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Monday, February 4, 2008

Virtual Property - Real-World Problem.

by: Elizabeth Hertz, Associate Editor, MTTLR

Editor: This post is part of a short MTTLR Blog series on virtual worlds - Part one (this post) explores parallels between virtual property and real-world property. Part two examines the contract agreements that govern relationships between virtual world participants and creators. Part three (this post) considers taxation in virtual worlds.

As a society, we’ve long been comfortable declaring property rights in ideas. The explosion of immersive online games, however, has raised the question of whether there should be legal rights in what is essentially another person's idea translated into a conglomeration of ones and zeros that is only useful within the confines of a virtual world. To add to the legal confusion, people are exchanging real-world money for virtual property.

In a recent article entitled “Leave Those Orcs Alone: Property Rights in Virtual Worlds,”1 Kevin Deenihan argued that online games and the virtual property therein should continue to be governed by the End User License Agreement (EULA) scheme rather than real-world property law. In
arguing against the application of legal rights to virtual property, Deenihan relies on a distinction between virtual and traditional property. However, I found myself unconvinced. If virtual property is truly its own category, deserving of a special legal exemption, the distinction must rest on more than the “communal, social atmosphere of virtual worlds.” 2

Deenihan states that virtual property possesses no special value “except as a record of achievement” and “an aid to socializing.”3 Virtual property derives its value from the status it confers on its owners, showcasing the time and skill they have invested in its procurement.4 This may be true, but it is true of traditional property as well; I suspect it would be difficult to sell a five thousand dollar handbag if it conferred no status benefits on the buyer.

Deenihan supports his position on the distinctiveness of virtual property by citing the controversy over so-called gold farmers, players who perform repetitive tasks to earn items and virtual money, which they then sell for real money.5 Such players warp the ‘economy’ of the game and make it difficult for others to maintain their status; to keep up with the rising costs, people are forced into doing the ‘less playful’ tasks that earn virtual money. Sound familiar?

Even the player-lauded efforts of developers to shut down, kick out, and generally punish those who would upset the status system don’t prove the distinctiveness of virtual property. The heart of the regulation is keeping high-status items out of the hands of those without the requisite characteristics; in short, game developers are mimicking sumptuary laws.

Deenihan seems to operate on the implicit assumption that property law is meant solely to protect necessities and govern commercial exchange.6 Most property isn’t necessary, and few people outside of business and law are concerned with large contractual borrowing. The fact of the matter is that people have a lot of property that falls into neither of Deenihan’s categories but nonetheless enjoys the protection of the law. The mere fact that large portions of American property law wouldn’t apply to virtual property
doesn’t mean that the remaining law should be inapplicable as well.

Perhaps the only reason the one-sided EULA scheme has not been more critically scrutinized is that the value of most individual players’ virtual property is low. The Linden dollar, the currency of Second Life, is worth roughly 1/270th of an American dollar.7 All that the average player has invested in a game is a few dollars and a lot of hours that, presumably, he or she enjoyed. But in the aggregate, these investments do add up to significant amounts.

It’s all very nice to think of the virtual worlds as extralegal spheres of community and fun, but virtual worlds involve real money. As any reader of the news will know, Second Life has already produced a millionaire,8 and the plaintiff in a recent suit against Linden Labs claimed to have invested over eight thousand dollars in virtual real estate.9 With this kind of money at stake, there will come a point when a settled virtual property law becomes a necessity rather than a point of debate.

1 Kevin Deenihan, Leave Those Orcs Alone: Property Rights in Virtual Worlds, Virtually Blind, January 15, 2008.
2 Id. at 16.
3 Id.
4 Id.
5 Id. at 17-18.
6 Id. at 23-24.
7Stephen J. Dubner, Philip Rosedale Answers Your Second Life Questions, Freakonomics Blog, December 13, 2007.
8Rob Hof, Second Life’s First Millionaire, Business Week, November 26, 2006.
9 Declaration of Mark Bragg, Esq. ¶33, Bragg v. Linden Research, Inc., No. 06-CV-4925, 2007 WL 526313 (E.D.P.A. Jan. 25, 2007) (zipped file ("Bragg's Motion for Injunction, Brief and Exhibits 1/25/07") containing Declaration ("Exhibit 1") available from http://secondlife.typepad.com/second_life_lawsuit_bragg/second_life_lawsuit_pleadings_with_the_court/index.html.

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Blogger Erik said...

I think the gist of Deenihan’s “Leave Those Orcs Alone” article is that many virtual world participants prefer a virtual world where property rights are not rigidly enforced. As you cited, Deenihan believes there is a “communal, social atmosphere of virtual worlds” that would be disrupted if virtual property rights were legally enforceable. The beauty of the EULA system is, different worlds can evolve in different ways that suit different users. EULA’s allow virtual world property rights to be tailored to the nature of the community the developer is trying to create. The “feel” of the community is altered when property rights are enforced. You suggest EULA’s are a “one-sided … scheme.” I disagree. Virtual world users have plenty of bargaining power, since they can shop-around to decide which virtual world they will join. I hope the powers that be don’t force a one-size-fits-all virtual property solution upon us anytime soon. Many people prefer just to play a game, where they can leave behind the dollars and cents that surround us in the real world.

February 12, 2008 at 6:12 PM  

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