Gray Market; New industry: Scavengers collect virtual booty in online games and sell it for real cash.(Cover Story)

Byline: Mark Russell

K. sits in front of his computers for 12 to 15 hours a day, playing games for a living. He is a scavenger in the kind of online games that involve as many as 200,000 players building or battling in elaborate virtual worlds. His specialty is Lineage, a medieval-fantasy game, and he plays seven characters simultaneously on four computers, seeking the spoils--magical swords and the like--that allow victors to move to higher levels. At 27, K. says he couldn't find a normal career out of university, so he turned to this gray-market profession, earning some $4,000 a month winning and selling virtual booty to other players.

While selling virtual goods for real cash is not illegal in Korea, it is against the rules of Lineage, and every other entry in the class of "massive multiple-player online games." Some of the big game makers encourage trading of virtual goods between friends, and some even sell their own virtual goods for real cash. But none allows outsiders like K. to take real money out of their virtual worlds. It's not yet clear how the courts or the government in South Korea, or any other nation, will resolve the disputes arising on this border between the virtual and actual worlds. That's one reason why K. won't give his real name.

Even the fanatic universe of game players is divided about trading virtual goods. The buyers are paying to gain an advantage (a magic weapon or whatever), and many consider it cheating, or just stupid. Often people are paying real money for play money, a deal no sane person ever made on a Monopoly board. "Selling and buying stuff online through games is just a crazy idea," says Kim Min Ho, a university student. "I don't understand why people do it. There are better ways to waste your money." Others say it's capitalism at work. "It's just an incentive for playing," says 27-year-old office worker Kim Ki Woon. "It's great to know that you can earn a little on the side while spending time on your hobby."

South Korea is the world's most wired society, a center of the online gaming craze and a main battlefield for disputes over who owns commercial cyberspace. In 2001 the Korean government sided with NCsoft, maker of Lineage, in a dispute over ownership of online goods, but did not go so far as to outlaw trading in such goods. NCsoft has since banned ...