It's been an exciting week in Second Life! Dell opened a new store in-world, IBM's CEO, Sam Palmisano, made an in-world appearance, and so did the dreaded CopyBot. The presence of companies like IBM, Dell, Reuters and many others in Second Life shows that there is growing interest in using virtual worlds for more than killing orcs and avatar-based flirting. Sure, these companies are just beginning to experiment with business applications of virtual worlds, or "v-business," but things are moving fast. It seems like every week there is an announcement that another new company or institution is trying to go virtual by buying an island in Second Life.
But also this week, the now infamous CopyBot reared its ugly head in Second Life. Here's a brief recap: CopyBot is a tool that enables the unauthorized copying of virtual objects by a player (see Raph for more detail). Since virtual objects in Second Life are created by other players, rather than by Linden Lab, there was an outcry from many players to stop the use of CopyBot. Players protested and closed their in-world stores in fear that their creations would be stolen, resulting in the loss of real U.S. dollars.
In response, Linden Lab banned the use of CopyBot under its Terms of Service agreement but at the same time stated a reluctance to enter an "arms race" with players (e.g., by implementing Digital Rights Management technologies like Apple did with iTunes). The Lindens are taking the position that unauthorized copying is a general problem with the internet, "Like the World Wide Web, it will never be possible to prevent data that is drawn on your screen from being copied." Thus, player/creators in Second Life are panicking just like the Recording Industry Association of America did a few years ago when it began suing individuals for the unauthorized copying of music.
So what impact, if any, might the unauthorized copying of digital content in virtual worlds have on the still nascent v-business industry? Will CopyBot and its successors scare off some early would-be v-businesses?
On the one hand, if companies like Dell use their virtual store fronts primarily to sell physical products, like XPS laptops, unauthorized copying may not pose any problem at all. On the other hand, to the extent that companies attempt to sell digital products - virtual houses, avatar hair, code, images, books, music, etc. - their revenues will be vulnerable to digital piracy. Should companies be worried?