Poor Countries Cash In with ‘Virtual’ Economies
It's still hard for many people to understand, but there's a real market for things that don't technically exist: avatar clothing, gold farming, power leveling and more. These things exist only as 1s and 0s, and yet they are more profitable than real commodities for many poor countries, according to a report from the World Bank.
Virtual economies serve the growing number of people worldwide who want goods and services for their online personas. This has led to businesses that outsource online goods and services to people who sit at computers all day trying to find that important piece of virtual gear, or doing the tedious work of earning experience points in a game, or even just artificially inflate votes in social networks. The most notorious example is the World of Warcraft gold farmers that spend all day earning gold and improving characters that can be sold for real money.
The World Bank released a report [PDF] this month revealing that virtual economies earned $3 billion in revenue in 2009, and that number likely increased in 2010. These virtual economies were the primary source of income for an estimated 100,000 people, mostly from China and Vietnam.
Even more interesting for poor countries is the efficiency of virtual economies. The World Bank reported that virtual goods are more profitable than real goods because almost all the revenue comes back to the country that performs the service. By contrast, real goods such as food and clothing bring only a fraction of all revenue back to the place where they were grown or manufactured. The coffee bean industry is one example. Though the coffee bean market does around $70 billion of business each year, only $5.5 billion stays in the country where the beans were actually grown.
The other advantage poor countries have when investing in virtual economies is the potential growth. More and more people are going online and becoming interested in virtual goods, and many of them are looking for the very shortcuts and discounts gold farmers and other services provide. There's also a growing demand for virtual goods and services outside of games and entertainment. Many people are working in the digital equivalent of sweatshops, not to get game gold but to transcribe text, check images and artificially inflate polls and votes.
