Why do we let contracts govern virtual communities? Contracts are private law. Communities need public law. Contracts are about helping two (or a few) people negotiate their preferences. Communities are large numbers of people, who shift in and out of the community, and really don't have time for all that negotiation. For communities to really thrive, as Greg Lastowka remarked to me recently, "we need to get beyond the EULA." So I wrote an article about it.
Here's the gist. Communities need legal relationships that run between every member of the community and every other member. Some examples -- it turns out that everyone in the world is obligated not to hit you. (Tort law.) Similarly, everyone in the world is obligated to not walk on your land. (Property law.) They didn't sign any contract to say so, the law imposes those requirements on everyone.
Contract law cannot create those background, default rules, not without a lot of hassle -- and hassle is called inefficiency by the overeducated. (Imagine creating the "no-hitting rule by contract -- walking down the street, saying to each person you meet: "Do you agree not to hit me? Sign here.") In contract law, the basic idea is: "if you didn't sign it, you're not bound by it." The problem is that virtual world EULAs, as they currently exist, eliminate and replace almost every other source of community, background, default laws -- tort law, criminal law, certainly property law, and even constitutional law. EULAs attempt to replace those rules with contractual provisions.
A thought experiment: Let's say you and I agree that I will buy your watch. We've made a contract. That contract works because there is a background legal rule that says I own a property right that already binds the entire world.
But here's an example of a contract that doesn't work: Let's say you and I agree that everyone else who reads this Blog has no property interest in their watches. Private property in watches, you and I agree, doesn't exist.
Wait a minute -- we can't DO that. And that's precisely the problem we're seeing with EULAs right now. EULAs all over (except Linden's, SOE's Station Exchange, and a few others) eliminate private property in virtual property. Another example: WoWGlider is getting sued based on Blizzard's pretty risible restriction stopping any third party software from interacting with WoW. (Oooookay -- is Blizzard's next target Microsoft? 'Cause my operating system sure interacts with WoW.)
Ok, so that's the first point -- contracts can't create community-spanning obligations because communities are porous at the edges. Even if you force everyone to sign contracts with the community service provider as they enter the world, players can't enforce those contracts against each other. All those "Code of Conduct rules are completely unenforceable against other players because, of course, you didn't sign any contract with those other players, only with the community service provider. Ever been harassed, and thought "wow, they signed a contract saying they wouldn't do that."? Turns out they did, but they didn't sign it with you. And, of course, the contract doesn't bind parties outside of the world who never signed the contract -- which (according to their claims) comprises the majority of RMT middlemen.
Second point: if EULAs can't create the rules of the game, what should courts turn to? Well, NFL employment contracts certainly don't create the rules of the game. What does? Community custom and practice.
At first blush, this may sound nuts. But think about it -- isn't the most important fact in the WoWGlider case the fact that *everyone* uses third-party software? Can you imagine high-end raiding without CTRaid? Should a judge really construe the contract between Blizzard and me to (1) bind MDY (makers of WoWGlider); and (2) eliminate third-party software? Probably not.
I'd love your comments -- sending me emails at jofairfi at indiana dot edu would be fantastic. Constructive criticism is of course welcome -- and comments that help me support my arguments are even MORE welcome!