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Apr 30, 2004

Comments

1.

Prof. Jack Balkin wrote in 4 page of the draft
"To the extent that game owners commodify their virtual worlds, encourage people to treat element in those world like property, and allow purchase of those assets in real world markets, they will lose first amendment protection for much of what they do."

>> In China where many Korean MMORPGs being imported & consumed, tens of chinese lawyers request their assembly to enact new law recognizing in-game items as private property of game consumers.

Jack Balkin also wrote
"Conversley, the more that game owners endeaver to design their platforms to be non-commodified, and take steps to preserve their non commodified and "speech-like" character, they more protection they can and should expect under the free speech principle."

>> In Korea where Many MMORPGs being produced,the NcSoft officially requested korean goverment to make a law banning the item trading business for protection of its free speech. This means the gaming company endeavers to set their out-game surroundings un-commodified, while still designing their in-gam platform commodified.

BTW, it is reported that the scale of item tading maket in Korea will surpass that of MMORPG buiness market this year.

2.

Relating to 'Fraud', J. Balkin wrote in 25 page

"As the moment of real world money invested in these gamesspaces increases, people may think they have been wrongfuly defraded in case where the EULA is silent....But it is probably only a matter of time before someone brings an action for fraud in virtual worlds."

Until now, the almost of cyber-fraud case in korea is like that "If you give me a real money in advance, then I give you virtual items, after receiving the money, the seller disappeared."

But recently one case which Seoul distict court sentenced guilty is like that " If you give me a virtual items in advance, then I give you real money, after receiving the items, the buyer disappeared."

3.

I found Professor Balkin's paper a fascinating read because it argues for so many of the same ideas that I want in digital worlds from such a different perspective. It goes to the heart of the debate over the pros and cons of trying to create the Metaverse -- that is, a digital world tightly connected to the real world -- versus other forms. Apologies for the length of this post, but it is a long paper that pulls together some very interesting topics.

There is a basic assumption made that creators and operators have a choice about the commodification of their worlds. Much like a land war in Asia, this may be a classic blunder. Real world trading of in-game assets or accounts can be blocked in two basic ways: design the game so that real-world exchanges aren't effective/profitable or structure the Terms of Service so that real-world exchanges are a violation. The problem, of course, is that neither of these work.

Modifying the game mechanic to block real-world exchanges necessitates the blocking of all in-world exchanges of items between players and all exchanges of accounts between players. Blocking all in-world exchanges is required because there is no way to accurately determine if the exchange is the result of a real-world monetary transaction. Yes, certain patterns may indicate that the exchanges are driven by real-world concerns, but detecting and proving user intent is extremely difficult and prone to false positives. So, designers are left blocking all player-to-player transactions, which completely eliminates most of the game play of MMORPGs. Proving that an account has changed hands, much like proving intent, is also difficult and prone to false positives. Technical detection of intent, generally, is an arms race that is at best expensive and at worst not winnable.

That leaves the ToS and EULA. Sony decided to block item sales in EverQuest and had enough muscle to get eBay to drop EQ items. This did not eliminate EverQuest item sales. Instead it created a black market -- with all the questionable business practices that traditionally appear in black markets -- that is now completely dominated by IGE. Does Sony enforces its EULA and ban accounts run by IGE? No. Instead, they sometimes choose to ban individuals who engage in item sales and state that item sales are blocked because their users don't want item sales. IGE's sales numbers indicate that a large percentage of players want item sales, so Sony either doesn't understand their users -- which I doubt -- or they have decided to ignore the issue, which would seem to seriously weaken their EULA.

So all digital worlds are commodified, which makes it a poor choice for determining First Amendment protections. Would it be useful to instead phrase the problem as a consumer protection issue? Game creators retain their First Amendment protections always -- since digital worlds are a form of expression -- but sales and exchanges that connect to the real world must come under consumer protection laws, regulations and taxes like other forms of online commerce. This echoes your discussion of media regulation but with the commodification test removed. Obviously it's a separate discussion -- and probably hinges on subtle differences in the rights of commercial versus political speech -- but it feels similar to arguing that NPR has greater First Amendment protections than Clear Channel because NPR is not-for-profit.

The related assertions that commodification and IP rights destroy the freedom to play are tempting but flawed. The real world is commodified and has IP rights, yet play exists within in. Do money and rights impact play? Certainly -- look at the NCAA -- but they also support play, allow the invention of new forms of play, and ultimately allow the very best professionals and amateurs to spend their lives playing the games and sports that they excel at.

In describing the freedoms, freedom to design and freedom to play are given primacy, while freedom to design together is pushed to the background. Much like commodification, it is incorrect to think that designers have a choice about whether their game supports the freedom to design together. Any game with multiple players who can communicate has that freedom. Certainly worlds like Second Life, which are designed from the beginning to allow users to control their destiny, make the freedom to design together more clear, but multiplayer worlds need neither be based on open source software methodologies nor specifically enable it.

Whether the world is open source or not isn't particularly relevant to what features it grants the users. It is instead linked to whether the engine supports the kinds of customization, personalization and communications systems to allow users to layer on their own meanings. The Sims Online, for example, is closed source software but has seen the evolution of the Sims Shadow Government, The Alphaville Herald, &c. Obviously, a system that is open source -- or at least supports open standards -- is more able to leverage existing skills and content from the real-world, so it would be a competitive advantage, but it isn't a requirement.

In the same way, the designers needn't enable freedom to design together for users to find ways to have it. From my canonical example of the user drive to create -- the "piano" in Ultima Online made from careful stacking of cloaks, desks, and fish steaks -- to the myriad ways that in-world and out-of-band communication has been used by players to change, cheat, and mold every MMORPG, users clearly want their worlds to be places that they alter and control. Given that all MMOs have significant player activities that would be classed as the freedom to design together, it is a freedom worth defending and should be balanced against -- rather than subordinate to -- the designers' freedom of speech and the players' freedom to play.

4.

Cory > There is a basic assumption made that creators and operators have a choice about the commodification of their worlds. Much like a land war in Asia, this may be a classic blunder.
> So all digital worlds are commodified, which makes it a poor choice for determining First Amendment protections.

I’m half way with you here. I was impressed with the degree to which Proff B has understood VWs and the arguments that go on around them – but I was confused about the commodification point. It seems either to be an error in understanding of how VWs work or something that needs to be fleshed out a little more. Given that the paper recognizes all kinds of shades of grey I suspect it is the latter.

At the end of the paper (p47 near the bottom) Proff B states:

    "The most significant criterion, I believe, concerns the extent to which the virtual world is engaged in economic activity and encourages real world commodification"

I don’t believe that we have to use Authorial Intent as sole yardstick here. I think agree that pretty much all VWs commoditise to some degree (indeed I argued this long and hard in my AoIR paper Commodification Of Identity In Online Communities last year) hence one can argue that solely in virtue of creating a VW a designer is creating a space that can be commoditised. The thing to look at is the ‘extent’ both or ‘engagement’ and ‘encouragement’. Just as in the sports analogy it is not sufficient to look at whether people are getting hurt to see if the law should step in, but to look at the degree to which the rules are being adhered too.

These two factors are interesting and problematic when we try to combine them. The degree to which a VW is commoditised (“engaged in economic activity”) seems largely a factor of how popular it is. But is it right to say that if a designer creates something that is popular then suddenly the law starts to get a foot hold and the designer has less control – well, despite the irony of it, yes this does seem fair if we look at the VW in a wider social context and as many of us here have been arguing for some time – you take VWs and V communities seriously. In these cases popular means that we are moving from loos associations of people to real communities and all that this entails.

The more difficult point is the degree to which the VW i.e. the designers, ‘encourage’ economic activity. First off, VWs have economies of some type so our base line is that there is an in-game economy, our question is the degree to which and out-of-game economy is encouraged. Obvious examples would be endorsed equivalence between in game currency and out of game currency (the Project Entropia Model), There’s real world branding and Second Life’s IP rights might also be seen as encouraging economic activity. Where we really have to make value judgement though I think are areas where in-game resources such as trading systems seem to facilitate out-of-game activity.

Lastly I want to ponder the notion of passive encouragement (potential sin of omission if you want) – this is the case where a EULA may disallow out-of-game trading but where it goes on and the game company are very well aware of it. I think one can argue that the game company not only has a right but a duty to actively stop trading so that they preserve the nature of the game and if they do not then they are leaving the door open to all the consequences that come of this. That is, we can argue the (philosophically dubious point) that in action constitutes encouragement, at least for the purposes of the legal state of a VW.

Now if we could untangle a way of working out then combining the degree to which out-of-game economic activity occurs and the degree to which it is encouraged, then work out who to combine these two considerations, then we may indeed have a workable test for where laws kick in. Of course this would all be value judgements and legal fictions, buy hay, that’s law for you.

5.

I finally managed to get a couple of hours free to read this paper today.

I've seen many researchers come to virtual worlds from outside and construct completely idiosyncratic hypotheses that then became canon in their field. They have an incomplete understanding of what virtual worlds are, what people do in them, that there are different kinds of virtual worlds, that there are different kinds of players, ...

It was therefore a very pleasant surprise to discover (at the State of Play conference) that this is not the case among law professors. They seem to have a much firmer grasp of the essence of virtual worlds than have visitors from other disciplines. If they'd given us the same kind of check-box study we got from mid-1990s gender theorists, I'd be in a state of despair; as it is, I'm overwhelmed with relief.

Jack Balkin's paper describes a view of virtual worlds in Law that's pretty much as I'd hoped they'd be viewed. If legislators and judges have the same perspicacity, designers and players have nothing to fear (at least in the US).

Of course, if we get some quacks-like-a-duck judge setting some ill-conceived precedent based on a misunderstanding of what judges in China and Korea have decided, we could be in for a rather more rockier ride.

Richard

6.

My thanks to Greg for posting the URL of the draft article on Terra Nova, which is likely to get me the most intelligent comments a researcher could hope for.

Cory's comments in particular are worth pondering some more. I'm still mulling how to draw the necessary lines. The paper currently argues that we should focus on the purposes of the virtual space and on whether the platform owner intends or encourages real world commodification. That is, at least as a first cut, we should focus on the purpose of the virtual space rather than on whether some players are buying and selling things in the real world behind the platform owner's back, which, as Cory rightly points out, may be inevitable for a large number of virtual spaces, and may be impossible to stamp out through code. The point of that focus is to avoid making designers' and players' rights to play and design hostage to behind-your-back sales of virtual items by some players.

Conversely, virtual spaces that are designed to be shopping malls and emporia for the purchase and sale of real and virtual goods should be treated as such, and shouldn't be able to hide behind the First Amendment. But I'm open to other suggestions about how to draw the line.

And there's another problem: Some virtual spaces, I suspect, will be eventually be treated as places of public accomodation whether they like it or not if the spaces get sufficiently central to people's lives. If that happens, then there will have to be a very delicate balancing act in order to maintain the freedom to play, the freedom to design and the freedom to design together. I'm all for protecting consumers from fraud, discrimination, and invasions of privacy, but I worry that consumer protection done in a ham handed manner will greatly restrict the sorts of spaces that people can create and play in.

Jack Balkin

7.

Jack Balkin>Some virtual spaces, I suspect, will be eventually be treated as places of public accomodation whether they like it or not if the spaces get sufficiently central to people's lives.

This would be greeted with alarm by many developers, for a number of reasons. For example, losing the ability to remove troublemakers (where the definition of "troublemaker" might vary from virtual world to virtual world) would make management of the virtual world somewhat more difficult.

I was hoping that the fact that most virtual worlds had an entrance fee would stop them from being considered places of public accommodation, but it seems this is not the case. [Aside: does the fact that a virtual world has become a place of public accommodation prohibit changes in its pricing structure or its business model?].

I wonder, therefore, whether there might be some way a virtual place could disqualify itself as being a place of public accommodation? Would limiting the lifetime of an account to 1 year do it, for example, assuming people were told this in advance? How about if the virtual world were closed down for a period once a year, with access to the public denied during that time? The latter is is what my local University does to ensure that it doesn't have to cede control of its boundary road to the local council: on December 25th every year, the road is completely closed. I suspect that virtual worlds couldn't get away with closing down for a single day, but perhaps 2 weeks might be sufficient.

As your paper says, there is a tension between the creative rights of the designers and the consumer rights of the players. My nightmare scenario is a piece of one-size-fits-all legislation that treats all virtual worlds is if they were Second Life or There. Commodification-friendly virtual worlds (e.g. SL and There) are outnumbered hundreds to one by commodification-unfriendly ones, and making the developers of these other worlds accept commodification because the developers of SL and There invited it in would be like forcing all cat owners to put steel bars on their windows because one of their number decided to keep tigers.

Something that wasn't mentioned in your article, and which isn't clear from what Cory says above, is that some virtual worlds are not only commodification-free but commodification-resistant. Even a two-tier system (for full-blown commodification versus regular consumer protection laws) these could suffer.

Here's an example. Suppose a virtual world utilised the concept of permanent death. What this means is that if a character is killed (usually in combat) in the virtual world then it is obliterated. It doesn't respawn, get cloned, come back as a relative, get resurrected by the gods, recover from its fatal blow, turn out to have only been playing dead, or anything else - it's GONE. This kind of virtual world is not only very commodification-unfriendly, it's very consumer protection-unfriendly, too. You could be playing for 2 months, have a run-in with a dragon, and POOF! Your character is gone.

Consumer protection laws framed to assume that characters (or objects or anything else) conform to the same standards from one virtual world to the next would hit a wall here. From the designer's point of view, the player knows from the outset that their character could die, and while they may understandably be upset or distressed if their character DOES die, they have no comeback if it happens. From the player's point of view, they paid for something on eBay, bought it fair and square, yet it broke the first time they used it.

I guess what I'm arguing for here is for legislators to recognise that if some 18-year-old youth who has just passed their driving test buys a second-hand Ferrari and immediately upon driving it onto the freeway loses control and crashes into a lamp-post, neither Ferrari nor the people who position street furniture should wind up in court over it.

Richard

8.

Professor Balkin> Conversely, virtual spaces that are designed to be shopping malls and emporia for the purchase and sale of real and virtual goods should be treated as such, and shouldn't be able to hide behind the First Amendment.

I'd be interested in your take on where SL would fall based on this criteria. We created a world that was designed to allow its residents to create and interact within it. A critical incentive to the creation of truly great content is the freedom of the creators to choose economic motivations if they want -- either purely in-world currency exchange or by converting that currency back to real currency (see James Au's article about a user supplementing his income) -- and to allow them to retain their IP rights. Does this mean that we're a shopping mall? I don't see how we are, unless you classify the real world as a shopping mall. Yes, SL supports shopping malls within it, but we also support communication, activism and the myriad other forms of expression and communication that humans find. In order to better support those activities, SL needs to have strong connections to the real world. National Public Radio is a business that has to conform to labor laws (as you point out), that effectively advertises (by announcing who has supported this hour of Morning Edition) and that engages in all kinds of consumer sales (pledge weeks, auctions, membership drives, corporate sponsorship deals, estate planning, etc etc). Nobody questions that NPR has 1st Amendment protections (Noam Chomsky might argue that they're still effectively limited in what they can cover, but that's a separate discussion) even though they are engaging in all of this economic activity.

Richard> For example, losing the ability to remove troublemakers (where the definition of "troublemaker" might vary from virtual world to virtual world) would make management of the virtual world somewhat more difficult

Sure, but people can be removed/banned from public spaces if they endanger the space or other visitors.

Richard> My nightmare scenario is a piece of one-size-fits-all legislation that treats all virtual worlds is if they were Second Life or There.

Yes, but it's all about the decision criteria. Second Life is significantly more tightly bound to the real world than There.com is. Independent of the scaling issues, There.com's strategies of approving every upload and not allowing users to fully retain IP rights to their creations indicate a strong intent to keep the real world out even though it is a strongly commodified world. I completely agree with Professor Balkin that we need to find metrics and guidelines that allow judges and legislators to make informed decisions. I just don't believe that commodification is the correct windmill to be tilting at.

Richard> Here's an example. Suppose a virtual world utilised the concept of permanent death.

You've brought up permadeath before as an anti-commodification strategy but I don't think that it actually solves anything. If anything, it would seem to make the high level character *more* valuable because getting to high level would be more difficult in a permadeath world and therefore an even scarcer item. Sure, the person buying it on eBay would be taking on a risk -- they're buying a character who could be killed -- but this high level character with her shiny +10 Unobtanium armor would be harder to kill than the noob with his -3 Breakesium shield.

More obviously, in a permadeath world, the higher level my character becomes, the greater the loss upon its death, so the greater the incentive is for me to run around buying anything that will help keep me alive. I might hire body guards ("Asps -- very dangerous. You go first.") and the best body guards would be other high level characters who will be able to demand real world currency to take on the risk. Also, there would immediately be a market for insurance ("For $600 we will build a character of equal skills to the one you lost and transfer it to you upon the original's death").

Also, SW:G's jedi permadeath has been removed -- now you are knocked out of the game for a couple of weeks if you die enough -- but jedi were for sale on eBay before Sony made the change. Here is a game with a strong anti-commodification EULA, permadeath (until recently) and a relatively small jedi population that should have had social barriers to sales but they were still being sold.

9.

Cory Ondrejka>people can be removed/banned from public spaces if they endanger the space or other visitors.

For some virtual worlds, mentioning yesterday's baseball results would endager the space for other visitors, in the sense that it would cease to be the strong role-playing world they signed up to play. If the definition of "endanger" is couched in such terms that it allows for people who don't play by the rules to be ejected, that's fine. If, however, they can use some argument about being in a public space to claim that the rules don't apply, that would be worrying.

>I completely agree with Professor Balkin that we need to find metrics and guidelines that allow judges and legislators to make informed decisions. I just don't believe that commodification is the correct windmill to be tilting at.

I also agree that it would be useful to have a set of criteria that judges could use to decide whether to act in favour of a virtual world or in favour of its players, so long as these were only guidelines and the judge could completely ignore them if the situation obtaining for some particular virtual world warranted it.

I'd hope that one of the reasons for favouring the designers would be the extent to which a contentious issue ran counter to the virtual world's magic circle, but this may not be how a judge sees it. The paper I submitted to the State of Play organisers for their book goes into this in a bit more detail (I could email you it if you liked, or you could just wait until the book comes out since you'll be getting a free copy of it anyway!).

>I might hire body guards ("Asps -- very dangerous. You go first.") and the best body guards would be other high level characters who will be able to demand real world currency to take on the risk.

Hmm, this isn't an idea I've come across before. I guess it could happen, yes, but those guards would be charging premium rates because if they die taking a bullet for Mr President then it'll take them ages to get back to a high level, too. That said, there will be people who can afford premium rates.

The market for insurance would only be effective if the insurers had characters in stock ready to sell to prospective buyers (otherwise there would be a time problem). Also, with permanent death, they may find that they can't be sure how long it would take them to get a character to a high level.

As I said, though, PD just makes a virtual world resistant to commodification - it doesn't eliminate it entirely. A virtual world that reset once a day wouldn't eliminate it, either, but it would certainly cut it down to the extent that professional commodifiers would keep away.

Your point about commodification being perhaps the wrong windmill to tilt at: I see it as a particular symptom of a much wider problem that won't necessarily go away merely by tackling commodification, so to that extent I agree. However, I do think that considering the effects of commodification a worthwhile thing to do, because at least it gives us a grain about which we can crystallise some opinion. It gives us something concrete to discuss, rather than having to waffle on in the abstract. There's no reason we can't do both, of course!

Richard

10.

Richard> I see it as a particular symptom of a much wider problem that won't necessarily go away merely by tackling commodification, so to that extent I agree [. . . I]t gives us something concrete to discuss, rather than having to waffle on in the abstract

Absolutely. To echo your general SoP comments, I think that we're just at the start of this particular discussion and I think that the industry is fortunate to have polymaths like Professor Balkin taking the time to really understand the issues. Sure, MUD-Dev covered it in '97 :-) but I've certainly discovered a tremendous body of scholarship and thought on the legal side that brings new perspectives to the table.

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