The Lawbringer: Why you'll never buy gold from Blizzard
by Mathew McCurley 
Jun 29th 2010 at 6:00PM
Greetings, Lawbringer readers! As you'll soon notice, I am not Amy. Amy is currently studying for the bar and I've been asked to fill in for a bit while she studies for that hellish exam. I've been there -- it's a rough road. Her readers, however, are in good hands. So, please excuse me while I do my best to fill in. After I wrote my feelings about the Celestial Steed and heard many awesome responses, I wanted to talk a little bit more about buying and selling merchandise parallel to the World of Warcraft.
You'll never buy gold from Blizzard. There's a lot of reasons for it, both legal and economical, but at the heart of the matter is that it just doesn't make sense for a fourth generation massively multiplayer to capitalize on such a worthless item. "Gold isn't worthless," they decry! "Gold buys me many things in game. Gold allows me to fly epically and fill my bank with magic holes." All true, no doubt. But gold as a resource is infinite, and selling an infinite resource is a fools' errand.
Let's go down the list of reasons why Blizzard selling gold is a bad idea. Like I mentioned before, there are legal implications, economical implications and just plain bad business decisions.
Do you know how much it costs to sue?
America gets a bad reputation for being the lawsuit capital of the universe, and usually people are right. We sue back and forth about a whole bunch of stupid things. The fact you don't know is that most, if not a good amount, never make it to court. Judges aren't stupid. They've seen this crap before and just toss these people out of court for one reason or another.
But what happens when you do have a case? Money. Lots and lots of money. Deep, deep pockets are empty by the time the lawsuit ordeal is over. Lawyers get paid, court fees get paid, expert witnesses get paid, co-counsel gets paid, service processors get paid, associates, paralegals and everyone back at the office gets paid. When I tell you that it's a lot of money to sue, it is a lot of money. Especially when you deal with corporations, and even more especially when you're going up against someone like Blizzard.
Imagine if Blizzard sold gold. Gold would then have a real world value according to the creator of a currency. Therefore, directly, gold in Warcraft would have a value. A dollar value. The IRS here in America collects taxes, requiring all citizens to report earnings to the agency and pay a percentage of income. Shocker of shockers, we call that the income tax. Now that WoW gold has a value in our little made up world, and confers benefits to me, one could argue that my gold is income. Without real world value, gold is just numbers in a database stored on a server somewhere in Arkansas.
The last thing Blizzard wants to do is have to write out income reports for every player filing their taxes. Obviously this situation is ridiculous, right? It's all hyperbole to show you the dystopian gold future, where taxmen run amok in Azeroth, charging sales tax on every auction house purchase. But it's not! We've been talking about this since 2006. And we still don't really have an answer.
Imagine the costs of dealing with lawsuits for 12 million people. Imagine the potential tax implications for 12 million people. Imagine the amount of people Blizzard would have to hire to deal with legal and tax issues for 12 million people. Then multiply that number by at least a hundred. It's too expensive to sell gold in World of Warcraft.
"I should be able to buy this stuff in game!"
One of the bigger responses to the Sparkle Pony debacle of 2010 was that players should be able to receive any reward offered on the Blizzard store with a comparable in-game route to earn the item, either by achievement or purchasing the item. If you believe that this even crossed Blizzard's mind, you're more than likely wrong.
Achievements and gold are unlimited resources in Blizzard's eyes. What could you possibly price the Celestial Steed at in-game? Let's just go with 100,000 gold. I know people with well over that, and people who will never see nearly that much gold. So, I can either purchase the Celestial Steed for $25 or pay in-game 100,000 gold for the horse. That gets awfully close to Blizzard ascribing a real world value to gold, equating $25 to 100,000 gold pieces.
Gold and achievements are limitless within the world. Your money is not. The sale of a horse or a pet isn't about it being able to be earned in game. It is a purely optional cash transaction for the use of an item that, in its design, cannot be gained within the game. Maybe that's why people are so mad at it -- it really is about making some cash. It worked, though. They sold a heck of a lot of horses.
You'll never buy gold because gold is worthless to Blizzard. They would much, much rather have your $25 for a horse rather than your $25 for gold to spend on a horse.
Bad business
It's bad business for Blizzard to sell gold. You've seen the cottage industry that has ballooned into a multi-million dollar juggernaut in China. Hell, it's probably in the billions now. The amount of gold being bought from China in WoW and other games is immense. I wish I could give you the real scope and scale of the industry, but it eludes me. It's just massive.
Blizzard does well to not stick its nose into Chinese politics. For what its worth, Blizzard has been wonderfully diplomatic about the gold selling problem. The game sold well in China and continues to make Blizzard money even during the long stints of Chinese bans on the game. Many Chinese players connect to WoW through the Taiwanese servers, in fact. Over the years, Blizzard has made decisions in China that have, for the lack of a better word, endangered WoW in the largest market on the planet.
Blizzard selling gold would create a huge problem for their relationship with China. First, it undermines what amounts to a Chinese export. Second, it forces a lot of Chinese out of work. Of course, they shouldn't be employed in this odd gray market in the first place, but it's there, it exists, and it is a fact of life.
You won't buy gold in World of Warcraft from Blizzard. You just won't. You'll buy mounts, tabards, pets, hats for your orc shaman, extra draenei horns, houses, guild halls, proto-proto drakes and whatever else your mind can dream up. But you won't buy gold, because that's a fools errand.
This column is for entertainment only. If you have a real legal question, consult a real lawyer. This edition of The Lawbringer was written by Mathew McCurley, WoW.com's Addon and UI columnist. Sometimes, he's a lawyer, too. Check out his weekly columns Reader UI of the Week and Addon Spotlight! Contact him at mat@wow.com.Filed under: Analysis / Opinion, The Lawbringer
Reader Comments (Page 1 of 3)
Balgus Jun 29th 2010 6:09PM
actually unless im mistaken the income thing isnt entirely correct. they cant charge taxes on gold as income just because you could buy it. they could only charge taxes on it if you can trade the in game gold for actual real money. as long as blizzard doesnt let you cash it back out into real money that wouldnt be a problem.
(cutaia) Jun 29th 2010 6:21PM
I decided to refresh after typing out something to this effect, so I'll just add it here as a reply since you already brought it up:
"Now that WoW gold has a value in our little made up world, and confers benefits to me, one could argue that my gold is income."
I agree that Blizzard will never sell gold, but I have trouble understanding this argument.
Walk into your local 7-11 and you already see cards hanging on the rack to buy in-game money for Farmville, etc. Does that mean that the taxman is going to start taxing all the coins that those players can earn in-game because those coins can also be purchased for real money?
Things don't automatically become real live currency just because someone is able to pay for it. Artists, for example, can draw paintings all day long. Does this mean those paintings suddenly have automatic taxable value, just because someone could technically buy one of them?
I'm just not understanding some of the argument laid out in the article...
Kemikalkadet Jun 29th 2010 6:25PM
Correct. You'd be buying a product (virtual gold) rather than exchanging one currency or another. It would only fall under sale of goods laws rather than income and currency exchange.
cielago Jun 29th 2010 7:17PM
I think that the tax on gold argument doesn't fly, it's not a currency exchange, it's a bought product, and if the goverment deceided it was a currency and thus taxable on game income, it would go uglier faster for the goverment, can i pay all my taxes in game gold?
and thinking of game gold as a product if it gets stolen (hacked account etc) and sold, is it a crime? (as viewed by a court of law) and can it be prosecuted?
Chris Jun 29th 2010 7:20PM
@(cutaia)
I hate to jump in with the "I'm a lawyer in real life" argument, but I am, so here it is: You are having a hard time understanding the article because it is legally incorrect. There is absolutely no legal authority to support this being an income tax. Blizzard will, of course, also insert some contract language in the TOS which stated that gold has no intrinsic value, is for entertainment only, etc. It's probably already in there, but I don't like reading boilerplate contracts anymore than a non-lawyer. It would be no different from buying a shiny e-horse for $25.
If Blizzard allowed you to change your gold to currency, and Blizzard was sending you a check for US funds for turning in gold (lol at that ever happening) then, yes, you would have issues, especially in Europe with the VAT. It would be similar issues to what Second Life constantly goes through (fraud, etc.), but on a broader scale, and even they have eluded an outright slapping of illegality by the courts.
The most obvious issue which I didn't see in the article is that not selling gold forces people to actually play the game, and pay $15 a month to do it.
Irem Jun 29th 2010 7:44PM
"The most obvious issue which I didn't see in the article is that not selling gold forces people to actually play the game, and pay $15 a month to do it."
Thank you, this is it in a nutshell. Blizzard has absolutely nothing to gain at all from making ingame currency purchasable, and way too much to lose.
Phoulmouth Jun 29th 2010 11:54PM
You are wrong and right at the same time.
If you can pay 5 dollars for 1000 gold in game then technically you can sell 1000g to a real life or in game friend for the same 5 dollars. So technically you will be able to exchange 1000g in game for 5 dollars real money thus meaning that every 1000g gained in game is 5 dollars of income.
Of course the only way you would really be taxed on it is if there was proof that you sold it for real money or traded it for real services or products.
Basil Berntsen Jun 30th 2010 7:10AM
The difference between wow and other microtransaction based games is that I could theoretically get so good at trading that I'd have a serious income from it, and that's when the tax man would get a little suspicious.
Other games like Farmville don't allow you to buy currency, make a trade, and then earn more currency in exchange.
Bluriel Jun 30th 2010 8:04AM
@Chris
"The most obvious issue which I didn't see in the article is that not selling gold forces people to actually play the game, and pay $15 a month to do it."
As long as you pay up your monthly subscription, lesser crowded servers is actually better (I said lesser crowded not underpopulated or ghost towns).
Best guess is people buying gold for RL cash _do_ intend to play some several months from now on. They just won't be farming Sons of Hodir/AT/whatever dailies and/or stalk AH so they can afford epic gems/enchants/crafted stuff/etc.
jxl Jun 29th 2010 6:12PM
"Imagine if Blizzard sold gold. Gold would then have a real world value according to the creator of a currency."
That is actually not quite right. In-game currency would only be have real-world value if it were transferable back to a hard currency. A one-way gold transaction Blizzard -> customers would be exactly the same as selling My Little Sparkle Ponies. Being able to sell gold back to Blizzard for cash would cross the line you are talking about.
Edge Jun 29th 2010 7:30PM
Yeah this would fall more along the lines of "Blizzard will never sell or let you sell gold".
Beli Jun 29th 2010 6:16PM
I'll start by poking a hole in the argument created here... IF you could buy gold with cash, there's nothing to say that Blizzard would allow you to go the other way - you couldn't "sell" your gold and earn cash. Without being able to go both ways, there isn't a real trade market available, and you would have to be extremely foolish to try and say that gold earned in game - which can't be transferred to cash - should be taxed. Yeah, there would be sales tax on any gold you did buy... but that's not anything Blizzard isn't prepared to handle with their online store.
The rest of the arguments i do buy, however... they would much rather sell you items you can't get in game, than sell you gold and let you get the items with gold - they make more money on the items that way.
I just think people need to lay off the whole taxation thing with gold buying... that really won't happen unless the transfers can go both ways.
Dragoniel Jun 29th 2010 6:17PM
Interesting read, thanks.
Surprisingly, I really enjoy these columns. It's very interesting to get a glimpse of how serious things are behind the stages of a painted world with millions of people in purely for the fun and laughs.
Oteo Jun 29th 2010 6:19PM
Lawyers everywhere! Also, I love reading Mathew McCurley's articles in an NPR voice.
shadowhowl1900 Jun 29th 2010 6:23PM
buying gold from blizzard is a big slap in the face really. all they need to do is just adjust your gold with a few clicks while the chinese farmers are probably up all night killing and looting over and over . in that case, you are spending money for the time it took them to farm them.
(cutaia) Jun 29th 2010 6:30PM
You don't think "gold farmers" actually just farm for gold to sell, do you? The unfortunate truth to the matter is that pretty much every piece of gold that gets sold was stolen from hacked accounts.
It's basically a crime syndicate in the virtual world.
(Forgive me if you were just making a joke.)
Malkil Jun 29th 2010 7:28PM
@(cutaia)
That's only partially true. Gold farmers do, in fact, farm gold in a way.
More specifically, they will farm herbs, ore, and skins and sell them on the Auction House. In fact, I've even seen gold farmers farming up Relics of Ulduar in Storm Peaks on a number of occasions, though I haven't checked since Sons of Hodir rep became incredibly easy to earn.
There's no denying that they make gold from 'hacked' accounts, but that's not the whole picture.
Irem Jun 29th 2010 7:32PM
Malkil is correct. They do a lot of their business in hacked accounts, but if you ever visit the Just My Two Copper forums, you'll see a lot of people discussing how a recent wave of goldfarmer bans caused supply of raw materials to drop and prices to raise.
They do frequently use bots and hacks to accomplish their farming, like the one that allows them to hide under the terrain and mine without being seen or getting aggro.
Hih Jun 29th 2010 8:02PM
Ya, after I had my account compromised, one of my characters was naked in Sholazar Basin with a couple stacks of Saronite Ore that I definitely hadn't farmed. When I logged in I was underneath the terrain and fell to my death. So they definitely do farm.
Aracross Jun 29th 2010 6:30PM
One day, Mathew, one day I'll remember you this post.