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Dec 01, 2005

Comments

1.

On the surface, the article makes sense. If the sword is rivalrous (can only be consumed by one person at a time, and trading it away removes your possession of it), then in theory you should be able to sell it for profit, without unduely harming the IP owner or other gamers. Or at least, still respecting the IP owner's IP rights. Rivalry > tangibility for virtual goods...

But ... does this imply that the player owns the sword, too? In the real world, if I sell someone a book, and then once I receive the money, I rip it from their hands and burn it, that is considered illegal.

If the player owns the sword, can he then sue the MMO manager if the server is closed down, or if a glitch occurs to make the sword vanish, or if the game is modified to change the value of that sword? If ownership is implied, then does a banned player still have the right to his "stuff"? The state may execute a convicted murderer, but at what point can it acquire the felon's estate (assuming none of the goods therein were used in the commission of crimes).

It seems to my mind that we don't want MMO managers to be liable for player's lost virtual property, while at the same time RMT may be a mixed blessing (both good and bad points).

And on the other hand, if the player doesn't own the sword, but merely rents or licences it from the MMO manager, then does he really have the right to sell something that is not his to begin with? If I rent an apartment, I am forbidden to sell it, even if I maintain and improve it. I can only sublet it, with the owner's (landlord's) approval.

So it seems to me that intangible, yet rivalrous, items from virtual worlds may form a new class of property, that aren't really fully addressed by older laws like "1st sale", newer ones like the DCMA, or the above article.

The article makes a good claim for RMT not violating IP rights, but fails to address under what conditions an MMO manager could be protected from litigation over lost virtual items, were "1st sale" concepts to be applied.


Plus, what if RMT doesn't violate IP rights, but it does violate the "real world" property rights that the MMO manager has to all virtual items within its domain?

2.

Preface: I'm an idiot. I posted this on the Stewart paper, when I meant it as a comment on the Schwarz/Bullis paper. Anyway, here it is, a moron's POV:

I think this should be required reading for anyone interested in the policy questions raised by RMT. The specification of goods according to rivalry and exclusion is a direct off-the-shelf application of age-old economic understanding of 'strange' goods (which digital items certainly are). I believe - and Joshua Fairfield can correct me if I am wrong here - that this economic treatment is generally consistent with a legal approach that treats digital items as ordinary property (not intellectual property).

I think this paper and Fairfield's bring the community two giant steps forward. First, we get away from the confusions of intellectual property law, which we've been applying just because the items in question exist in databases. Look, not everything exportable as a file is intellectual property. And now, we get to the heart of the matter: what are the economic properties of the goods in question? Are they excludable? Are they rivalrous? Are they copyable?

So now we are almost in a position to talk about an RMT policy. RMT regulation should proceed according to the ages-old economic policy recommendations that apply to goods because of their economic features. That's where intellectual property thinking comes in -
property that's excludable but copyable at low cost deserves some copyright protection. That thinking applies to a brand name in Second Life, but not to the Greater Magic Essence of World of Warcraft.

Basically, the idea is: no regulation for pure private goods (Hamburgers & Magic Wands: excludable, not copyable, rivalrous); public provision for pure public goods (national defense & the internet: non-excludable, non-rivalrous); copy protection for intellectual goods (my book & SL's Tringo: rivalrous, excludable, copyable); regulated private provision for club goods (Disneyland & synthetic worlds themselves: excludable, partially rivalrous with congestion effects); government regulation of externality-producing goods (coal-fired electricity & {GUESS WHAT}: goods with non-excludable effects).

All we need is a broad understanding that RMT falls in the last category: when Jones sells Smith Boardwalk for $US50, Jones and Smith are made more happy, but Miller and Kakutani, the other two players, suffer an unexcludable effect in that their Monopoly game is less fun.

That's the case for having a policy about RMT. It's pollution. Pollution of the game atmosphere, the game's economy, and the designer/player relationship. Since the 1920s, even the most libertarian of economists have said that where there is pollution, it makes sense to look for cost-effective ways to reduce it, quite possibly through regulating bodies such as the government, or in this case, the devs. I am not sure that EULAs and bans are the way to go, but parsing the market, as with RP servers and Station Exchange, is a good start toward very low-cost solutions.

3.

As to your question as to whether prospective changes by the 'world-owner' would devalue the property in the future, it seems that yet another example from print be used. That is, the property has qualities of a book, being that it can be sold - but also changes in the setting may likely change the "worth" of the item, like selling someone an encyclopedia. It is likely to at some point be affected by change outside of the control of either the original owner or the subsequent ones. The items can be sold (they are books, in any event); some of the "usefulness" is maintained for some time (the sword is still a sword: the encyclopedia still contains a majority of valid information); and above all, there is a probability that change will occur that affects the value of the item itself. (Time passes and sections on "Soviet Union" grow less useful, etc.)

So, using the analogy of a book being sold to subsequent owners, it may be even more like selling an encyclopedia set, or a dictionary. Some value is maintained, and some is expected to diminish. The change is not in the control of any owner involved in sales and is an "at-risk" transation since changes in MMO's inevitably mean some items lose value.

4.

I think the EULAs and the publicly stated position of many NorthAm MMO operators have made it clear that their subscribers do not 'own' anything.
Instead, (in their view) subscribers typically pay a periodic fee in order to have access to an entertainment service, wherein they may or may not earn the right to control or access certain rivalrous data. There are no magic swords, armor or wizards; there is only data. Access to that service and the ability to manipulate its data on the operators server hardware is really all that is being licensed/rented to subscribers.

There are obvious exceptions that fall into undiscovered legal country; synthetic world operators who *explicitly* create a 'place' for subscribers to behave as citizens and empower them to self-govern, or to collaborate in the creative or executive process, or otherwise participate in a manner which is not solely a crafted entertainment experience. Those are perfectly legitimate domains for discussing and debating virtual property rights, and the related obligations of virtual citizenship (a very neglected topic in its own right).

IMHO, the proprietary, crafted entertainment services such as SWG, WoW, AC, etc. do not belong to the subscribers in any shape manner or form, and discussions about the operators obligations to their subscribers should fall entirely into the domain of PR and CRM.

By confining the virtual law debates to those domains where we legitimately belong and may constructively participate, we instantly remove the distracting and anti-productive resistance of corporations whose interests we threaten. As we evolve and grow public awareness and legal precedent in areas of virtual law, and as we develop the new digital Social Contract between netcitizens and governance, simple market expectations and selective forces will bring commercial interests forward with us. Until then, Sony and EA and Microsoft will continue to view their sythetic worlds simply as a controlled entertainment service, similar to motion pictures, and will resist surrendering any control with all their might.

Let's just bypass that fight entirely and allow ourselves to get on with the overdue evolution of digital culture.

5.

Mike Steele has it right. We've discussed this here on TN many times before, and yet the waters continue to be muddied by unnecessarily conflating access to data and ownership of objects.

The simplest way to say this is to remember that magic wands do not exist. Obvious? Maybe. But every time we use "magic wand" or some other game-device as if it was a real object with mass and heft and (most of all) existence independent of any supporting database, we end up confusing the issue. In-game objects have an essential difference from books, MP3s, or anything else: you cannot move them from one computer or format to another and have them retain their utility or their value. This essential factor is missing from Ted's economic calculus above involving items that are copyable, excudible, and/or rivalrous. In-game database entries rely entirely on the server computer, and since they are created, modified, and maintained solely by the owner of that computer (hardware and software) there is no argument for saying they might belong to anyone else. What we're really talking about is access to these entries, a service that may be transferred among individuals in a variety of ways.

Ted, part of what you say above is answerable with this reminder that in-game data-entries are not objects and shouldn't be confused with objects, even if access to them can be conferred differentially (and in some cases for a payment of real money).

The second part, your "pollution" argument, works only in games whee the assets themselves are rivalrous. That is, in Monopoly there is only one Boardwalk, and its possession confers special benefits unavailable to anyone else, and which directly affect all other players. As a result, playing a meta-game and trading it for $10 real dollars instead of $400 in Monopoly money does adversely affect others playing the game; it "pollutes" their experience.

OTOH, if the number of Foozle swords in the world [fn1] isn't limited to just one, anyone who has one gains the same benefit, and anyone who kills enough monsters (for example) to get the Foozle as a random drop can use it no matter how many others exist, then the pollution argument falls apart. To paraphrase Thomas Jefferson, "It does me no injury for my neighbor to have twenty Foozles or no Foozle. It neither picks my pocket nor breaks my leg." If my character has a better sword than yours, in game terms you have no grounds for objection. The way in which I got the Foozle sword -- whether I had to laboriously kill a thousand Elder Elzoofs to finally get this to drop or I got lucky and the first baby Elzoof I killed dropped it doesn't change the play of the game for you at all. Similarly, if I bought [access to] it (whether for in-game or real money) from someone else who had to kill n Foozles (where n:{1-10000}), it also has no bearing on your experience of the game. It doesn't increase the time it takes you to gain a Foozle or (excepting the vagaries of fad and fashion) reduce its utility to you.

---
fn1: "Foozle swords in the world" is a convenient shorthand for "database entries of a certain type that have been made partially available by the DB creators and maintainers to system users." It's easier to talk about Foozle swords, but as discussed above, it is imperative to remember that the swords literally do not exist.

6.

Interesting article, but a conclusion we've heard before: IP law is (for the most part) irrelevant to the RMT debate. I agree. What I don't understand is the focus on property. As I pointed out with respect to Joshua's paper, applying property law only strengthens the power of the contracts under which access to the (VW owner's) "property" is granted. So we are back to contract law. As Michael Steele (more or less) points out - what difference does it make whether or not it is "property" that is regulated by the contract, if the VW owner never gives any of it up?

Mike > It does me no injury for my neighbor to have twenty Foozles or no Foozle. It neither picks my pocket nor breaks my leg.
Then why do players/devs get so uptight about duping?

7.

Then why do players/devs get so uptight about duping?

"Duping" is counterfeiting. It's not playing the game (or paying someone else who has played the game) to obtain [access to] an item; it's exploiting a known software issue to create more of an item (or money) than the gameplay would normally provide. This opens up unintended faucets into the economy, which makes the in-game money worth less, which (in many cases) makes things more difficult on other, less wealthy players.

8.

Edward wrote:

All we need is a broad understanding that RMT falls in the last category: when Jones sells Smith Boardwalk for $US50, Jones and Smith are made more happy, but Miller and Kakutani, the other two players, suffer an unexcludable effect in that their Monopoly game is less fun.

What Monopoly (a game with, we can agree I'm sure, one purpose: to win) has to do with a virtual world is a bit beyond me, but that same logic can be used with any number of game features.

"When Jones gives Smith Boardwalk because they are irl friends, Jones and Smith are made more happy, but Miller and Kakutani, the other two players, suffer an unexcludeable effect in that their Monopoly game is less fun."

So is the ability to give things to other players also "pollution"? Same thing from a player's perspective, since you have no idea why Jones gave Smith Boardwalk. All you know is that Jones gave smith Boardwalk for some reason you're not privy to.

--matt

9.

Mike > This opens up unintended faucets into the economy [...] makes things more difficult on other, less wealthy players.

And farming for RMT doesn't have this effect? I don't see the difference between using a bot/exploit and hiring people to farm at $5.00/day, assuming both are banned by the EULA/TOS/ROC. Once we agree that there is a normative order beyond the code, the forms which the breaches of those norms/rules take are relevant more in terms of detection than enforcement. The fundamental question is whether RMT is "playing the game" - if we start with the assumption that "paying someone else who has played the game" is acceptable, then the legitimacy of RMT is a foregone conclusion. If, on the other hand, we consider RMT to be against the rules, then the effect on the economy is unfair to those who play by the rules. But either way, the effect of RMT on the in-game (socio-)economic order is hard to deny.

10.

Oops... that should be "detection and enforcement"

11.

Matt wrote:

So is the ability to give things to other players also "pollution"? Same thing from a player's perspective, since you have no idea why Jones gave Smith Boardwalk. All you know is that Jones gave smith Boardwalk for some reason you're not privy to.

I'm not at all convinced that RMT's are a Bad Thing that must be removed online games. But I am unmoved by this argument. What you say is correct. If there are out-of-game relationships that lead to a metagame where a player feels left out, he will be unhappy. And if this is a significant source of discontent to your community then it it IS an externality (as I understand it) that you probably should at least address.

In this case I simply think that the externality of RMT has a decidedly larger impact on the player population. Players get a lot more upset by one form of pollution than the other.

There are different forms of pollution. There is smoking in your own home and there is dumping toxic sludge in the bay. We worry about one a lot more than the other and for good reasons. An argument positing that we shouldn't dump sludge in the bay isn't undermined simply by allowing a person to smoke in their own home. It requires a better argument than that.

12.

I'm not sure the externality of RMT is larger. I've got no data to back it up, but I don't think it would be considered out of line to opine that people gifting things to each other in-game because of out-of-game relationships is at least as frequent as RMT, and unless it's bot running those, there's an external effect from those transactions. I'd argue it has probably a considerably larger effect overall, though again, I don't have any data to back it up, though I don't think anyone does either.

You can debate whether that collective external effect is more or less damaging to the game of course, but given the nebulousness of what we're talking about, anyone's guess is as good as anyone's other to some extent.

When you say "Players get a lot more upset by one form of pollution than the other", I'd tentatively agree that more players get annoyed by RMT than by twinking, though overall, it's pretty clear that a lot of players are also made happy by RMT and twinking both - so happy in the case of RMT that they're willing to spend multiple times the subscription fee.

To talk about RMT as pollution is to mislabel it, precisely because of this fact. If pollution is making players unhappy, then every single game design decision I've ever made is pollution, as it's made at least some players unhappy.

To refer to one as pollution and the other (gift-giving) as not is to pre-judge the issue with some sort of moral overtone, and I think that's completely unwarranted. Objecting to the fact that RMT is against EULAs in some MMOs is objecting to rule-breaking, not to RMT generally.

--matt

13.

Now you are talking semantics not logic. If you'd said you were just quibbling over a label I might have agreed.

The "pollution" here, as defined, is that some people are made unhappy by RMT. Do you deny this?

You are right that the actual argument comes down to determining how significant the pollution is (or whatever we wish call it). That is exactly what I was hinting that you need to make your real argument. Your need to demonstrate that RMT isn't a significant form of pollution and not to argue about whether it should be called pollution or not. Your example with twinking is unhelpful because twinking DOES impact gameplay, is an externality, does annoy players and it is not a counterexample. It doesn't challenge the logic of Castranova's characterization of the problem. Especially if we determine that it has less impact on players' enjoyment of the game.

FWIW, I'd say that twinking probably affects gameplay in most games by about as much as RMT does. But just to look at actual in-game effects is to miss the external nature of this whole problem. What really matters is player psychologies. If one practice is perceived as less "fair" than the other to players then it will cause a greater negative impact on your players. I think it's obvious that RMT's are viewed as less "fair" than twinking, which you may disagree with if you wish, but player perception of each act does remain a very important variable.

14.

Sure, what matters is player psychology. I'm not sure why you thought I was disagreeing. However, making a player happy matters as much as making a player unhappy. Actually, I think it matters more, but that's a different discussion. Your argument sounds like it boils down to RMT being "worse" than helping out your rl friends. What I'm saying is that I don't really have any way to judge in anything approaching an objective fashion (none of us do), but that it's a fact that some players are made happy by RMT and some are made unhappy by RMT (indeed, I know of two different private surveys done by interested companies that showed that it splits about 1/3 towards disliking RMT, 1/3 towards liking it, and 1/3 towards not caring).

And really, if all we're talking about is whether players like it or not, well, that is indeed a very boring discussion insofar as just talking about whether "players" like any game feature or gameplay practice is pretty boring in the absence of actual data (such as the studies I mentioned, though neither of them, as far as I'm aware, attempted to measure how much players like/dislike RMT rather than just the binary of liking or disliking.). In the presence of actual data, there's no argument to be had.

--matt

15.

My argument boils down to not thinking that you had a logical argument for dismissing Castranova's characterization of RMT.

I already said it and I still agree that what it really comes down to is how significant the problem is. That's where your real argument lies. I'm actually on the fence about RMT myself. I was just stating that I didn't find the logic of your original counterargument to be going anywhere. Twinking isn't a counterexample or a reductio ad absurdum. It is a similar, related example. And calling RMT not a problem worth nothing simply because it also makes some people happy doesn't accomplish much either. There is some gain, there is some pollution. How much gain? How much pollution? That's where the real discussion is.

16.

Poor revision there:
And calling RMT not a problem worth nothing simply because it also makes some people happy doesn't accomplish much either.

should read:

And calling RMT not a problem simply because it also makes some people happy doesn't accomplish much either.

17.

Yeah, I agree, the real discussion is in how much gain and how much pollution, but the point in my last paragraph above was that this is not an interesting discussion to have insofar as the data that's available is so thin and nebulous that any debate is just a matter of barely-educated guessing.

It'd be a moot point if we could accurately measure it anyway, as I don't know a developer that wouldn't love to be able to measure that kind of thing regarding every possible game design/administration decision possible.

--matt

18.

The counterfactual is hard to access, but it is there: what would a world look like without RMT?

With pollution regulation, the ideal is not elimination of pollution. The ideal is to have the marginal cost of an extra unit of pollution equal its marginal benefit. That is, we should not deny that RMT has benefits. The problem is that at free-market levels, its cost in terms of damage to the game exceed its benefits in terms of making the game more fun for some players. To restore balance, RMT should be reduced. Marginal cost goes down, marginal benefit goes up, until these two are equal. That's the optimal level. Perhaps we can all agree that the optimal level of RMT is 'friendly trading among people who know one another in RL.' 'Global corporate RMT utilizing wage differentials among nations' is above the optimal level.

19.

As a relatively new player to the genre (WoW from Day 1, but not much before that), I recall hearing about how the WoW economy was doomed to collapse due to RMT from almost the first day it opened. Indeed, to this day you can find nearly the exact same posts warning of dire consequences because of "Chinese Farmers in Tyr's Hand"

And yet, as a player, I don't see any effect other than forum posts.

Is the current theory that "one year isn't enough time to break an online economy?" Or am I too dim to notice the effect?

To be honest, the thing I've noticed the most is the way the economy fluctuates. Six months ago you couldn't give away the laughably bad "Fire Resistance Libram." Now you can't find one, because they are so good. Of course, that is really because a larger segment of the player base is a point in the game where they are needed. But, in turn, now some other popular librams have dropped in price to junk status.

Regardless, I have noticed nearly no inflation whatsoever in the last six months. The Large Brilliant Shard (which seems to be this game's Stone of Jordan) is basically stable at 7 gold.

Why haven't we collapsed yet?

On another note, why do I never find people who either admit to buying gold or have anything that would indicate they ever did? I can understand the first phenomenon - who would want to confess to such a thing. But shouldn't I be seeing people not in large raiding guilds running around with . . . well, to be honest, I don't know what one would even DO with an excess of gold in WoW. Nice bags, perhaps?

20.

Edward Castronova wrote:

The counterfactual is hard to access, but it is there: what would a world look like without RMT?

www.mudconnect.com will show you a thousand+ worlds without RMT in them. Now granted, the reason there is no RMT in most of those worlds is probably nothing more interesting than that there isn't a large enough population for a market to be particularly viable, but there you have it.

--matt

21.

Why haven't we collapsed yet?

Because (unlike duping) farming doesn't open up unanticipated faucets into the economy: all farmed assets are gained the old fashioned way: someone whacked monsters for them.

Also, I suspect but can't prove that the number of active farmers is a drop in the bucket compared to the rest of the monster-player-gold economy. I haven't seen enough of the game to say for certain, but I don't see any overt negative effects of farming either. The "pollution" Ted describes really seems to come down to being upset because someone else was able to, say, buy an epic mount faster than you think they should have -- though it's beyond me how one player knows this about another unless the gold-buyer is noisy about it, or how this manifests as a negative effect on the other player's game.

22.

People play games to have fun, and value the positive reinforcement they get from it at their own personal level; People don't play these games in order to earn the hourly rate of a bad gold farmer. Knowing about RMT makes your game playing equivalent to the second, which means you were wasting your time, and devalues the rewards you appreciated. You can't be as efficient or as cheap as the gold farmer, so you can't think you acheived anything worthwhile while playing, which invaidates the point of playing for advancement, rare items or reward, which takes away your source of relaxation or fun.

Let's say you work for WoWron, you put your effort into their uhm... Purple Sword of Pwnage 401s, you then find out that their value was artificially inflated and your investment comes crashing down to worthlessness, while guys that knew the worth cashed out and made money farming.

You've just been the victim of fraud over the value of your leisure.

Ok, it's late and I'm in an odd mood.

23.

On a macro level the concept of pollution comes into play when looking at the legal and policy framework, which the two papers cited in the opening comments by Dan focuses on. It is up to law and policy makers to set framework for virtual assets within online games. These two papers do shed more light on the matter.

Now, following Peter's line of thought (stated above), we can move the focus away from the IP or property law frameworks and back to contract law.

We can look at the financial derivatives framework and the body of laws and policies supporting the financial derivatives markets, the framework that allow for the trading of “pollution rights”, asset swaps that doesn’t swap physical assets but swap the utility of said assets, and other exotic exchanges.

As "possession is 9/10th of the law", looking from this framework bypasses the legal ownership issue and MAY allow for legal RMT.

Anyone explored this angle?


Frank

24.

Mike Sellers> "The "pollution" Ted describes really seems to come down to being upset because someone else was able to, say, buy an epic mount faster than you think they should have. "

Per the 'RMTs are Pollution' argument, I think Hawaiians should be able to say that foreign investments, say money from Japan, has 'polluted' their homeland. If we think that someone getting a virtual sword 12 days faster than you is a crime, why wouldn't we also be willing to say the economic effects of increased land prices that disallow indigenous people from maintaining possession of land that has been locally owned for centuries is also a crime?

Maybe a better question would be; if the second is true, why are we wasting our time worrying about the first?

-bruce

25.

Thanks for all the posted thoughts. I hope to spend a good deal more time reading through your comments. But I wanted to share one quick thought with you, or perhaps more like two quick analogies.

The first is from parking lots. When you park in a large for-pay parking structure you usually receive a "contract" which the parking lot owner asserts you've agreed to, as a condition to parking there. They also assert a great deal of "rights" that I've come to feel are much more like wishful thinking: I cannot sue if my car is stolen by the parkign attendant, I cannot sue if the valet smashes a Porsche into my Honda, etc. I think in time EULAs may come to have a similar status, so I'm not too swayed my an argument that rests solely on "but the EULA says this is the world's property." A EULA is a tool, that says "Beware of Our Law Team" and needs to be heeded because a lawyer's bite can be deadly. But it doesn't mean it's any more real than a Swiftblade of Zek. At least not yet. That's what i think some of this debate is about --- should a EULA be allowed at all. If so why don't we allow EULAs on our books?

The second analogy: I also am not sure we don't have close real-world analogies to someone who owns the whole dang place but not the items produced there because increasingly I see a virtual world like Norrath as being like a pick-your-own-apples orchard. When I was a kid anyway, we'd drive a few hours to an orchard where we'd been given a straw basket and a Jeffersonian apple grabber and told we had 4 hours and we could pick (and keep) as many of the apples as we wanted.

The farmer made the trees, the paths, the baskets, and the apples. He invited us into his world (to a suburbanite, a world full of nothing but trees was pretty exotic) and he let us role-play being an apple farmer. The farmer wasn't responsible if our apples eventually rotted before getting baked into pies, and when he shut down and sold to some nasty ex-urb developer, we didn't have any claim that our future expectation of living our apple-driven fantasies annually required continuous operation.

Liek all analogies, these don't totally map to the issue at hand. Presumably if the farmer had closed the orchard during our 4 hours of time, my mother would have demanded a refund. So maybe a third analogy, also imperfect, will help: a manufacturer of Everquest-specific customized keyboards (These exist, by the way, though I am proud to say my enjoyment of the game has not extended so far yet). The manufacturer of these keyboards needs Norrath to exist to make sales. He goes into business with a reasonable expectation that Norrath is not going to close tomorrow, but with no reasonable expectation that Norrath will last forever. We don't feel compelled to deny him full property rights to his keyboards just because he is entirely at the mercy (with respect to the value of his prperty) of Sony's decision whether or not to shut down its servers. I think a form of property that relies on the property of others is not so far removed from our real world law that old laws can't work for virtual property contained within another party's property. Can I own the ship and you own the bottle?. Does that give me a right to make you smash the bottle to get at the ship? They aren't easy questions but I don't know if they are so ridiculous that a class of conditional property couldn't emerge to solve the problem.

Anyway, I do hope to digest all of these great comments by the community ehre and see if I can forma more coherent set of thoughts, but these have been bubbling in me and I thought I'd throw them out to pave the way for something more rigorous later.

26.

Frank > bypasses the legal ownership issue and MAY allow for legal RMT.

There already are plenty of worlds with legal RMT - Project Entropia and Second Life are but 2 prominent examples. I don't think anyone is arguing that there shouldn't be worlds with RMT, nor that RMT inherently destroys a world. Even the most vehement anti-RMT arguments (eg. Ted's "Right to Play") raise the question of whether it should be possible to have *some* worlds in which RMT is banned. In the worlds that do choose to ban RMT, engaging in RMT is the equivalent of cheating and is an exploit. An "exploit" is distinguished from a "feature" based on rules and norms (as Mike pointed out earlier in an answer about duping) - a macro is an exploit in a game that prohibits macros, otherwise it is a feature. Same with RMT/sweatshop farming/bots, etc. Of course, there are problems of detection and enforcement, but those already exist with exploits. The fundamental question is whether, in a game that prohibits RMT, players have some inalienable right to cheat.

Andy > If so why don't we allow EULAs on our books?

We do allow EULAs on books - we call them NDAs [non-disclosure agreement] (try buying a report from a financial analyst and reselling it or even donating it to a library, see if you don't get sued - for breach of contract). The doctrine of "first sale" is about *copyright*, not contract. The trick with the EULA on a book is getting it to apply to a third party. If you are not privy to a contract, you are (generally) not bound by the terms of the contract - ergo the "first sale" problem with used books even if you did have a EULA. That is not the case with a VW - every account holder clicks through the EULA and (setting aside consent/adhesion issues) agrees to the terms. In some games (eg. Everquest) you click through the contract every time you log in. Should this allow VW owners to go after third parties like IGE? if they are genuine third parties (ie haven't clicked though the EULA themselves or through an agent), then no (some exceptions if you induced the breach, etc. - but I digress). Should it allow a VW owner to cancel an account if you breach the contract? hard to see why not - assuming the player understood the EULA/TOS/ROC, and knew the penalties for engaging in RMT, would such a punishment be unjust? If the rules against RMT ought not be enforced, then why enforce any rules at all? Banning someone for duping/exploits/griefing is really just about enforcing rules that are in the TOS/ROC/EULA. Methinks the primary legal justification for banning a griefer/duper is thus going to be contract law, no?

Andy > let us role-play being an apple farmer.
Maybe you thought you were role-playing a farmer, but I bet your mom was more interested in the apples (then again, I grew up on a farm and am often surprised by what city folx will do for fun...). If you feed the rabbits at the petting zoo every day, will you eventually gain an ownership right? While we're on the topic of analogies - how about these two:

  • amateur sports (eg. Olympics) conditions on participation
  • sanctions for throwing games in sports (eg. 1919 World Series)
Should either be enforceable? If not, why?

Andy > class of conditional property couldn't emerge to solve the problem
What is the problem we are trying to solve? Do Project Entropia or Second Life have RMT/virtual property "problems"?

27.

Andy’s comments prompted me to make an observation about things constructed with other persons tools.

If we take a wood working class at the local community college we might find that the college provides a workshop, tools, materials and an instructor – everything we need to learn woodworking. And when we create a coffee table in the class the school does not expect that they own the table. Even if the school goes out of business after we take the class, we continue to have use of the table. The only way we have issue with the college is if they fail to provide us with the service we signed up for under the service agreement.

I then tried to cast Second Life in the same roll. They provide everything we need to build a table and they don’t claim any rights to the table once we build it. But we can’t take it down the street to WoW and use it if Second Life folds. Why? Because there is no practical standard for MMOG item form and function. Lacking such a standard there is a critical disconnect between virtual and physical worlds that undermines discussion of property.

There is a second way to view the same issue. There need not be a standard if there is a public virtual world managed by an agent of the players. In that case, there is a social contract – as there is between citizens and their government – to maintain the environment. The standard for actualizing form and function of objects in the world then becomes the agreed upon reality for the citizens of the world.

Returning to the relationship between current MMOG providers and their players: is their position like landlords to lessees? If the landlord tears the property down before the lease is over does the lessee have any recourse? How much can the landlord change the property before the lessee can assert that he no longer has what he signed up to get? If the comparison between leasing property and access to a virtual world is valid, can the rules we’ve developed about leasing guide our discussions about property rights in MMOGs?

28.

Returning to the relationship between current MMOG providers and their players: is their position like landlords to lessees? If the landlord tears the property down before the lease is over does the lessee have any recourse?

Lessees? What makes you think players of a MMOG have anything like tenant's rights? At most game subscribers might be entitled to a refund if they had paid for membership past the date at which a game was turned off, much as country club members might have a similar recourse if the club owner closed its doors. But like country club members, they have obtained the right to access the facilities without retaining any actual ownership over them.

Of the current virtual worlds, only those in Second Life might have some sort of quasi-ownership claim, given that Linden Labs has said it does not retain ownership of whatever SL users create.

This raises the thorny question of what happens one day when Linden turns off Secoond Life -- can they legally do so if they don't own the things people have created? Can they even "retire" work that appears to have been abandoned by those who are no longer members? I don't know, but my bet is that deep in the EULA someplace there's language that preserves Linden Labs' right to turn off the world servers at their sole discretion, even if this means destroying all that work that they otherwise say they do not own.

This takes us back once again to the essential difference between apples you gather in an orchard or a table you make in a class and anything in a virtual world: in the latter case, you cannot take it with you. So long as that is the case -- and I see nothing on the horizon likely to change that -- then arguments of property are irrelevant. If you create, maintain, and control access to a thing, and most especially if you hold the sole power to destroy it, then surely you own that thing. Once users can extract a sword's code and data from one virtual world and insert it into another in substantially the same form, then there will be good grounds for talking about who truly owns the sword.

29.

Ok, so lets assume that the developer of said MMO world has reserved all rights (copyright, IP, property, or otherwise) to all in-game objects with the exception of allowing paid customers to "use" the objects in the manner expicitly or implicitly allowed by the developer, of which they can change at anytime they want without notice. Moreover, in order for customers to enjoy the MMO world and in-game objects, they have to sign a contract (EULA or otherwise) to this effect. Is this then a simple matter of contract law? IF so, then developers can allow or not allow RMT at their whim (which appears to be the case now).

However, legislation can be put in place to determine the status of digital media and provide special protection (duh).

So backing away from the different analogies and their applications, is the concept of or the test for rivalous consumption the critical distinction that determine which digital media needs special legal protection?

Let's talk about this.

Frank

30.

My stance on this matter is largely in agreement with Steele and Edelmann. Firstly, I will repeat two points which are, to me, a given:

1) The debate is not about property but access to property. External markets selling swords or characters are not selling things, but access to things. This access has very specific limitations contingent upon the design of the virtual world that it is accessed within.

2) There can exist a virtual world in which RMT is beneficial. There can exist a virtual world in which RMT is not beneficial.

Having said that, one key issue in this discussion is intentionality; the intention of the operator, and the intention of the subscriber. The operator is providing a service that is intended for a specific function. When the service is used by the subscriber in a manner beyond the original intention of the operator, there may be a conflict. Many owner/operators have the right to discontinue service to persons not using the service in the intended manner. In the case of subscriber based virtual worlds, the intention of the operator as well as the expected intention of the subscriber is enumerated in the EULA.

When Castronova is writing about "pollution", I understand it more as the degree to which the original intention of the service, or the expected intention of its subscriber base, is effected by activities not aligned with or counter to those intentions.

There is clearly a consumer base calling out for RMT as an intentional part of a virtual world, and others calling out for RMT to not be an intended part of the virtual world. It should be the rights of the owner/operator to decide the intention of the service provided and allow consumers to choose which service they may wish to be patrons of. The market is still maturing.

The pitfalls of non-RMT intentions are clearly enforceability issues, but the dangers of pro-RMT virtual worlds more acutely reside within the laws of the actual world as legislative and regulatory pressures are growing in concern of unsupervised Internet-based monetary activity.

31.

Eric> "1) The debate is not about property but access to property. External markets selling swords or characters are not selling things, but access to things."

Agreed! And, its being done both as an initial access fee (the retail box) and as an extended access fee (through subscriptions).

While we are on this topic, I think it may be good to touch on the other hot spot that hasn't come up yet in this thread, but normally does.

TAXES

I think it has been argued a number of times that due to RMTs affixing value to virtual assets, there is a possibility that governments will come in and TAX players based on the value of assets that they accumulate during the course of the game.

Let me make two statements;

A) Governments are already taxing the retail box that you buy, and they are already taxing the subscription fees. It doesn't matter if Sony or Blizzard is giving you access to a billion gold piece sword, at the end of the day, the only thing that governments are able to tax at this point is the US$ transaction, which they are already doing today. Note: If we all had to pay taxes on the value of the items that we were gaining access to in the rental markets in the RW, there would be no rental car market, or it would be much smaller than it is today.

2) Even if we go with the concept that it is possible to 'own' property within virtual worlds, I think it's important to remember that when you buy a pack of baseball cards, you are not taxed on the value of the cards, you are taxed on the purchase price of the pack. This changes of course if you decide to resell the cards in the pack, at which point in time you are then charged income tax based on the difference between cost of the pack, and the sale price of the cards, why would we expect virtual assets ownership, and the transactions that include them to act any different than baseball cards do today?

Just as a note of caution, regardless of how virtual assets are currently treated, or how I think they should be treated, VW developers, VW academics and VW players had better get on the same page as soon as possible. From what I have seen, governments have a tendency to misinterpret experts in newscasts stating that TAXs could be applied to a certain class of objects, as a new tax opportunity, especially in a 'sin-taxable' industry like video games.

Whether it's 'tax the access, not the asset' (my personal preference as it covers both initial access and additional RMTs) or 'tax the pack, not the cards' or some other just as simple slogan, we'd be best to come to some sort of an industry opinion before we grow much larger.

-bruce

32.

Bruce is spot on. Let's drop the legalese hair-splitting about EULA/RMT/virtual/etc...

Governments are bound to spot an "untaxed" market of $800 millions (said SOE?) and growing.

SO(first but not the last) is putting itself in the situation of being the (virtual) assets producer and the market intermediary on sales (Exchange). Conflict of interest anyone? Check the little "problems" of stock brokers having an "advisory" branch.

About "teen-murdered-his friend-over-a-$100-virtual-sword", the only question is when in US/Europe!

Same can be said about "Dev caught red handed manipulating virtual assets value. $500 000 skimmed!"

Or "Fire destroy MMO data center. Thousands of players claim $10 millions in lost VIRTUAL assets!"

When all these elements reach critical mass (huge money + TV headlines), goverments will give us a "nice answer" to these debates!

It could be the end of a Golden Age of MMO or the start of it. Time will tell.

33.

I agree with folk’s sentiment that being bogged down in legal hair-splitting can lead to paralysis at a time when a position needs to be established and advocacy needs to be organized. But it also seems to me that in matters of law a position needs to be based on some legal theory (property, contracts, tenants right, etc). In any endeavor a balance must be drawn between the two: analysis and action.

Our experience here suggests that even within our community there are two broad camps – the “developer’s rights” folks and the “virtual world inhabitants’ rights” folks. We seem to be casting our arguments around property and contract from one perspective or the other without quite facing the tension directly or working toward what we think is a workable synthesis of the two views.

Where are those kinds of discussions taking place? Who is involved in building a consensus position and taking it through to political action? Are there just industry groups on one side and no advocates for virtual world inhabitants?

34.

Franek > there are two broad camps – the “developer’s rights” folks and the “virtual world inhabitants’ rights” folks.

I can see the broad camps you describe, although I am not sure we are so easily divided into them based on views of RMT. Saying that RMT is about contracts is not in and of itself an argument for developer's rights (in effect, I've argued that the "property" analysis may well come closer to that result). Taking the EULA/contract seriously means clearly establishing the respective rights of players and developers within the flexible framework of private law. There is certainly an argument to be made that EULAs are currently being abused by some developers/owners to take as much as they possibly can in exchange for the right to connect to the world, while guaranteeing little in return. Part of the problem has to do with the realities of consumers "negotiating" contracts of adhesion (one reason we have consumer protection legislation in most jurisdictions). Both Sal Humphreys and T.L. have written insightful pieces about this problem as it relates to VWs - plenty has been written about it more generally by legal scholars. The fact that most players do not take EULAs seriously may be partly to blame as well - if players are serious about the set of rights they expect to have in a virtual world, they arguably have the power to get those rights, either within a given world by putting pressure on the devs/owners, or by leaving [setting aside the exit costs problem - although players serious about their rights would probably: (1) negotiate the rights *before* they invest significant time/resources; (2) not accept a contract which allows unilateral changes by the other party - but this is for another discussion].

The availibility of multiple worlds and the desire to retain players are strong incentives for developers to grant rights acceptable to players. The example of There and Second Life is a case in point: in 2003, if keeping the IP rights in your in-world creations was important to you, you would (presumably) choose Second Life over There. There saw a noticeable shift in its population growth in early 2004 (mmogchart) - just after the Second Life announcement about player IP rights in November 2003 at State of Play. This may be a coincidence (and I would be interested to hear other theories) but it makes sense that player retention of IP would be important to the content creators attracted to such worlds. Second Life is going to face similar challenges in the future as other worlds emerge with differing rights regimes, and as their own playerbase insists on changes. The same will be true of RMT - if the ability to engage in RMT is crucial to players, they will (presumably) gravitate to worlds in which it is allowed and facilitated. If players (like Ted) prefer worlds in which RMT is banned, they will gravitate to those. Some devs may offer both, or some other variation/synthesis we haven't even thought of - so much the better.

Do we need to negotiate an industry-wide (and cross-jurisdictional?) set of standards for RMT or other rights? Maybe, although my guess is that consumer protection legislation already covers some of the bases, and egregious abuses may even be covered by criminal law (eg. fraud, ponzi schemes, etc.). However, I am not convinced that an industry-wide standard, whether banning or mandating RMT, is where we want to go. Virtual worlds have the potential to be highly jurisgenerative, and players ultimately have choices about the virtual communities into which they wish to invest their time and resources. Over time, I imagine (and hope) we will see the emergence of different genres of rights regimes - and participants will know what to expect in each genre. In this sense, I have no problem with worlds modelled after actual world property regimes - as long as we don't try to impose such a regime on *all* worlds.

35.

I think this paper is dead on.

I want to focus on one point that has emerged at several junctures in this conversation: the objection that virtual objects don't "exist" is, I don't think, not an obstacle to property treatment of virtual objects.

Stocks don't "exist" in any meaningful way, yet we clearly can own them. Companies, by extension, don't exist, but we not only own them but give them status as "people" under several critical legal fictions.

The question is not whether you can own something that doesn't exist. We own intangibles all the time. The question is whether the legal rules that allocate these intangibles do so in a way that is useful for the parties engaged in the transaction.

What I've heard over and over again is that companies are blocking property rights in virtual property in order to reserve creative control. But what everyone -- including those companies (read: Sony) has noticed -- is that creative control can be maintained without blocking property rights.

A public market in stock interests doesn't have to impinge on a CEO's ability to direct his company. A public market in stock doesn't stop the ability of a company to declare bankruptcy, liquidate, and take its marbles and go home.

So both major arguments advanced here against recognizing clearly useful and valuable trading right in virtual property may be missing the point:

(1) the tangibility of virtual property has no bearing on whether property regimes are useful to regulate its trade in markets;

(2) creative control can be maintained without attempts to knock out economically valuable property interests.

36.

Stocks don't "exist" in any meaningful way, yet we clearly can own them.

That's not the case. Stock shares (equity) exist in a very real, independent, and tangible way. You can own serialized paper certificates that rely on no external agency (other than the company to which they refer) for value, much less actual existence. You can also keep your stock in electronic form, but it can always be reduced to paper and/or transferred to any other brokerage.

Contrast this with "virtual" goods which have no existence outside of a particular database. (This relationship is not analogous to the value of a stock certificate, because with stock it's the value that is defined by the referant company, not the existence of the equity-portion certificate itself.) You cannot transfer a virtual object from one game/world to another, no one but the database (game/world) operator has the ability to create or destroy such entries, and any access to the objects by users is ultimately trumped by the operator's maintenance of the containing database. This is as true for WoW as for SL.

I'm not sure why this is so difficult or controversial; it seems to me to be a pretty plain fact that goes right to the heart of the matter. It's the essential difference that sets all virtual-world-goods apart from any real-world goods, and renders discussions of rights (property, tenant, etc.) moot. Maybe someday this won't be the case; maybe someday you'll be able to take a sword from one game and move it to another completely unrelated (i.e. not run by the same operator). Maybe... but if so, that day is a long way off and should not be conflated with the way things are now, or are likely to be in any foreseeable future.

The question is not whether you can own something that doesn't exist. We own intangibles all the time.

What are some examples of items which an individual can own (in the same way you can own a car, house, baseball, pie, etc.) that are intangible, whose creation, maintenance, destruction, and access are completely under the control of someone not controlled by you, and which you cannot transfer to another controlling entity? In what possible sense could you be said to "own" such a thing?

37.

Mike made many of the points I’m making more succinctly than I do in his recent post. But I’d hope this one still contributes some value.

Schwarz & Bullis and Fairfield make compelling arguments for rivalrous consumption as the test for the transition from intellectual property, legally protected, to “tangible” property whose inherent manifestation protects the creator’s rights. In the physical world the test can be applied objectively – an oil painting is less easily copied than a photograph which is less easily copied than a JPEG file – but all are tangible manifestations of a portrayal. This introduces, however, the concepts of the level of protection afforded by a particular manifestation and a sliding scale of owner’s concern for legal protection of IP. So without even considering items in virtual worlds we have two tests: 1) does the manifestation of the IP limit its utilization to a single controlling entity? 2) to what extent is the manifestation amenable to duplication?

Surrounding this complicated set of issues Bruce and Elrana make an excellent point: just as the government stepped in with the Digital Millennium Copyright Act, a similar (and to some undesirable) legal framework could emerge in MMOGs. And I have suggested that organized interests could act more effectively to structure the legal framework for MMOGs than unorganized “players” or individual developers could. What’s more, I definitely agree with Peter that the constituencies surrounding these issues are not easily categorized. Casual visitors to virtual worlds are different than folks that “live” in them. Individual developers are different than mega-corporations. And there is some representation for every shade in between. So finding a consensus may have to be left to the marketplace. In general, I favor that kind of competitive resolution. But the current climate, at lest in the US, leads me to believe that political action by all interested parties may be necessary to an equitable resolution of the issues.

The current state of virtual worlds casts the discussion in IP and copyright terms, and in my opinion rightly so. RMT seems to me to be recognition of the value of a manifestation that is inherently rivalrous. But it is not the manifestation of an object, it is the manifestation of the effort it took to gain access to the object within the framework of the virtual world. People are not selling the Great Sword of Swerd, they are selling (or reselling) their time. And to that extent I believe I disagree with Josh. I assert that at this point no practical virtual property exists. There is only an access right to privately held virtual environments, the fees associated with access, and the effort associated with gaining access to elements of those environments as mediated by the environment’s operating rules. So for me the questions become: Do the operators of the virtual environment own the efforts of individuals expended while in the virtual environment? And the does the EULA (whatever one feels about its enforceability) prohibit transfer of the access rights gained by an individual’s effort to another individual? Note that in the quintessential RMT, the buying of an entire account, this is exactly the transfer that takes place and no one is confused about it. Issues of property do not arise. People say “I bought the account because I didn’t want to take the time to level up.”

In the examples above the rules imposed by the virtual world insure the rivalrous nature of the manifestation. There is only one Sword of Swerd. Each account can only be logged in by one player at a time. But the Sword of Swerd, once earned, can not be transferred for WoW to CoH. It exists only in the virtual world that creates it. And I argue that for that reason alone virtual items do not meet the test of property as I discussed it in the first paragraph. I believe context matters. Until the product of one’s effort in a virtual world can be transferred to a different virtual world and live within it there can be no practical virtual property in the sense we are discussing it here.

This kind of independent manifestation of virtual items does not exist now but it certainly can exist in principle. Packages of geometry, textures, animation, physics characteristics, and operations on the environment could be standardized (X3D/VRML). And those packages could be exported from one VW and imported into another. I am not particularly advocating such a development. And I certainly understand many of the issues involved in making it work. But until that kind of interchange is possible I don’t

38.

In brief response to Mike:

The idea is that stocks "exist" because, although you note they can be kept as electronic records, they can be printed out? I can print out my character screen's inventory, too, if I need to evidence my control of the asset.

I submit that the "reduction to paper" is a distinction without a difference. The stock is a marker for a set of voting rights, information rights (yearly reports), and rights to payment. All intangibles. All valuable, thus all owned and traded.


39.
Mike: Maybe someday this won't be the case; maybe someday you'll be able to take a sword from one game and move it to another completely unrelated (i.e. not run by the same operator).
Won't the items still be "intangible"? So, intangibility can't be the threshhold.

Portability between games likely is determinative, but to the issue of who owns an item rather than if it is "ownable" at all.

Jeff Cole

40.

Franek: I assert that at this point no practical virtual property exists. There is only an access right to privately held virtual environments, the fees associated with access, and the effort associated with gaining access to elements of those environments as mediated by the environment’s operating rules.

Well said.

So for me the questions become: Do the operators of the virtual environment own the efforts of individuals expended while in the virtual environment?

My answer is 'no' -- but they do own the results of the efforts expended in the virtual world. The operator define, regulate, and maintain these results completely and unilaterally.

... Until the product of one’s effort in a virtual world can be transferred to a different virtual world and live within it there can be no practical virtual property in the sense we are discussing it here.

Yep. I'm still not sure why this is controversial.

Joshua: The idea is that stocks "exist" because, although you note they can be kept as electronic records, they can be printed out? I can print out my character screen's inventory, too, if I need to evidence my control of the asset.

No, you're missing much of what I said earlier and the essential differences here. If you could print out your character record in a way that was uniquely serialized and verifiable as bona fide (as are stock certificates) and if you could take that printed version (or an electronic version) to a new game for inclusion there (as you can with stocks going from one broker to another), then the character would have a form of independent existence that stocks have, and would likely be said to be your property. What matters is the ability for you to control your access to your stock, and to be able to transfer it, even keeping it entirely out of the brokerage system if you want. This ability does not currenlty exist with any in-game goods/database entries; they exist solely within a single game and are never out of control of the developer/operator, who can thus be the only ones who are said to own them.

41.

Mike:

Good points. What you're pointing out, though, is that artificial exclusivity and rivalrousness, through serialization, is enough for us to treat something as property. When swords and avatars are effectively serialized through code, we should also treat them as property.

As for your point about portability: we don't require you to be able to take your house to the next town before you can own it. In fact, that's one of the reasons sale rights are so valuable. In brief -- if you can sell something you avoid a lock-in effect. Imagine what would happen to property values in a town if you couldn't sell.

Portability, in effect, will be created when you can cash out of one environment and buy into another one. Just like neighborhoods.

42.

Joshua Fairfield wrote:

As for your point about portability: we don't require you to be able to take your house to the next town before you can own it. In fact, that's one of the reasons sale rights are so valuable. In brief -- if you can sell something you avoid a lock-in effect. Imagine what would happen to property values in a town if you couldn't sell.

Houses are moveable. It may be expensive to do so, but they are definitely able to be moved from one location to another.

--matt

43.

Joshua: When swords and avatars are effectively serialized through code, we should also treat them as property.

Just to be clear, the serialization must be sufficient to guarantee validity and uniqueness -- so serialization of a "sword" would have to be valid across games to create any property value. With stocks, the Stock Transfer Agent (an external company not related to the company issuing the stock) typically validates share certificates. Some similar method or body would be required to say that a serialized virtual item was in fact bona fide.

Portability, in effect, will be created when you can cash out of one environment and buy into another one. Just like neighborhoods.

In effect but not in actuality. When you sell a house in one town and buy another house in another town, you don't get a replica of the first house. Depending on property values, you may get nothing close to the house you sold. The "portability" aspect is really a manifestation of control: do you control the thing? Can someone else change it, remove it, etc., without recourse from you? For most objects, this includes the ability to move the object; obviously for some real-world objects moving it isn't generally tenable (though it's worth noting that people do move houses, so portability is part of ownership/control even there).

44.

An analogy:

Suppose you were a member of a country club that had three sorts of poolside chairs: hard metal ones, adjustable plastic ones, and curved wooden ones with cushions. These chairs are fenced off from each other so that you have to go through the red first then the green, then finally get to the blue chairs in the best spots by the pool.

At this club, you're given a little key that's red, green, or blue. Each key is uniquely numbered and works only in the country club's locks. When you join, you're given a red key; this allows you to get into the first fenced area to sit on any red-tagged chair -- all the metal ones. After you've been a member for awhile (paying in both dues and time), you're upgraded to a green key that lets you into the next fenced area to sit on the green-tagged plastic chairs. Finally, after some additional time as a member you're given a blue key that lets you into the blue area with the nicest chairs.

Now, the rules of the club say that you can't lend, give, or sell your key to anyone else. If you do, you're likely to be ejected from the club. This helps retain the exclusivity of the green and blue areas. Even so, people do lend, rent, and even sell their keys of course, and mostly no one else notices; the club regulates how many chairs and how many keys there are, so if you have a blue key you're not being kept from a good spot to sit in the sun (there's even another club across town that doesn't worry about whether people sell or rent out their keys, and even awards additional keys for winning contests). Some complain that having "reds" in with them in the "blue" area is cheating, since the "reds" haven't been around long enough to "earn" their spot, and this makes the club less enjoyable for them. As a result the club management tries to be vigilant, but isn't generally able to stop non-blues from getting blue keys. Others don't see what the big deal is, since a "red" buying a "blue" key doesn't make it harder for them to get their own blue chair, but they mostly abide by the club rules anyway.

Given this setup, the other issue (besides "cheating") is ownership: could a blue key holder argue that one of the blue chairs was actually theirs? Could you take home one of the nice blue wooden, padded steamer lounges, or take it with you to a different club?

I submit that you could not: despite the fact that you "worked" (put in your time) for your blue key, the club builds or buys, maintains, and destroys or replaces the chairs and controls access to them. The club could, for example, change the time requirements for getting a blue key, or change the type of chairs provided, though of course the members would likely not be happy if they did so. Your membership and your key allow you to use the chairs while at the club, but that's it.

In this case you do not own the chairs nor anything about them. You own a membership in the club (which may or may not be transferrable), but the assertion that because you have been granted access to a nice chair you also somehow have tenants', property, or other rights of ownership to that chair is not likely to be seen as compelling by others.

45.

In an earlier post Mike noted…

... Until the product of one’s effort in a virtual world can be transferred to a different virtual world and live within it there can be no practical virtual property in the sense we are discussing it here.

Yep. I'm still not sure why this is controversial.”

I’ve made the point in other posts that for many people value arises from meaning. In fact, Josh’s new thread on Names and Narrative echoes some of those considerations. So when a developer sets out to make an environment meaningful to a player he deliberately sets out to tie that player emotionally to the virtual world he has created and that in turn gives value to the virtual world and the things in it. It is common for people when they have put effort into an endeavor, the result has meaning for them, and they are emotionally committed to it to feel a sense of ownership of the result.

We know from a legalistic point of view there may be no basis for that sense of ownership. But wars have been fought and lives lost over things that have just as little basis in law but arose from the same roots. In my estimation it is why the issue of virtual property sans independent realization continues to be controversial.

Is there a fundamental hypocrisy between doing your best to draw people in without giving them any ownership? Like all moral questions each of us has to answer it on our own.

46.

Joshua > So both major arguments advanced here against recognizing clearly useful and valuable trading right in virtual property may be missing the point: (1) the tangibility of virtual property has no bearing on whether property regimes are useful to regulate its trade in markets;

I agree. Characteristics such as alienability, rivalrousness, etc. are not the exclusive domain of tangible goods, although tangible goods tend to exhibit these characteristics by nature, while intangible "property" tends to acquire such characteristics through contract/statute. I am still undecided as to whether we should treat running code as tangible or intangible - but we can probably leave that aside for present purposes.

(2) creative control can be maintained without attempts to knock out economically valuable property interests.

I suppose it depends what you mean by "creative control". If the ability to shape the rights regime is important (so you can create a world for players like Ted who dislike RMT), then not so much. Property regimes are one way to structure rights in a VW, and some worlds will undoubtedly structure themselves in that way. But is it the *only* valid model? Even assuming economic value ought to be our only yardstick, a world that bans RMT may still have economic value - Ted might even pay extra to play in one (although it might not be so useful for his research...). Any approach to distributing/defining rights in a VW is going to "knock out economically valuable [rights]" and create others. Isn't the market generally a pretty good gauge of the extent to which such regimes provide economic value to players?
For the most part, the papers arguing for the recognition of property interests for the players (eg. yours, Hunter/Lastowka, Schwarz/Bullis, etc.) use examples of worlds in which the owners explicitly deny any property/ownership interest on the part of the players and create EULAs which make that clear (WoW, EQ, etc.). The argument seems to be that the "property" analysis should trump any other distrubution of rights in a VW if objects happen to be rivalrous, etc. Rivalry, etc. may be a necessary condition for a property regime, but does their existence mandate the imposition of such a regime? In all the other examples of intangible property cited (stocks, derivatives, bank accounts, domain names, etc.), the ownership rights are created, delimited and defined by contract or by statute. Yet somehow in virtual worlds, simple possession/limited control of a rivalrous resource ought to create an alienable property interest that supercedes an explicit contract, and presumably ought to be recognized by courts. Why is that?

47.

I agree with Adelmann and Sellers, but have a few points to add…

LEGAL PRECEDENCE ON EULA
Schwarz - "Why don't we allow EULAs on our books?"
I believe this is a matter of technology surpassing legislation. There have been many attempts to legislate Federal recognition of EULA's. One such example is the Federal Uniform Computer Information Transactions Act (UCITA). But because it includes some rediculous articles of power, it continues to get rejected. That is not to say that EULA's do not get upheld, or thrown out in court. One such well-known case is ProCD v. Zeidenberg which supported "shrink wrap" licensing commonly referred to in cases involving click-through licensing and terms of service contracts which found that the license was "enforceable unless their terms are objectionable on grounds applicable to contracts in general." There is much legal precedence on record referring to EULAs, both upheld and rejected. That is a long, and perhaps separate, topic.

CONTRACTUAL NON-TRANSFERABILITY IN RIVALROUS GOODS
Non-transferability in cases of rivalrous goods exist outside the boundary of the digital world in such objects as tickets for theme parks, airlines, and cruises among others. Each provides for access to a service that enumerates rights of access and rules of behavior. Prohibited activity can result in complete or partial refusal of service. This same standard is currently applied in virtual worlds. Further, value accrued within the services can be non-transferable. Virtual objects accrued in virtual worlds can be viewed as the accrual of miles on frequent flier cards. Some airlines provide for transferability, others do not.

TRANSFER MAY CONSTITUTE A BURDEN ON OPERATOR
Allowance for RMT is not simply allowing it. Acceptance of transferability of virtual items may constitute a burden on an operator. Items transacted in the real world require authorities of transfer. If developers were obligated to allow for RMT, they would also be obligated to provide authority of transfer in cases of fraud or abuse. This may constitute as a burden as the operator is the only authority of transfer. Unlike book reselling, the publisher is not burdened to provide proof of transfer on the resale of books.

It is now so easy to make extra money on the side, the line between legal hobby and legitimate business are fading fast. In an online merchant business as simple as selling items on Ebay, multiple sales beyond a specific monetary value may constitute legitimate business and require registration and possibly licensing. Even with Ebay, transfer of inventory such as how it was acquired, stored, sold, and shipped are all accountable. Such accountability may place a further burden on a virtual world.

In the future, there may be many such regulations which currently exist in brick-and-mortar businesses that will find their way to the Internet. With activities like tax evasion, off-shoring, and money laundering on the rise in e-commerce, among others, not only are governments taking a notice of unregulated monetary activity, but International bodies like the OECD, WB, and WTO are as well. RMT may be in its innocent youth, but it may seem very different in the future. This may only increase the future legal and regulatory burdens of virtual worlds involved in RMT.

These are just concerning simple monetary transactions. There are still issues of anti-trust, conflict-of-interest, fraud, etc. that have been introduced in these forums before as Elrana last illustrated.

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