World of Developmentcraft: academic paper on gold farming as a development activity in poor countries

On Salon, Andrew Leonard ruminates on a new paper that tries to analyze gold farming (doing repetitive in-game tasks to earn money that is sold to players) with international development. Richard Heeks's (University of Manchester) new paper "Current Analysis and Future Research Agenda on "Gold Farming": Real-World Production in Developing Countries for the Virtual Economies of Online Games" is the first paper to explore gold farming from a development perspective, and as the title suggests, it is mostly a literature review and an attempt to define the areas for future research on the topic.

This was a pure-gold find for me, as I'm working on a young adult novel called For the Win that expands my story Anda's Game (about union organizers who sign up gold farmers in the developing world), and I've been reading everything I can get my hands on about gold farming. Heeks's paper is absolutely enthralling (for me, at least), a very broad and thorough survey of what we know, what we think we know and what we definitely don't know about gold farming -- it was even worth putting up with the world's least readable typeface (though it gave me a splitting headache). (Coincidentally, Andrew Leonard is the Salon editor who bought and published Anda's Game in the first place).

Continuing survival of the sub-sector also relies on overcoming some severe information failures – absence, uncertainty, asymmetry, and communication problems. These have produced many examples of both opportunism and adverse selection, with trading bringing uncertainty, risk and negative consequences. As expected, these seem likely to have suppressed real-money trading well below its "natural" level, and to have induced sellers into (potentially-hollow) assertions about their trustworthiness. Because of its virtuality, though, real-money trading has seen only a little of the localisation and intermediation one might otherwise expect in the presence of such information failures.

Thirdly, continuing survival of gold farming relies on dealing with the many threats it faces. Some of these are business-generic such as ease of entry intensifying competition, or rising labour costs. Others are business-specific but just a low-level nuisance such as character killing or account and IP banning or fraud. Others still – patching, game redesign and marketing channel blocks – require constant innovation to stay one step ahead. And a final category is much more serious such as game company substitution or legal action by governments or game companies. Game companies probably take such action through a mix of economic, moral and personal in-game experience rationales. But one must recognise that gold farming bringsa benefits to these companies, while action against gold farming brings both anticipated and perhaps unanticipated costs.

World of development economics Warcraft, Current Analysis and Future Research Agenda on "Gold Farming": Real-World Production in Developing Countries for the Virtual Economies of Online Games (PDF) (Thanks, Patrick!)