Tobold's Blog
Tuesday, February 16, 2010
Do gold farmers hurt the economy?

RMT is a very emotional subject, and people have a tendency to jump from one argument to another totally unrelated one. Thus whenever I mention gold farmers, somebody immediately starts shouting about hackers, which is *not* the same. While everybody knows somebody who know someone who has been hacked, few people bother to count that they also know 99 other people who *never* got hacked. Simple back-of-an-envelope calculations of the amount of gold stolen by hackers compared to the amount of gold sold every day in World of Warcraft shows that the large majority of sold gold is produced by farming and botting, not by hacking and stealing. So in this post I'm focusing on the effect of gold farming and botting on the economy of World of Warcraft (although many of my considerations will be true for other games as well).

So lets take the fabled Chinese sweatshop where a dozen young Chinese men make a living by playing World of Warcraft, because it pays better and is more pleasant work than working in the factory next door. First thing to note is that obviously they are playing on US and European servers, because that is where their customers are; thus reported problems Blizzard has with Chinese authorities do not affect the gold farming business. Second thing to note is that much of what these gold farmers are doing is done manually. If it was possible to completely automate the farming of gold in an efficient way and without Blizzard shutting you down fast, there wouldn't be a Chinese sweatshop. The desire to make easy money is not unique to poorer countries, only cheap labor is.

So what are gold farmers actually doing? The main difference between a gold farmer and a regular player is motivation. A regular player wants to make his character as powerful as possible, wants to have lots of items, both fluff and gear, and wants to have fun. Much of what a regular player does is destruction of economic value through the use of money sinks. Besides the money sinks (repair costs, buying special mounts, etc.), there is also the destruction of economic value by "item sinks", that is by equipping bind-on-equip items, which effectively removes those items from the economy. A gold farmer at the start of his career is often indistinguishable from a regular player, because he'll want to level up his character to the level cap and equip him with reasonable gear just like the regular player does. But once he reached the cap and okay gear, a gold farmer plays differently than a regular player. He isn't interested in activities like raiding or PvP, and he certainly won't spend money on a mammoth or a motorcycle. Instead the gold farmer will seek the most effective way to make gold, so he can pass that gold to his boss, who'll sell it for real money.

Now a game like World of Warcraft has lots of different ways to make gold. Gold drops from monsters you kill, or is handed out as reward for quests and daily quests. But for the gold farmer these direct gold-making ways aren't optimal: For reasons of efficiency several gold farmers share one account, playing that account 24/7. With only 25 daily quests, and a thousand or so high-level quests that give good gold rewards, this avenue of gold farming is quickly exhausted. And the amount of gold you can make per hour by doing quests and getting coin drops from monsters is actually not all that big. Various WoW blogs frequently express a certain disdain for players who try to make gold that way. Being better motivated than the average player to be efficient in making gold, we must assume that the gold farmers know all the tricks that WoW bloggers know, and more.

There is however one big difference between a gold farmer and regular player with an interest in WoW economics: Gold farmers have to make a regular living, thus they prefer steady incomes over risky deals. Activities like buying low and selling high on the auction house, or making thousands of glyphs to sell them, are profitable for the regular players, but not something you can profitably do 24 hours per day. So typical activities of gold farmers would be gathering herbs and ores, or killing monsters that drop valuable trade goods like eternals, then selling these goods on the auction house. This hypothesis is easily verified, just check your auction house for lets say Northrend herbs, and you'll often see the same seller offering several hundred of the same type of herb, the obvious result of hours of farming.

So what is the effect of this gold farming activity on the World of Warcraft economy? The most surprising result, to many people, is that this doesn't cause rampant inflation. Take any given item, like a crafted epic Merlin's Robe, or a Frostweave Bag, and you'll see that its price today is *lower* than its price a month ago. Inflation and prices in any economy, virtual or real, depend on the relative levels of money supply and the supply of goods. As the gold farmers aren't actually farming gold, but goods that they sell for gold, they do not increase the supply of money. They do however increase the supply of whatever item they are farming, which is why the various trade goods and items crafted from these trade goods are getting cheaper. A secondary effect of gold farmers is to cause a predictable price fluctuation of trade goods during the week. The gold farmer who is lets say gathering herbs will supply about the same quantity of herbs every day. Sharing his account with other gold farmers, he can't wait to sell his goods. But the regular players who buy those herbs will be more active during the weekends, simply because they play more during the weekends than during the week. With supply and demand regulating price, prices for trade goods are higher on weekends than during the week.

So are gold farmers hurting the economy? That depends on which side of the economy you are. If you are a seller, then a bunch of gold farmers playing 24/7 is something you'll find hard to compete with. But if you are a buyer, and the majority of players is, the gold farming activity actually lowers the prices of the things you buy, which is good for you. Gold farmers will adjust to prices in the economy, so if some item dropping from some kind of monsters becomes especially valuable for some reason, they will go and farm that, keeping the supply up and the prices low. Ultimately a Chinese gold farmer isn't fundamentally different from a Chinese manufacturer of cheap toasters. If you happen to be a US manufacturer of toasters, he is a threat, but for the general population he just means cheaper toasters available at Walmart.

A different way to look at it is to look at what the gold buyer is actually buying. He doesn't buy gold because he likes to have a large amount of gold unused on his account. He buys gold to buy that crafted epic, those flasks for raiding, or whatever else. Thus the economy is a full circle: The gold farmer gathers trade goods, sells those for gold, sells the gold for real money to the gold buyer, and the gold buyer spends that gold for trade goods or items made from them. For the economy as a whole it doesn't matter who is doing the gathering, whether the regular player spends hours to gather all those trade goods himself or whether he "hires" a gold farmer to do it for him ends up being the same.

Now imagine Blizzard would start selling gold they create out of nothing to eliminate third-party gold sellers. Or some bug would allow widespread duping of gold or have gold fall out of the sky. The effect of that on the economy would be much worse than gold farmers. These events would dramatically increase the money supply, leading to inflation. If enough gold fell out of the sky, the value of gold would crash to zero, and the economy would break down. People would be reduced to bartering, or using alternative currencies.

Now it is totally reasonable to be opposed to RMT and gold selling because the basic concept of it is somewhat perverse: You could gain everything in the game by playing the game, thus buying gold is equivalent of paying somebody else to play the game for you. If you would for example buy enough gold to buy all the best bind-on-equip epics in the game, you would make large parts of the game which consist of collecting bind-on-pickup gear or tokens for such gear obsolete. You would "finish" World of Warcraft faster, get bored, and quit. It's like bribing the guy at the projector in the cinema to press the fast forward button, it simply doesn't make much sense if you consider hours spend in a game as entertainment and fun, not work. But to blame gold farmers for destroying the economy isn't really justified: They've been doing this for over 5 years now, you'd think that if their activity really destroyed the economy, that economy would be gone by now. The fact that the World of Warcraft economy is humming along nicely in spite of gold farmers disproves the argument that gold farming destroys the economy. Buying gold certainly is cheating in a video game, and some gold sellers use more harmful techniques like phishing, scamming, and hacking to get gold to sell, but the basic act of gold farming isn't all that harmful to the virtual economy.
I agree. Gold farmers certainly do not destroy the economy. However, mobs in WoW also drop gold when you farm them. Therefore gold farmers do slightly increase the money supply.

That isn't too bad, as Blizzard can regulate how much gold mobs drop and they are quite good at removing gold from the economy using prestige items like mammoths.

What's bad about gold sellers?

1) If it is posssible to buy gold the MMO designers have an incentive to limit the value of gold. While in EVE (sorry:) you can buy almost everything, in WoW the majority of desireable things you cannot trade.

2) If it is possibel to buy gold this limits immersion / credibility / consistency of the gaming 'world'. It severely limits and economic game.

3) Gold spammers tend to spam in text channels. With a 'report spam' button and the 'wisdom of the crowds' that is manageable nowadays. Text filters still cost money.

4) Gold sellers occupy certain spot in the world and thus hinder other players from 'normal' farming=playing the game. Since WoW nowadays is about teleporting to dungeons and raids and otherwise standing around in Dalaran, that isn't a problem for WoW anymore.

5) Gold sellers make game designers alter their games, thus that they can 'beat' the gold farmers. EVE handles RMT the way it does, because they don't have the ressources to fight gold sellers. A pity!

Gold sellers also have at least one advantage:

1) The game company earns more money and thus can produce a better game without increasing the (montly) fee.
While the price of herbs and ores might decrease, anything that drops from high level dungeons (Battered Hilt, Orbs, recipes) will not be farmed by goldsellers.

Bearing in mind that the average player has less than 5000g at any one time (as polls have indicated), this leaves the options of:

Which caps at about 300g/day

2)AH buying/selling
Which fluctuates wildly and requires considerable research

3)Farm materials
Which are deeply undervalued due to volume of 24/7 farmers

4)Buy gold

It is not surprising that many players opt for option 4.
Even though Gevlon is apparently opposed to it, it is 'goblinish wisdom' to recognise that your time is worth more in £/$ than in gold.

The only reason why I've never bought gold is that WoW is game in which you don't need it.
I was recently thinking about this also. You made some very good points. Many people kick and scream about gold farmers but in actuality if the game they played sold it, it might not be so bad in peoples eyes.

But then you would have those who would just cry *make gold easier to accumulate*! Which if that was the case it would eliminate the need to buy gold.
IMHO, the question has been moot since the introduction of daily quests. Before that, every player was both a seller and a buyer and your income scaled according to the time spent. While goldfarming did reduce the prices of goods back then, it also reduced the income of every player in the game, because they were unable to compete with an untiring bot or unwilling to play in shifts.
that is because in WoW the supplies are inexhaustible and the amount of RMT relatively low. In EvE RMT clean out resources that spawn once every 24h (nothing to mine = no economy for you),

or as worst offender Lineage 2: you can't even use some zones during the night because they are flooded with RMT bots (if the mob gets killed within 1ms of its spawn, you can't get your hands on that resources.).

And of course the economy is also affected massively, due to the price-drop making it extremely difficult to compete as crafter in WoW. And in Lineage2 you basically *have* to buy gold, as the inflation is just so rampant (but maybe that is part of the game design).
Nice read, thank you (yep, sometimes I post to say just that).
'They've been doing this for over 5 years now, you'd think that if their activity really destroyed the economy, that economy would be gone by now.'

Are you making the claim that WoW still has an economy? You can't destroy something that doesn't exist.

What proportion of players are actually limited in what they want to do by a scarcity of gold, or things exchangeable for it? What status items can be purchased for gold that will actually impress people in a crowd?

If lack of money never constrains you, and surplus never rewards you, then you only give it any value at all out of habit.

Choosing not to have an economy is obviously a deliberate choice on Blizzard's part, largely in response to gold sellers. Other games (notably Eve and Aion) have made different choices, with varying successes.
Simple back-of-an-envelope calculations of the amount of gold stolen by hackers compared to the amount of gold sold every day in World of Warcraft shows that the large majority of sold gold is produced by farming and botting, not by hacking and stealing.

I disagree. Let's do some simple back-of-the-envelope:
-One in twenty accounts gets hacked
-One in twenty people buy gold

I believe that you are seriously underestimating the number of hacked accounts. My guild alone had around 5 / 40 hacked accounts. As for gold buyers? There was at least one in my guild who admitted to doing so.

If the gold is made by farming then the problem is a lot less severe. Worse case you will get lower prices for selling your gathered materials. But you can buy them cheaper which is even a benefit.
It seems backwards to me to look at WoW, a game that from 2004 has been designed with gold-sellers in mind, and say gold-sellers don't have that bad an effect.

Of course they don't - WoW has been designed to stop them having much impact including:
- bind on pickup
- daily quests
- lack of interesting things to buy
- emphasis on instances over world
- limits on consumable stacking
- dumbing everything down so you don't need an edge to be uber
I disagree. Let's do some simple back-of-the-envelope:
-One in twenty accounts gets hacked
-One in twenty people buy gold

You already have the wrong numbers there. Surveys among WoW players, who could answer anonymously, showed that over half of the players bought gold.

If you don't believe that, then answer me this: How come that when Blizzard bans accounts for botting and gold selling, they ban over 100,000 of them? There are only about 5 million players in the US and Europe, so if you 1 in 20 people buy gold number were correct, over 100,000 gold sellers would have to live from just 250,000 customers. If every seller only had 2 customers, he'd be broke in a very short time.

Even with your numbers (1/20 hacked, 1/20 buys), hacking can't cover everything.

If the average player has < 5k gold when they are hacked (see previous comment) and the average goldbuyer purchases 10k gold (an assumption based on the fact that the vanity items - mammoth, bike, Dalaran ring+upgrades, Battered Hilt cost 10k or more), this means that there is an extra 5k that has to be found from somewhere.

If the reality is that up to 50% of players have bought gold (this number seems too high...) then the delta between demand and supply is even higher.
The only thing that "hurts" the economy (any economy) is monopolistic collusion or cartel action. I would hardly consider gold farmers to be either. Some may want to argue that gold farmers constitute a cartel, but any arguments in that vein are specious at best, and are more likely ignorant.

Now, gold farmers may have a negative impact on your (or my) enjoyment of the game for any of a number of reasons, but "hurting the economy" isn't one of them.
The only thing that "hurts" the economy (any economy) is monopolistic collusion or cartel action.

Well.. what about printing incredibly massive amounts of money and then feeding it to the masses => hyper inflation? Doesn't hurt economy ? no ?

What about surprises in oil shortage, like several important oil fields drying up. Doesn't hurt anybody ?

What about war?
What about ideology?
What about astroids hitting earth?
Sunflares, Earth shakes, Tsunamies...

What about a game where most important things aren't tradeable by gods law (WoW rules) ??
I don't see how it could destroy the economy. Buying a couple K worth of gold? That's a drop in the bucket to most players. I have no problem with buying and selling gold. In fact it would be better if they just did it legitimately. I make a great living and play only very casually due to RL commitments. I can afford to spend the money to make my playing experience better for the time I am on. I hate grinding for the time I do play and only want to have fun. Most of it I hand out as "presents" to my friends that play anyway. For their birthdays or something. I did it in EQ, WoW and EQ2 and will with the next game too. I honestly don't care if they ban my account I will just stop playing and move on to something else and they won't get my $15 a month anymore for playing 4 hours a week tops...and I won't get the expansions. Simple as that.
hmm i'm not sure about #'s but it wouldn't suprise me if a lot more gold is produced from hacking than from farming any more. Many lv 80's have thousands of gold and even more if you consider all the stuff they horde but don't sell. If an average account has 5k gold in value (after selling everything/sharding/etc) 1-3 accounts per day would net more gold than farming which I estimate can't produce more than 10-12k gold even if they farm 24/hrs day.

The other reason I don't think gold farmers are that widespread any more is I don't see the results. IE, stuff that is easily farmable (but not fun) is not available in large quantities.

1. fish feast
2. low level mats - for the last couple months wool has been selling for more than frostweave cloth. Way easy to farm but it's not being done.

northrend herbs are farmed but mostly by real people. I have a couple people in my guild who play to much an spend an hour or two a day farming herbs in wintergrasp to make flasks.
As a person who has had their account hacked by a gold seller the numbers listed here are irrelevant. Even if 50% of players buy gold and only 1 in 100 accounts are hacked, do these same players who purchase gold make sure or even have a way of verifying the gold they are purchasing comes from reputable means? I mean seriously my meager bank-roll of 20kish was chopped up and transported away to 3 different servers. Gold farmers that acquire their gold in what we would consider the "normal" way I have no problem with at all. But how can you be sure you just aren't supporting a seller who acquired said gold by illicit means?

I see two solutions. Either make a way gold farmers can legitimately sell their products for cash, or have Blizzard to take the helm and take over the gold selling business. (maybe in a way similar to EVE)
I like comparing the effect of gold farmers to item malls. It limits the effect of gold farmers by doing things like bind on acquire. Like Stabs said, they put instancing over open world exploration which I dislike. I disagree that they are "dumbing everything down so you don't need an uber edge" JUST because of gold farmers but to increase the MASS non-uber community.
This is a very thoughtful blog post, Tobold. I'd love to see a similarly thoughtful followup on your "back of an envelope" calculations about the size of WoW RMT and the amount of hacking activity.

My intuition is the opposite of yours: most gold being traded is stolen via hacks. But I don't have data to back that up. What data do you have about hacking activity? What data do you have about the amount of gold changing hands via RMT?

I think the "1 in 2 players have bought gold" statistic isn't very useful here. The only survey I've seen like that was self-selecting. And it doesn't give any insight into how much gold is bought, nor how often. And I've never seen any data on the number of WoW accounts that were hacked, the average value of accounts, or the amount that is stolen. Is there some? It'd be fascinating!

(PS: on IGE, $15 buys about 2000 gold right now.)
I'm quite surprised by the number of people who seem to buy gold. Gold seems to be flowing these days.

As for the amount of hacked accounts, we can only guess. Blizzard wouldn't come out with these numbers as it would only scare the public. It has to be a considerable amount however seeing how they ease the distribution of their authenticators.

And it's of course one of Blizzards reasons to dismiss gold sellers:
Players who buy gold are supporting spamming, botting and keylogging.

In any case, if noone was willing to buy gold then the amount of account hacking would drop to zero.
A secondary effect of gold farmers is to cause a predictable price fluctuation of trade goods during the week. The gold farmer who is lets say gathering herbs will supply about the same quantity of herbs every day. Sharing his account with other gold farmers, he can't wait to sell his goods. But the regular players who buy those herbs will be more active during the weekends, simply because they play more during the weekends than during the week. With supply and demand regulating price, prices for trade goods are higher on weekends than during the week.

This is really the only part of your post that I feel is wrong. The majority of players play during the week, as that's when the majority of time is available for coordinated schedules; such as raids or arenas. This leads to increased demand for things like gems, flasks, etc. to use during activities.

In addition to the increased demand, there is decreased supply during the week; since people come home from school/work with just enough time to do their raid/arena, and then go to bed/logoff. People are also getting "new epics" more often during the week, taking a higher percentage of trade goods off the market to enchant/gem their new gear.

During the weekends however, since there are _fewer_ activities going on (freeing up farm time for regular players), _and_ since the weekend casuals are now playing (who if they can't raid are doing dailies/5-mans, and thus gathering more often), supply goes *up* and both prices _and_ demand go *down*. Not the other way around.

Anyone who tries to transmute and sell their daily red gems will readily notice this price phenomenon. Prices rise during the week, and fall during the weekend. Similarly, within each day, prices start out higher in the morning/afternoon and fall by peak play hours.
I think an added benefit of gold farming you may've overlooked is that it keeps at lesat _someone_ posting stuff in the AH. Since money really is inflating (due to WoW, not farmers); combined with "nothing to do" for most regular players outside of instances, the cost of reagents and consumables is steadily skyrocketing during 3.3. At least the farmers put some of the brakes on these situations.

The other thing I'll mention is that there probably isn't as much harm in gold _buyers_ playing WoW as some may expect. Most buyers are probably using the money to pay for epic flying, new mounts, and other big-ticket items so most of the money they "buy" is being dumped back out and not circulating in the overall economy. While yes they may buy BoE/crafted epics, other than cutting-tier items you can always get a better piece by raiding, PVPing, or via badges at this point in the game.
The better question would be: Do Goldfarmers hurt the game.

The simple answer is: Yes.

For many of the reasons you cite in your post: Hacking, phishing..ect. You have to redefine the definition of "gold farmer" to include those individuals who look for other means in which to supply the demand for in game gold. The days of gold farmers killing mobs to supply the gold to sell might not be completely over, but that also means that if it is profitable to trick/hack/dupe their way into a gold source, the gold farmers will do it.

Is their any proof that says that the stolen gold doesnt also make its way back into the gold selling supply chain?

If their is an actual economy in WoW, then the answer to your question is still YES, and gold farming -does- harm it.

If raiders cannot raid due to a guild bank being wiped out, along with potions and other important consumables being stolen, then the rate at which raid provided BOE epic plans and the resulting gear is slowed(even if the items/gold are eventually replaced, there is still a lag effect on the overall server economy). This prevents pricing competition from driving down prices on these items, thereby affecting players ability to buy these items at reasonable prices and advancing their characters as a result.

At any rate, we seem to always point the crooked stick at the gold farmers for the supply side of the damage argument, when the spotlight should always be placed on players who buy gold. We owe it to the line of thinking that time equals money in a game world, where it's ok to equate time saved with the ability to purchase gold. Sure, it saves time, but with the explosion of hacking/scamming/phishing...ect, the demand must be great enough to drive the gold suppliers to these activities in order to keep up...thereby affecting the game for a great many players.

To deny that gold farming has an effect on a game like WoW is just silly, in more ways than one.
Gold farmers do not hurt the economy. Hacked accounts hurts both the economy and a players trust.

Fortunately, hacking for the purpose of gold selling has been 100% solved by the token ID. Anyone without one is responsible for perpetuating hacking.
Gold farmers also, as you implied, ruin the game for crafter-type people.

If you can't sell to other players because someone's using the market system to generate gold for the express purpose of selling to other people, you're going to be unhappy. You might stop playing the game, if crafting/economy is your thing.

It's one thing to lose to someone who just invests more time and effort than you. But to lose to a hydra of 5 people on one account going non-stop seems unfair.
Just have to use logic to arrive at the answer. he answer is imo no, gold farmers do not hurt the economy. They hurt the game though. Makes it less atractive sort of. Its just the feeling. Buying something on AH I prefer to think of it as buing from someone that plays the game for fun. Othewise its abit like paying for sex, a sort of hollow feeling. I hope you dont know what I mean.
@Ben re: prices rising during week and dropping during weekend:

You described the situation on your server. Mine is the reverse. It depends upon many small factors adding up - all of which depend upon the habits and norms of the players on the server.

Mine happens to be heavily mixed between Australians and USA players most predominantly, with others mixed in. This makes for an interesting effect regarding time of day effecting prices...
There is a difference between amateur and professional farmers. I know a guildie with an IT job that is 10 hours before server time. Lots of herb farming. I have had many hundred glyphs on the market.

If I had an against-the-EULA business, each account would have a level 65 DK alt on both sides of 24 servers. Then they could at least do a transmute every 20 hours. Perhaps use a tailoring c/d, used to would have done the cooking daily or j/c daily. Probably a quick auctioneer snatch. I.e., if there is a short profitable thing to do, then just doing it for the money, you would do it on multiple servers.

While I suppose the gold from hacking/phishing is a small % of the total WoW gold, I am not as convinced its as insignificant % of the RMT gold market. Partly because I am not sure of how large that market is. Most people I know are indifferent to gold, or are adept at earning it, e.g. herbing.

Although, i *really* don't understand these people who talk about gold being worthless. With an unlimited budget I would buy a five+ Battered Hilts (alts). Because I like crafting and have one of each profession, I would buy a dozen or two of the epic patterns and then orbs/primordial saronite for crafting mats. So without any more Mammoths, I think spending the first 300,000 gold would be pretty simple.

Legal RMT is in some ways liberating; don't do something you don't enjoy if it is just saving you ten cents an hour.
While it is true that Gold Farmers supply the economy with items which would lower their prices because Gold Farmers are offering them in bigger quantity. However, you forgot to mention one important fact.

Imagine the game without gold sellers and I will give you 5 players as example. Player 1-4 would buy gold if gold-sellers exist and player 5 wouldn't.

Example 1 (NO gold sellers):
Players 1-5 all have 50 gold as an average (playing legit)
An item is offered in the Auction House and the seller asks for 100 gold (no one will buy it because they dont have that kind of money)
So, the seller will reduce the price to 50 gold and one of these 5 players will buy it.

Example 2 (Gold Sellers exist):
Players 1-4 have 1,000 gold since they bought it from gold sellers, while player 5 have 50 gold.
An Item is offered in the auction house for 100 gold.
One of the 1-4 players will buy it since they have the money while player 5 cannot because he didn't buy money.
Now the seller find out that his item was sold FAST he will sell it for a higher price. Since player 1-4 have 1,000 gold he can sell the item for 500 gold depending on how much those players need it. Which will end in a big inflation in the community (if most players buy gold).
The poor player #5 will get screwed badly because he didn't buy gold.
Player 5 is only screwed if he is too stupid or lazy to meet the needs of the market. With sellers on the auction house raising prices willy nilly because of all the gold sloshing around between players 1-4 who no longer pay that much attention to value, it becomes very easy to make gold trading or crafting. So player 5s will either live with having very little gold, or learn how to make it, or change their minds and buy it, but they aren't really "screwed" in any of these scenarios unless they had their hearts set on making gold the same way the farmers do.
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