we don't know long-term, do we?

What might be interesting, though...is what might happen if they set this up to provide an opposing flow of cash, by offering 30 dollars for every hundred gold turned in at such and such NPC. This would counter the inflation created by allowing players to buy gold with RL currency.

Just some thoughts from an average gamer.

Posted Feb 10, 2005 11:57:38 AM | link

Jeremy Neal Kelly says:

Edward Castronova wrote:

> It's not a sweatshop industry, it's a cottage industry.

Yes, that is essentially what I predicted here:

http://www.anthemion.org/Words/PlayTime3/playtime3.html

Posted Feb 10, 2005 12:22:22 PM | link

Brian Whitener says:

Was looking at this old wired article
Boring Game? Outsource It
http://www.wired.com/news/digiwood/0,1412,64638,00.html
from 02:00 AM Aug. 24, 2004 PT.

Some things to note:

----------------------------------
====================
----------------------------------

"For example, entrepreneur Valery Markarov said he pays workers in Russia a base salary of about $100 per week to earn in-game money, which Markarov then sells to Internet Gaming Entertainment, or IGE, the major seller of virtual goods. Workers get paid more as they're more productive, though, and could make up to $500 a week, he said."
….
"Automation, though, is generally considered cheating, and is frowned upon. IGE CEO Brock Pierce said the company cracks down on suppliers whose volumes imply they're using bots. That leaves the other method: cheap labor.

Pierce said he knows of other companies like Markarov's that employ play-for-pay gamers, including one in China and one in Singapore. But hundreds of others from those regions supply goods to IGE, either as individuals or more informally organized groups. "

----------------------------------
====================
----------------------------------

No they don't own the sweatshop, they just buy from them. Brock talks a lot more than Sayler (who has a lot more experience).


And regarding cheats/exploits here is a previous comment I made:

=================================
Oct 26, 2004
Material gains from virtual world:
http://edition.cnn.com/2004/TECH/10/21/spark.virtual.economy/

Some things to look at:
"Hong Kong-based company IGE is one of the biggest dealers in this business, turning virtual money into cold, hard cash -- their revenue is more than U.S.$1 million a month."
&
"The company's customer base is growing, particularly in Asia.

But Brock says there are some major problems within the fledgling business that his company must tackle, including fraud.

"I remember one night back when were first starting up. (We) went to sleep and the next day when we woke up, we had lost US$250,000 worth of inventory. It's not for the faint of heart."

I imagine they lost the $250,000 from SOE bannings. Sometimes when some exploits, dupes, macros get out of control SOE will ban not only the macroers, but will trace the plat and ban whoever is holding it (in this case if IGE bought it.. it means they had "tainted" accounts and any accounts that were tainted would be banned). This is one of the reasons that IGE now uses numerous accounts and will only take a minimum amount of platinum per account.

You know when SOE does a mass banning when one day prices are extremely low and the next day they are sky high.
===================

Most of the currency providers seem to be in China right now. I have talked to a few people who manage/run these sort of places and besides the language barrior they have trouble accepting payments and handling customer service from American customers. So, IGE has people set up who can talk to them (speak the language as a large number of them speak only limited english), and who can easily pay them. A lot of them are actually not happy at the prices they are getting from IGE as the markup is huge and there is nothing they can do. IGE has a complete monopoly on the market and agressivly (and I mean agressivly) attacks or buys out anyone who could challenge them.

By the way, did any of you guys notice that IGE bought out the back page of Computer Games Magazine this month?

Posted Feb 10, 2005 7:45:53 PM | link

Jeremy Neal Kelly says:

I've studied this subject for so long that it seldom surprises me. However, after reading this quote:

> (We) went to sleep and the next day when we woke up, we had lost
> US$250,000 worth of inventory.

I flashed back ten or twelve years to my days as a MUD player, and it suddenly occurred to me how strange all this has become.

Posted Feb 10, 2005 8:04:01 PM | link

John RainShadow says:

Julian Dibbel wrote:
"As far as I know, every reference you’ve ever seen to the Blacksnow sweatshop derives its factual authority from a single, very brief article that ran in Wired two years ago, bearing the byline of yours truly.

And that article, in turn, was based entirely on what I was told by Lee Caldwell, Blacksnow’s “sales director” "

Not to go too far afield from virtual property, but your article makes no mention that the anectdote you based your story on was a single unconfirmed account from a dubious source. In fact, so much detail is given in the first paragraph that a person could be forgiven for thinking that the "sweatshop's" existence was well documented. Frankly, you write the story as if you had seen the setup yourself.

And now, two years later, you're wondering if it was the truth?

Couple questions:
What kind of editing process does a Wired article need to go through before publication?

Is the author's personal 'bullshit detector' the only journalistic standard applied?

Who at Wired is responsible for vetting an article before publication?

How many other Wired articles are based on dubious sources? How many of these have you written?

And what has Wired had to say about the article since your post tuesday?

Posted Feb 10, 2005 9:54:39 PM | link

Dmitri Williams says:

So Julian asked for evidence of sweatshops and after 60 posts the best thing I saw was

What about this?
http://lineage2.gameamp.com/news/viewNews/152.php
(search for Adena Inc and view the cached version on google if this doesn't work)
Posted by: Lee Delarm | February 10, 2005 07:18 AM

As to rest, we know there is an incentive, so of course we know there will be supply. But aren't going to be able to pin it down here. So I'm still wondering about the initial basic question, i.e. where's the evidence?

As a social scientist, I don't really care much about anecdotes. I want generalizability, %s, statistical weights, etc.

What to do? I suppose that to be systematic, someone (not me, thanks) would need to make a solid estimate of the amount of virtual credit that is sold. Then, based on an estimate of the time required to generate said cash, work backwards to get an estimate of the manpower required to drive the supply chain. That gives an estimate of the industry, even if it doesn't provide the details of location or working conditions. But it would at least move this line of analysis past anecdotes . . .

Posted Feb 11, 2005 2:53:57 PM | link

Michael Hartman says:

Does Blacksnow Interactive have a web site?

I googled for it and all you get are 9 zillion articles written about them.

Posted Feb 11, 2005 6:26:52 PM | link

Jeremy Neal Kelly says:

I believe they went out of business shortly after the article in question was originally published (several years ago, that is).

Posted Feb 11, 2005 6:59:06 PM | link

Dave Rickey says:

The problem with trying to make that kind of analysis now is that very little of the market is trackable, for the US games at least. With SOE, Mythic, and Blizzard all pushing it out of eBay to one degree or another, much of it now occurs directly through the large brokers (IGE and similar). As far as I know, none of them is publicly traded, so the only data we have is what they choose to share, and it's unverifiable. IGE is known to be throwing a lot of money around buying other websites and advertising, but whether that is coming from operating profits or from capital, we can't know.

Based on the papers they filed in the Mythic vs. BSI case, Blacksnow was selling around $60K a month, or half a million a year, of DAoC currency alone, and they were hardly the largest operation. Even UO, where a hands-off treatment like OSI has kept eBay sales going, there are indications that much of the currency traffic is off the radar.

As far as the evidence of its existence, we know it exists, through Julian's "Diary of a dubious proposition" as well as other sources. We just have only vague notions of its scale and its internal composition.

The fact is, there doesn't seem to be anyone with much of an interest in putting in the serious investigative work it would take. The companies try to keep it pruned, but don't have the resources for a major international investigation and confine themselves to purging accounts associated with *other* problems (credit card fraud, harassment, etc.) sometimes associated with the practice. The companies themselves play it close to their vests, both because they don't want to educate the operators and for competitive advantage. And there is no law enforcement agency with an interest, unless and until the revenue departments decide it's time to collect their share.

Part of our problem as operators is that as long as they don't interfere with ordinary play in an obvious way, and everyone gets what they paid for, we hear nothing at all about it. So we wind up dealing with them only when exploits or competition for content bring it to our attention, or someone gets defrauded and complains to us.

--Dave

Posted Feb 11, 2005 10:15:34 PM | link

ren says:

From Edge Magazine (#145 Jan 2005) p122 The Guest Column, author: Tim Guest:

    “From his office in Dearborn, Michigan. Pierce told me his company buys items and currency from suppliers across the real world. Some are American kids who play games at evenings and weekends. Others own cybercafes in Europe and the Middle East; they let people play for free, as long as each one donates half their virtual booty to the cafe. IGE also works with Hong Kong partners who subcontract the work to Chinese suppliers. There, people are employed to play games nine to five, hunting virtual beasts, fashioning virtual items from their loot and selling them on via IGE.
    When I mentioned the idea of ‘virtual sweatshops’ Pearce was quick to interrupt. ‘They can earn up to $100 a day,’ he said. ‘That’s a higher wage than almost any career available in rural China.’”

Posted Feb 12, 2005 7:12:43 AM | link

Jeremy Neal Kelly says:

Ren quoted:

> "Others own cybercafes in Europe and the Middle East; they let
> people play for free, as long as each one donates half their
> virtual booty to the cafe."

Interesting; that's one I haven't heard before. This seems to support my idea that (where farming is concerned) those who enjoy play have an innate competitive advantage over those who do not.

Posted Feb 12, 2005 9:35:34 AM | link

magicback says:

Jeremy> Interesting; that's one I haven't heard before. This seems to support my idea that (where farming is concerned) those who enjoy play have an innate competitive advantage over those who do not.

I wouldn't classify it as competitive advantage. How about motivationally advantaged?

For many around the world, online trading (of real and virtual goods) has become a viable home business. In Hong Kong and many parts of the world, local versions of US magazines are republishing translated articles about developments in the US or Europe. So articles about people making US six figure salaries trading online (eBay, Yahoo Auctions, etc) or Julian making decent living trading virtual goods have galvanized many into starting their own cash flow business (Rich Dad, Poor Dad is popular too). Sure younger players may opt to go to a free internet café to trade labor for game-time, but more resourceful and savvy people are starting their own businesses. This is something we should reflect on.

The key people behind IGE realizes this trend and no doubt they are aiming to be as big as eBay for virtual goods.

So Julian, no more industrial operations (for the most part). The new angle is aspiring Julians.

Frank

Posted Feb 12, 2005 11:14:49 AM | link

Jeremy Neal Kelly says:

magicback wrote:

> I wouldn't classify it as competitive advantage. How about
> motivationally advantaged?

I guess I don't see the difference. Those who enjoy play can produce game goods at a lower 'cost' than those who do not, which gives them an advantage in the market. Of course, this idea can be (and probably has been) generalized to other industries, but it seems especially relevent to games.

Posted Feb 12, 2005 12:08:22 PM | link

Patrick says:

CEO of Gamersloot.net here, and depending how you define "sweat shop" I guess we qualify.

If you mean exploiting helpless people and making them work 15+ hrs a day at repetitive tasks that they hate in appalling work conditions, that's not us.

If you mean Employing people that don't mind "playing" a game for 8-10hrs a day at a wage that would starve a US resident but is a decent salary for an -employed- university graduate in their country, yeah that's us.

Part of what makes me get up in the morning, is knowing I have given good jobs to a bit over 20 people (I say good jobs because we don't do the mind-numbing gold farming stuff). I've been there, visited, spent time with them, been invited to spend the weekend in a mountain cabin to have fun. I know some of the wives, got picture of their kids along with thanks for trusting them enough to give them jobs. Because yes, it's a job, and a rather good one compared to what 80+% of the population there can get.

One of my managers was basically rescued from falling into credit card fraud as a way of surviving.

But yes, in talks with friends at times, there have been jokes of "sweat shops" because the wages paid would be refused by everyone they know. Makes you reflect that the world is small, but not quite there yet.

I'd say that if Electronic Arts isn't a Sweat shop, then we definitely don't qualify either ;)

I'm sure not all the companies out there dealing in virtual goods are like that though, of course (I mean heck, we don't even cheat/hack/bot or display any of the rude playstyles described here, but maybe that's why we're not bigger? =b ).

So are there "sweat shops"? Well, I'd be hard pressed to believe otherwise. You can easily generate $5+ an hour from a worker doing repetitive tasks that require no special skills. Workers in certain places of the world would be glad to be paid $1 an hour. You do the maths.
Setup costs and various barriers to entry make it not fully widespread, but that's true of every business =)

Prices will go up, and farming will go down when better jobs become available around the world. What did you do today to help that happen? ;)

A few good points were raised here, and the % given above by Brandon are probably not far from the truth
************
Self-proclaimed, large farmer: 24%
Guys who farm on one server: 16%
Players leaving the game: 23%
Smaller players, trying to earn a buck: 37%
************
Though I would surmise that large farmers probably sell mostly to IGE, since it's only worth farming large if you can sell large.
Also, the amounts generated by large farmers are by definition much higher. It's kinda like saying "What's the % of people that sell computers" I think:
Dell/HP/etc
No name brands
People selling their old computers
Local assembly shops
I think it gives an idea =)

If you want more questions Julian, you might still have my email actually ;)
P.

Posted Feb 13, 2005 3:13:26 AM | link

Jeremy Neal Kelly says:

Patrick wrote:

> I'd say that if Electronic Arts isn't a Sweat shop, then we definitely don't qualify either ;)

Ha, well said! (And for anyone who might have missed it: www.salon.com/tech/feature/2004/12/02/no_fun_and_games/)

Posted Feb 13, 2005 10:10:34 AM | link

No Comment says:

I'll throw it out there for some thought.

A good deal of this could be helped (not solved, but helped) with legal action against corporate entities such as IGE and the others.

Blizzard and other folks have thrown around the common "cease and desist" letters, but no one has taken a major virtual good case to court yet. No one has followed through with the threats.

There are certainly competent attorneys out there that deal with federal IP litigation every day. There are even attorneys that spend most days doing nothing but federal IP litigation in the game industry.

Copyright and trademark cases are cheap compared to patent cases and they are certainly in the budget of the more profitable games.

If a game company really wanted to make a statement, they could try to shut down the corporate entities by bringing a case. An injunction/judgement against the top corporate players in the third party item trading market would make big dent in the "problem."

I am not saying this would solve the problem, but a large part of the problem is the legal IP limbo that item trading is in. This would get a lot closer to resolution if someone would step up to the plate with and file a case.

Lastly, I am not necessarily taking a side on the issue, but I am categorically stating that this will not be resolved by simple posturing, letter writing, and half-measures. I think this whole issue must eventually get up to a federal court.

Either way the case or series of cases comes out, it would give the industry as a whole some direction that we just don't have yet.

I am anxiously reading the news each day for someone to have the "courage of their convictions."

Posted Feb 13, 2005 4:53:40 PM | link

M. Scott Boone says:

Sure, No Comment, there are plenty of attorneys with lots of IP litigation experience. But that doesn't really matter, because the litigation you seek would not be IP litigation. The sale of in-world goods does not violate any intellectual property rights; I have yet to see a convincing argument that the basic transaction itself violates any trademark or copyright laws. Certainly, a seller could do something to violate one of these rights, such as posting a picture of the item with the auction, that would be an IP infringement. But the core action, the sale, does not violate any IP rights.

It's not an IP problem, it's a property and contract problem. The companies can go after players because those players have a contractual relationship with the company that they have violated. IGE et al are probably not in any contractual relationship with the corporations (unless IGE et al farm in violation of EULA's).

And the property problem (whether virtual world objects are subject to property rights) is an unknown as far as how the law will resolve the issue.

Posted Feb 13, 2005 6:38:44 PM | link

M. Scott Boone says:

Also, remember that it is much safer for a large company to go after small targets that cannot practically or financially defend themselves. Going after large targets able to defend themselves could result in unwanted results.

This is especially true when the actual result of litigation is highly uncertain.

Posted Feb 13, 2005 6:42:01 PM | link

Bob says:

You will never see the Sony/Blizzard sue anyone - the cease and desist letters are threats and nothing more. If the SOny/Blizzard sue and lose (and most seem to believe there is a better than average chance that they might) - then the gaming world is instantly turned upside down. Welcome to lawsuits for server warps, account hacking, in-game scams, and just about everything else you can think of. And welcome to Virtualworld by Microsoft, Apple's World of Vaporware, and ToysRUs' Imaginary Item Planet. Sony/Blizzard will never sue anyone - because they are quite aware what would happen if they lose.

Posted Feb 13, 2005 7:04:28 PM | link

Brandon says:

I keep a pretty close eye on the SWG Credit market, and have noticed that the number of SWG auctions on eBay has dropped significantly in the past week. For the past couple months, a search for "SWG" on eBay resulted in around 900-1000 items. Today I'm seeing around 550 auctions.

Of course, there are a lot of factors that contribute to the number of auctions on eBay. My theory to explain this significant decrease is Chinese New Year. If many of these eBay sellers are buying from "sweatshops" in China, I would expect that their built-up stock of credits has diminished since the holiday started. My guess is that it will take the sweatshops a few days to ramp-up production again, and then we'll start seeing more eBay auctions. We'll see if my theory is correct if the number of ebay auctions for SWG increases back up to the 900-1000 range in the next week or so.

Some conclusions if my theory proves correct:
- "Sweatshops" must have at least decent working conditions that they give their employees time off for the holiday (so can somebody come up with a more appropriate name for these operations).
- A significant portion (about half) of the SWG auctions on eBay come from sweatshops in China

Posted Feb 14, 2005 1:40:18 PM | link

Anonymous says:

Gold Farming instructions for 'World of Warcraft' based on IGE game guides.
Given to individuals that are interested in sub-contracting gold to IGE.

Source has worked for IGE as well as a few other virtual-currency dealers.

http://www.gameking.com.cn/gk/gc/04/11/12/165453593_3.htm

http://www.gameking.com.cn/gk/gc/04/11/12/165453593_2.htm

http://www.gameking.com.cn/gk/gc/04/11/12/165453593.htm

Notice the publish date "November 12th, 2004".(2004年11月12日 游戏之王)
'World of Warcraft' was released on November 23rd.

Gameking.com.cn (aka. 深圳市金智塔电脑软件有限公司Shenzhen Gold Wisdom Tower Computer Software Inc.) is endorsed by IGE's Hong Kong affiliate and shares stocks with multiple Korean Game Developers.

Posted Feb 15, 2005 3:54:52 PM | link

Lara says:

Blizzard has dropped the ball. They have not doing squat in thg last few months of gameplay. I have played since release and the CGF (chinese gold farmer) situation has gotten horrible.

I play on Argent Dawn, one of the highest population roleplaying servers and there are numerous CGF guilds on both alliance and horde side. They don't hide anymore, they talk in chinese out in the open. They harass players out of hunting grounds, making questing in certain areas nearly impossible.

They spam duels and trades with players, telling them to leave the area also. And if that doesn't work they call in their friends and wipe entire areas quicker than a single player can get to the mobs for their quest kills.

They have ruined our auction house market and our economy on my server, as they have ruined it on lots of other servers as well. It is disgusting and offensive that with all the rules Blizzard had for safeguarding this kind of problem, and with all the thousands of reports against these farmer guilds, they just continue to be there and do what they do 24/7.

It truly makes me wonder if they are receiving kick-backs to keep these farmers in business.

Posted Jun 26, 2005 9:20:34 AM | link

steve hynes says:

Personally i believe bliz has really dropped the ball, i bought WoW three weeks ago and have already macroed 4 toons well into there 30's 24/7 i might add. I dont macro to farm, i just like to skip the grinding.

someone earlier said this
"So, this seems to put me in agreement with Blizzard. A strong EULA and TOS, squashing 3rd party sales wherever they are found"
???what are you talkin about? goto www.ige.com and tell me why there selling HARDCORE! why does Bliz not close them down?

I for one will go out on a limb and say i think Bliz gets a cut from IGE, far easier to take a % then hit the courts and accept the responsability that these items have RL value. Ya they will crush third part sellers...small fries like you and me but when it comes to someone with some cash behind them(ige) there not getting near them.

As for the farmers, it is possible they just ACM(attended combat macro) i ran a toon in Asherons Call to #1 on the VT server, one might have thought i was farming. i ran two accounts 24/7 for a year or more. It was not about items or wealth, i love to macro, i love to make a program that decieves the GM's/devs/envoys whichever they may be called. But only to rid the game of the Grinding leaving myself with more time to enjoy the game.

There is nothing Bliz can do, the farmers Pwn them. they pay a monthly fee to have access to a 24/7 game...they get there money worth.

MMORPG's will never combat this unless they take a stand and make in-game items have RL value, thus making people accountable for there actions...and of cource making the game vulnerable to RL lose of item issues.

Posted Sep 25, 2005 10:33:55 AM | link

Smith says:

Wow this is great news. Any system that can take a sale from ebay and give money back to the users is a great system. Why dose a company like ebay need to have such a high amount of control over its members transactions? thanks
http://www.auction4seller.com

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