Chan, 1

Nicole Chan

Clay Shirky

Exploring Net Literature

30 April 2015

The Gold Rush: A Look into the Rise and Fall of Gaia Online

In the formative years of my pubescent youth, I stumbled upon a website called Gaia

Online. The year was 2007, and my niche interest in all things Japanese felt much less obscure

within Gaia Online’s expansive anime based virtual world. The site gave me a place to be and a

sense of purpose. At the peak of my three-year addiction, I spent over 12 hours a day online.

Returning to the site after a five-year hiatus, I intended to explore how user hierarchy is visible

even without explicit site labels. But instead I found the once thriving site ecosystem infected

with plague. With the community in shambles and the economy in complete disarray, this essay

will look into the rise and fall of Gaia Online.

Gaia Online, referred to as ‘Gaia’ internally, is an anime-themed social media website

targeted at teens and young adults. The site’s name originates from the Greek mythological

personification of Earth, and is an encapsulation of what the site aims to be: an online Eden

where a user can be whomever s/he wishes to be. Gaia’s information page advertises that the site

is “more than just an online hangout. It’s a world populated with millions of people gathering to

chat, play games, watch movies, and show off their creativity through customized avatars,

profiles, and journals.1” Acknowledging cynicism from the start, Gaia emphasizes user-

interaction to separate itself from negative stigmas equated to digital spaces. Gaia Online sets out

to be an alternate universe where users can comfortably craft their own unique identities.

1
http://www.gaiaonline.com/info/whatisgaia/
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Much of the creative expressionism on Gaia Online comes from avatar customization.

Members of Gaia, called Gaians, are represented everywhere on site by avatars. For several years,

users would first design their base avatars2 then work to accessorize with

tens of thousands of virtual accessories3. Site usage revolves around

acquisition of items, and users can adorn avatars with everything from

flaming swords to elven ears. But more than a pixelated doll, it is more

accurate that the avatar is synonymous with the user in many cases. Every

user has one base avatar that generally remains unchanged throughout

one’s entire duration on Gaia. Gaians are judged heavily based on what Figure 1 Example base avatar

items are adorned, and how they are styled. It is not a huge overstatement to assert many users

form psychological bonds with their avatars as they take pride in their online selves. Gaians often

build “dream avatars” and will “quest” for more expensive items. This terminology

simultaneously reinforces the notion that being a Gaian is both purposeful and fantastical.

Figure 2 Example avatars

2
Originally users would design their base avatar by selecting gender, skin tone, hair cut, hair color, eye
design, eye color, and expression. The registration process has since changed and users are now assigned
a random avatar after registering.

3
There are no official or public statistics regarding the number of items available on Gaia Online,
however users estimate there are approximately 23,431 items, based on the marketplace information.
 Chan, 3

Gaians customize their avatars by earning and spending virtual site currency, called ‘Gaia

Gold’ or ‘gold’ for short. Posting in the forums, playing games, visiting the town, and voting in

polls are just a few ways users are awarded for interacting with the site and other users. Payout is

done at a constant rate for initial site interaction, and then computed through a logarithm for

subsequent usage. For example, from 2007-2010, a user’s first forum post of the day would

generate 50 gold. Subsequent posting would yield decreasing amounts, based on an equation that

takes into account the total site economy along with user activity. Gaia Gold can be spent in

Shops for items at fixed prices, in the Marketplace where user-set prices fluctuate with demand,

and in trade between two users who independently agree on exchange equivalencies.

Gaia operated on solely virtual currency for several months, but ran into financial trouble

as user base grew and increased server costs. In June 2003, many Gaians donated money to Gaia

Interactive Inc.4 to keep the site afloat. The site responded by gifting those users with an item

called the Angelic Halo as a thank you gesture. The item description reads, “Those who are

selfless and giving are often mistaken for angels -- the halo is the true mark of this angelic race.”

The Angelic Halo was well received and heavily sought out in the Marketplace. This inspired

Gaia to shift into a freemium model5 and they started to sell Monthly Collectible Letters the

following month. Monthly Collectible Letters

are premium items sold for $2.50USD. Owners

have the option to choose between two or three

special items and Monthly Collectibles are sold

Figure 3 Site advertisement for Monthly Collectibles

4
Gaia Interactive Inc. is the company that owns and manages Gaia Online.
5
Freemium is a combination of the words ‘free’ and ‘premium.’ It indicates a business model where basic
services are free but money is charged for more advanced features.
 Chan, 4

with the understanding that “when a letters month has passed, it will never be re-released, then

the only way to obtain an older Monthly Collectible item is to purchase it from another Gaian via

trades or the Marketplace6.” For several years, this was the only overlap between real world

currency and Gaia Online. A majority of users generated site wealth via sheer participation, but a

minority of users would purchase Monthly Collectible Letters with real cash then sell on the

marketplace to eager users who were unwilling or unable to invest real currency. Monthly

Collectibles are scarce by design, and the most desired items on site.

In July 2007 Gaia Online underwent its first major structural change with the introduction

of a new site currency: ‘Gaia Cash,’ otherwise known as ‘Cash’. Users purchase Cash for real

money, with 1USD being equivalent to 100 Gaia Cash. This Cash could then be spent only in a

specialty store, the Cash Shop, for limited edition items. Monthly Collectible Letters were moved

from their own section on Gaia into the Cash Shop. They were no longer the only coveted items

for sale, and the increased quantity of instantly obtainable premium items began to affect the

relationship between Gaia Gold and real currency. Users could now make calculated Cash Shop

purchases by examining which items yielded the highest Gaia Gold to Gaia cash ratio. For

example, if a Monthly Collectible is 250 Gaia Gold and worth 10,000 Gaia Gold on the

Marketplace, but another item is 999 Gaia Cash and worth 100,000 Gaia Gold on the

Marketplace, then the second item is of better value and 1USD was equivalent to approximately

10,000 gold.

Example:

If Monthly Collectible X = 2.50USD = 250 Gaia Cash = 10,000 Gaia Gold

Then 1USD = 4,000 Gaia Gold

6
http://gaia.wikia.com/wiki/Monthly_Collectible
 Chan, 5

If Cash Item Y: 10.00USD = 1000 Gaia Cash = 100,000 Gaia Gold

Then 1USD = 10,000 Gaia Gold

Nevertheless, Cash Shop items constantly rotated, and user demand determined

Marketplace prices. A Monthly Collectible in July may have a marketplace value of 10,000 gold,

but a Monthly Collectible in December may sell for 25,000 gold. The relationship between real

currency and Gaia gold remained in flux. This ambiguity preserves the site’s detachment from

reality and overall appeal. The Cash Shop changed how some users interacted with the

Marketplace, but a majority of users remained still only operated on Gaia Gold. 2007-2010 Gaia

Interactive Inc. Chief Executive Craig Sherman reassured that “up to 99 percent of the

experience online is free at Gaia7.” Users could more easily acquire large sums of gold by

making calculated Cash Shop purchases, but anyone could still earn enough gold to buy items for

their avatar if they dedicated enough time in the site.

However, everything changed when the gold generators attacked. On August 22, 2013

Gaia released an item named “Flynn’s Booty” for 99 cash (.99USD). This item was unlike

previous cash shop items, as it had “the potential to award [users] between 50,000 Gaia gold and

100 million Gaia Gold.8” Rather than having users purchase items that could then be converted

into gold in the marketplace, Flynn’s Booty granted gold instantly. It was inexpensive and had a

high payoff, and resultantly was purchased in large quantities. Many users, loaded with their

newfound wealth, rushed to the marketplace to purchase their long wanted item. Marketplace

gold revenue increased from 10 billion to 3 trillion in 5 months.

7
Adegoke, Yinka. "Kids Socialize in a Virtual World as Avatars."
8
From a private message sent from the admin account
 Chan, 6

Figure 4 Effect of Flynn's Booty on Gaia Marketplace

Flynn’s Booty and its related packages9 caused rapid inflation. Staff reassured nervous

Gains that the effect was temporary10 because the item would only be sold for four days.

However, Flynn’s Booty was re-released multiple times to the point where the Gaia Online

Wikipedia gave up on updating the related section11. Users petitioned the site to stop selling the

item multiple times and were ignored.

Even after seeing the aftermath of Flynn’s Booty, Gaia continued

to sell gold generators released under different names. Prior to Flynn’s

Booty, the site had released six previous gold generators, primarily in

2008. The site avoided pure gold granting items for four years, but after

the release of Flynn’s Booty released 120 within a one-year time span12. Figure 5 Gaia related meme
expressing frustration

The items needed to promise higher and higher payoffs to stay appealing as inflation skyrocketed.

The last gold generator, the “Golden Watermelon,” promised a maximum grant of 1,000,000,000

9
Flynn’s Booty had 4 related items: a bulk pack of 12, a more expensive version (Flynn’s Chest) with a
minimum yield of 1,000,000 gold, a bundle of 6 Flynn’s Chests, and pack of 12 Flynn’s Chest
10
In a now deleted FAQ, staff reassured users that Flynn’s Booty “is not predicted to have any long-term
negative effect on the economy.”
11
http://gaia.wikia.com/wiki/Item:Flynn's_Booty
12
The last gold generator at present was released on August 19, 2014. Some of the 120 released gold
generators also generated items, although 57 only grant gold. ManaManami, “All the Gold Generators So
Far.”
 Chan, 7

Gaia Gold. During this time period, users estimate the site suffered inflation as high 8.5 million

percent13.

Figure 4 Price increases in a 10-month span

The site suffered holistically as a result. Posting in the forums, participating in weekly

contests, and playing on games became vastly unprofitable. These sections, the lifeblood of the

community, hemorrhaged as gold generator after gold generator were sold in the Cash Shop. The

onslaught of negative feedback prompted site moderators to close the “Ask the Admin” threads,

and heavy criticism of new CEO of Gaia Interactive also caused censorship to rise on the site14.

User trust had already been breached, but now it was trampled on. Disenchanted users began

13
Zandy. "Your Marketing Team Is Driving Gaia to the Ground."
14
The Gaia Online Terms of Services were updated to with provisions regarding disparaging, ridiculing,
and scorning Gaia employees and officers [Sec. 4a]; and posting personal information (such as names) of
Gaia employees [Sec. 4q]. In addition, Gaia added an amendment to allow them to revise the Terms of
Service without notifying its users, and that the only recourse for those who find the revised terms
unacceptable is “to discontinue using the site” [Sec. 3].
 Chan, 8

leaving in droves and countless poor choices were made in desperation to keep Gaians interested.

In perhaps the largest insult to the site’s integrity, on June 28, 2013 “The Spectacular Summer

Sale” sold several previous Monthly Collectibles for Cash, including the Angelic Halo. The once

sacred item on the site, the symbol of user and moderator goodwill, was officially for sale.

In 2007, Gaia Online blossomed with over a million posts made daily and 7 million

unique views per month. The site ranked 1st in Average Time Spent on Social Networks by US

Internet Users15, and won the won the Webware 100 award in the Community category. Today,

Gaia struggles to garner 13,000 unique views per day16. The site has become the textbook

example17 of a poorly run virtual economy, a tragedy caused by greed. The decision to sell gold

generators in the cash shop created a direct link between the virtual currency and real currency.

An “everything is for sale” mentality now reigns over the barren site, where few users are visible

given that profitability only comes from lone wolf Marketplace activities18. A single a forum post

today can yield over 14,000 gold. Within ten minutes a user can easily generate over 100,000

gold. But in a place where items are sold in billions and trillions, this is worthless. Attempts to

reign in inflation have been ineffective. The site now has four distinct currencies, confusing to all

and helpful to none.

What is Gaia Online? The energetic world I once resided in has been reduced to nothing

more than a practice place for open market operations. The turn away from user interaction has

15
Dougherty, Heather, and Marc Fanelli. "Driving Opportunities Through Participatory Marketing."
16
http://gaiaonline.com.statstool.com/

17
Virtual Economies: Design and Analysis by Vili Lehdonvirta and Edward Castronova cite Gaia Online
as an example of hyperinflation.

18
The April 7 2015 Gaia Survey Results and Discussion revealed 85% of participants report earning gold
via marketplace, a large shift in away from traditional site resources.
 Chan, 9

caused a race to the bottom as Gaians fade away, mythical creatures of a distant past. Site

activity has been in constant decline, and site interest is currently at 1% of what it once was19. As

I log off from the site that once was my world, it is with sad resignation I realize Gaia Online

probably will not exist in the near future. But it is with even sadder resignation that I

acknowledge the site I loved has not existed for years.

19
http://www.google.com/trends/explore#q=gaiaonline.com
 Chan, 10

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 Chan, 11

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 Chan, 12

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