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Virtual Goods Industry: Digital Currencies

As part of both the virtual world and goods industries, a new market has opened up for trading virtual currencies to consumers. Primarily through online MMOs where money can actually buy happiness, consumers can now purchase virtual money for actual currencies through digital currency exchanges—primarily based in Asia. Although the corporations that regulate these virtual worlds do not take kindly to black-market businesses profiting from illicit activities—often involving hacking accounts, they are well sustained and have evolved their own in and out-of-game marketing strategies.

One of these markets, often referred to as Gold Farming, is defined as the “real-world sale of virtual goods and services produced in online games” (Heeks). Such examples are in the games RuneScape, World of Warcraft, or Lineage, whereby Gold Farming companies sell in-game currencies such as Gold or GP for US$ at a straight conversion rate: ex. 5M GP for $20 USD.

Gold Farming companies employ individuals to play Massive Multiplayer Online Role Playing Game’s (MMORPG’s) to acquire in-game currency to later be sold. Specifically, Gold Farming companies generate revenues from either (1) selling in-game currencies, (2) power-leveling characters before selling the accounts, and/or (3) selling in-game items (Heeks). According to an article on the Guardian, some of these companies employ individuals paying them as little as 30p an hour and providing accommodation and food, in jobs referred to as Playbour. Furthermore, the article who quoted “the biggest transaction I have seen was one person who bought 100,000 gold, which costs £2,000 to £3,000. For me this is a lot of money but for them it is not” in reference to their consumers.

According to the 2005 article by the New York Times, Ogre to Slay? Outsource It to Chinese, there are more than 100,000 professional, full-time gold farmers in China alone. It is important to note that this figure is form 2005 where World of Warcraft held only 4.5 million subscribers, well below their record of over 13 Million in 2008. Additionally, it is estimated in a 2006 BBC article that the market for trading virtual currencies is “worth nearly $900M”.

Due to the up rise and trading value of these virtual currencies several countries have taken legal action to determine how it will affect their own currencies. China for instance has banned the transaction for any real good purchased with virtual currency—however not the other way around,  Korea allows transactions with virtual currency however it is subject to taxation, and the IRS in the US has concern that virtual currencies may be utilized for tax noncompliance.

Lastly, it is important to understand that these Gold Farming companies actually market their services both in and out-of-game. For example, banner ads for World of Warcraft gold can be found on strategy websites or blogs regarding the game. Furthermore, spotting Gold Farms in-game is a normal occurrence by spamming text-ads across in-game communication services.

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Gold Farming Industry