Schaff: Online gaming not a good way for students to earn income

Is it possible for college students to stop feeling guilty about the hours they waste on… Is it possible for college students to stop feeling guilty about the hours they waste on Internet games like Words With Friends or FarmVille?

Not only is it possible, from the perspectives of Columbia University graduates Makhael Naayem and Dimitri Sillam, it’s profitable. Together, they have founded a company that aims to redirect students’ compulsive gaming habits in an effort to make dents in larger social problems — such as the increasing financial burden of college education. In contrast to other gaming sites that charge users for moving around the virtual environment, their site,  Grantoo,  raises funds from companies eager to market to young people. Game winners are paid to the tune of a $100-$200 tuition-reimbursement checks per daily tournament, with no money down. Grantoo asks winners to engage in charity giving, which has so far accounted for 35 percent of winnings, according to Inside Higher Ed.

The founders of Grantoo deserve credit for producing an innovative way to combine commercial interest, social gaming and philanthropic passion, as well as for the potential benefits that such a combination could bestow on society. It should be noted, however, that any such benefits carry limitations and could easily be overshadowed by costs if Grantoo becomes too popular.

It is possible the business model only creates value where it did not exist before. In this respect, Grantoo’s founders are the “creative” workers which heads of state constantly speak of. In a perfect world, Grantoo would only affect college students who already pour hours into online games with sure-to-be-zero (or less) returns, causing them to move from their previous unproductive activities to Grantoo games, where they have the chance of reaping positive returns. The student winners could use the checks to stay in college longer and, in one way or another, spend more money. Along with these student benefits, tournament “sponsors” get a unique funneling channel to advertise their products, and charities receive some amount of increase in donations. By enticing sponsoring businesses to spend more of their cash in this way, the Grantoo scheme could endogenously stimulate economic activity.

But the world isn’t perfect — reality is much less rosy.

The problems with Grantoo begin with a potential flaw in the premise. Companies that partner with Grantoo essentially pay for access to the website’s consumer audience (i.e. the student gamers). Putting aside the possible tax breaks and altruistic intentions, companies would only commit to regular sponsorship if they thought there would be a possibility for a positive return on their investment. That means the scheme would work only if companies could take more money from students than the students would win. If the ads were to increase students’ consumer spending (on the advertised products), Grantoo would actually defeat its own purpose of helping students’ ability to afford college by reducing the average gamer’s disposable income.

While a veritable risk, that flaw is not as worrisome as other problems. Since students could simply rearrange — not increase — their consumption behavior and companies might only want to cash in on newly synthesized public goodwill (outside of students). The greater worry is more fundamental: Incentivizing game-playing over more economically valuable activities — like studying — may be far from what college students need.

At the moment, Grantoo’s payouts are small and number relatively few. According to Inside Higher Ed., a mere 2,000 people (with university IDs) have registered so far. As a small operation, little harm can be done, as it’s likely that already-hooked gamers occupy the lion’s share of participants. But, the site only launched in late March. Given some word of mouth and the fact that gamers can’t lose money, it’s not hard to imagine Grantoo taking off on campuses across the country come next academic year, thereby attracting more sponsors, divvying up larger payouts and — the disturbing part — filling its gamer ranks with non-traditional gamers.

That’s because all of us have — snugly tucked back in some corner of our human brains — an innate tendency to want something for nothing, for gain without pain. This unfortunate tendency poses to both stimulate Grantoo participation and be retroactively enhanced by that participation. Just like how 19th-century merchants regularly abandoned their trading posts for the stock exchanges to speculate in asset bubbles (opportunities to make easy, but unsustainable, profits), the prospect of making hundreds of dollars while having fun on the Internet could pull students from their books, further assaulting the already dismal number of hours they devote to studying. At a time when our country needs crops of young workers filled with industrious spirit, Grantoo could unwisely dissociate financial gain from hard, economically significant work (like keeping a job) in the minds of students. The Grantoo scheme might nominally create value, but potentially at the expense of twentysomethings’ appreciation for the true meaning of valuable production.

Furthermore, Grantoo represents anything but a “private sector solution” to the problem of spiraling higher education prices. Payoffs can only be so large. They go to practiced gamers — people who may have neither true academic merit nor financial distress — and they don’t address cost control.

Although Grantoo still has time to prove itself as an innovative philanthropic concept, we must proceed with caution.

Write Matt Schaff at matthew.schaff@gmail.com.