Real money trading in Massively Multiplayer Online Games

Want to know the current price of gold? Check out http://www.mysupersales.com/. You won't find the traditional store of value there, but rather the virtual gold used in massively multiplayer online games like World of Warcraft. You could earn gold by playing the game, and use the gold you earned in the game to buy equipment "in-game". But you can also buy gold from "gold farmers," in China and elsewhere, using real money, and having the gold delivered to you inside the game. Here's a paper by Richard Heeks of Manchester that says it's a surprisingly big business: "It employs hundreds of thousands of people and earns hundreds of millions of dollars annually. "

Real money trading for online gold also involves a set of transactions that some gamers and game operators find repugnant: operators go to great lengths to stop it. Here's a statement against the practice by the proprietors of World of Warcraft. And an article at a gamer site begins
"Is gold selling like pornography: something more of us do than admit? A shameful secret, something indulged alone and at night, in front of the screen; or during a lunchbreak, safely away from a partner, when a quick credit card or PayPal transaction will go unnoticed by others in-game?"

A further article recounts how some game operators have tried changing the rules on in-game transactions to make real money purchases less practical, while other games have decided to allow players to enter for free, and finance the game by officially selling equipment for real money:

"The most probable trend is that the games become 'free-to-play', and the operators sell gold or other in-game items by themselves. There are a lot of so-called F2P MMOs, and they mainly get revenue from selling in-game items.
"One of the most famous examples is a Chinese online game developer and operator - Giant Interactive Group, they got listed in the NASDAQ by selling in-game items in ZhengTu, a game they developed and published in China. So I don't think the game publishers will be willing to share the cake with the gold sellers.
...
"According to Vili Lehdonvirta of the Helsinki Institute for Information Technology, an expert on virtual consumerism, real money trading is now well-established outside of the MMO sphere.
"Several Korean online games successfully sell performance-based items to users," he says in his recent report Virtual item sales as a revenue model: identifying attributes that drive purchase decisions. "

HT: Rich Dougherty (who describes himself as an avid reader of Market Design).